<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 11, 1997
REGISTRATION STATEMENT NO. 333-___
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------------
APOLLO GROUP, INC.
(Exact name of registrant as specified in its charter)
ARIZONA 86-0419443
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4615 EAST ELWOOD STREET
PHOENIX, ARIZONA 85040
(602) 966-5394
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
JAMES W. HOGGATT
VICE PRESIDENT OF FINANCE
AND CHIEF FINANCIAL OFFICER
APOLLO GROUP, INC.
4615 EAST ELWOOD STREET
PHOENIX, ARIZONA 85040
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
COPIES TO:
JON S. COHEN, ESQ.
CHRISTOPHER J. LITTLEFIELD, ESQ.
SNELL & WILMER L.L.P.
ONE ARIZONA CENTER
PHOENIX, ARIZONA 85004-0001
(602) 382-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. /x/
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box./ /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED(1) REGISTERED(2) PER UNIT(3) OFFERING PRICE(3) FEE
<S> <C> <C> <C> <C>
Class A Common Stock, no par value per share 510,019 $34.3125 $17,500,027 $ 5,303
</TABLE>
(Facing Page Continued on Following Page)
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(1) This registration statement covers the resale by the Selling
Securityholder of up to 510,019 shares of Class A Common Stock to be
acquired by the Selling Securityholder in connection with the purchase
of certain assets of the Selling Securityholder by the Registrant.
(2) In the event of a stock split, stock dividend, or similar transaction
involving Common Stock of the Company, in order to prevent dilution,
the number of shares registered shall be automatically increased to
cover the additional shares in accordance with Rule 416(a) under the
Securities Act of 1933.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based upon the average of the high and low
prices of the Class A Common Stock on September 8, 1997, as reported by
the Nasdaq National Market.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED SEPTEMBER ____, 1997
PROSPECTUS
________ SHARES
APOLLO GROUP, INC.
COMMON STOCK
This Prospectus relates to the resale by The National Endowment for
Financial Education, a Colorado non-profit corporation ("NEFE" or "Selling
Securityholder"), of up to _______ shares of Class A Common Stock, no par value
per share (the "Class A Common Stock") of Apollo Group, Inc., an Arizona
corporation (the "Company"), which were previously acquired by the Selling
Securityholder in connection with the acquisition of certain assets of the
Selling Securityholder. The resale of the Common Stock by the Selling
Securityholder currently is not subject to any underwriting agreement. See
"Recent Developments" and "Plan of Distribution."
The Class A Common Stock registered for resale hereby has been
registered pursuant to the Company's obligations contained in a written
agreement with the Selling Securityholder. The Selling Securityholder may elect
to sell all, a portion or none of the Class A Common Stock offered by it
hereunder. See "Recent Developments" and "Plan of Distribution."
The Company's Class A Common Stock is traded on the Nasdaq National
Market ("Nasdaq") under the symbol "APOL". On September ____, 1997, the last
reported sales price of the Class A Common Stock, as reported by Nasdaq, was
$______ per share.
The Selling Securityholder may sell the Class A Common Stock from time
to time in block trades, in ordinary brokers' transactions through the
facilities of Nasdaq or otherwise, in underwritten public offerings, or in
privately negotiated transactions, at market prices prevailing at the time of
such sale, at prices related to such prevailing market prices, or at negotiated
prices. The Company will not receive any of the proceeds from the sale of Class
A Common Stock by the Selling Securityholder. The net proceeds to the Selling
Securityholder will be the proceeds received by it upon such sales, less
brokerage commissions or discounts. All expenses incurred with the registration
of the Class A Common Stock, other than any underwriting or brokerage discounts,
commissions and selling expenses with respect to the Class A Common Stock being
sold by the Selling Securityholder, will be borne by the Company. See "Plan of
Distribution" and "Selling Securityholder."
SEE "RISK FACTORS" COMMENCING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES OFFERED HEREBY.
THE SELLING SECURITYHOLDER AND ANY BROKER-DEALER EXECUTING SELLING ORDERS ON
BEHALF OF OR PURCHASING FROM THE SELLING SECURITYHOLDER MAY BE DEEMED TO BE AN
"UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT. COMMISSIONS RECEIVED BY
ANY SUCH BROKER-DEALER MAY BE DEEMED TO BE UNDERWRITING COMMISSIONS OR DISCOUNTS
UNDER THE SECURITIES ACT OF 1933.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is September ___, 1997
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). The reports,
information statements and other information filed by the Company with the
Commission can be inspected and copied at the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at its regional offices located at 7
World Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such information can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission also maintains a Web site (http://www.sec.gov) that contains
reports, proxy, and information statements and other information regarding
registrants, such as the Company, that file electronically with the Commission.
The Company's Class A Common Stock is listed on the Nasdaq National Market
("Nasdaq") and similar information can be inspected and copied at Nasdaq at 1735
K Street, N.W., Washington, D.C. 20006.
This Prospectus constitutes a part of a registration statement on Form
S-3 (the "Registration Statement") filed by the Company with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"). As
permitted by the rules and regulations of the Commission, this Prospectus omits
certain of the information contained in the Registration Statement and reference
is hereby made to the Registration Statement and related exhibits for further
information with respect to the Company and the securities offered hereby.
Statements contained herein concerning the provisions of any documents filed as
an exhibit to the Registration Statement or otherwise filed with the Commission
are not necessarily complete, and in each instance reference is made to the copy
of such document so filed. Each such statement is qualified in its entirety by
such reference.
No person is authorized to give any information or make any
representation other than those contained or incorporated by reference in this
Prospectus and, if given or made, such information or representation must not be
relied upon as having been authorized. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in the affairs of the Company
since the date hereof.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the
Commission and are hereby incorporated by reference into this Prospectus: (i)
Annual Report on Form 10-K for the fiscal year ended August 31, 1996, (ii)
Quarterly Reports of the Company on Form 10-Q for the quarters ended November
30, 1996, February 28, 1997 and May 31, 1997; (iii) the description of the
Common Stock contained in the Company's Form 8-A filed with the Commission
pursuant to Section 12(g) of the Exchange Act, including all amendments or
reports filed for the purpose of updating such description; and (iv) the
Company's Form 8-K relating to the acquisition of the business described in
"Recent Developments." All other documents and reports filed pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of this offering shall be deemed to
be incorporated by reference in this Prospectus and to be made a part hereof
from the date of the filing of such reports and documents.
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Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of such
person, a copy of any or all documents which are incorporated herein by
reference (not including the exhibits to such documents, unless such exhibits
are specifically incorporated by reference in the document which this Prospectus
incorporates). Requests should be directed to Mr. James W. Hoggatt, Chief
Financial Officer, at the Company's principal executive offices located at 4615
East Elwood Street, Phoenix, Arizona 85040, telephone number (602) 966-5394.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus, including all documents incorporated by reference,
includes "forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. All statements other than
statements of historical facts included in this Prospectus, including without
limitation, statements under "The Company," "Recent Developments," and "Risk
Factors," regarding the Company's financial position, business strategy, and
plans and objectives of management of the Company for future operations, are
forward-looking statements. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to have been correct. Important
factors that could cause actual results to differ materially from the Company's
expectations are disclosed under "Risk Factors" and elsewhere in this
Prospectus, including without limitation in conjunction with the forward-looking
statements included in this Prospectus. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by this section.
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<PAGE> 6
THE COMPANY
Apollo Group, Inc. ("Apollo" or the "Company"), through its
subsidiaries, the University of Phoenix, Inc. ("UOP"), the Institute for
Professional Development ("IPD"), and Western International University, Inc.
("WIU"), is a leading provider of higher education programs for working adults
based on the number of working adults enrolled in its programs. The consolidated
enrollment in the Company's educational programs would make it the largest
private institution of higher education in the United States. The Company
currently offers its programs and services at over 93 campuses and learning
centers in 29 states, Puerto Rico, and London, England. The Company's enrollment
has increased to 53,137 at May 31, 1997 from 21,163 at August 31, 1992.
Based on its enrollment of over 38,000 adult students, UOP is currently
one of the largest regionally accredited private universities in the United
States and has one of the nation's largest private business schools. UOP has
been accredited by the Commission on Institutions of Higher Education of the
North Central Association of Colleges and Schools ("NCA") since 1978 and has
successfully replicated its teaching/learning model while maintaining
educational quality at over 50 campuses and learning centers in Arizona,
California, Colorado, Florida, Hawaii, Louisiana, Michigan, Nevada, New Mexico,
Utah, and Puerto Rico. UOP has developed specialized systems for student
tracking, marketing, faculty recruitment and training, financial aid,
accounting, and academic quality management. These systems enhance UOP's ability
to expand into new markets while still maintaining academic quality. Currently,
approximately 75% of UOP's students receive some level of tuition reimbursement
from their employers, many of which are Fortune 500 companies.
The Online(TM) campus was established by UOP in 1989 to provide
group-based, faculty-led instruction through computer-mediated communications.
The Online(TM) campus currently serves approximately 2,700 degree-seeking
students. Students can access their Online(TM) classes with a computer and modem
from anywhere in the world, on schedules that meet their individual needs.
Online's(TM) degree programs can be accessed though direct-dial, local Internet
providers or CompuServe(R). The Online(TM) faculty receive specialized training
to enable them to teach effectively in the electronic learning environment. The
same academic quality management standards applied to campus-based programs,
including the assessment of student learning outcomes, are applied to programs
delivered through Online(TM).
IPD provides program development and management services under
long-term contracts that meet the guidelines of the client institutions'
respective regional accrediting associations. IPD provides these services to 18
regionally accredited private colleges and universities at over 38 campuses and
learning centers in 20 states and shares in the tuition revenues generated from
these programs. IPD is able to assist these colleges and universities in
expanding and diversifying their programs for working adults. IPD places a
priority on institutions that: (i) are interested in developing or expanding
off-campus degree programs for working adults; (ii) recognize that working
adults require a different teaching/learning model than the 18 to 24 year old
student; (iii) desire to increase enrollments with a limited investment in
institutional capital and (iv) recognize the unmet educational needs of the
working adult students in their market. More than 13,000 students are currently
enrolled in IPD-assisted programs.
WIU currently offers graduate, undergraduate, and certificate degree
programs to approximately 1,200 students and has a total of four campuses and
learning centers in Phoenix, Fort Huachuca and Douglas, Arizona, and London,
England.
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The Company was incorporated in Arizona in 1981 and maintains its
principal executive offices at 4615 East Elwood Street, Phoenix, Arizona 85040.
The Company's telephone number is (602) 966-5394. The Company's Internet Web
Site addresses are as follows:
- Apollo and IPD - http://www.apollogrp.com
- UOP-http://www.uophx.edu
- WIU-http://www.wintu.edu
RECENT DEVELOPMENTS
ACQUISITION OF CERTAIN ASSETS OF NATIONAL ENDOWMENT FOR FINANCIAL EDUCATION
On August 22, 1997, Apollo Group, Inc. (the "Company") announced that
it had reached an agreement with NEFE to purchase the assets and related
business operations of the College for Financial Planning and related divisions
that include the Institute for Wealth Management, the Institute for Retirement
Planning, the American Institute for Retirement Planners, Inc., and the
Institute for Tax Studies (collectively the "Acquired Business"). The purchase
price was $35,000,000, subject to certain adjustments, consisting of (i) $17.5
million of the Company's Class A Common Stock, based on the average of the
closing bid price of the shares made by certain specified market makers (the
"Share Determination Price") on the fifth business day prior to the Closing Date
of the acquisition; and (ii) cash in an amount equal to $35 million less the
value of the number of shares of Common Stock determined in (i) above based on
the Share Determination Price for the business day immediately preceding the
Closing Date, plus the assumption by the Company of certain liabilities,
including deferred tuition income. Based on the determination of the purchase
price described above, the Company issued ____ shares of its Class A Common
Stock to the Selling Securityholder on the Closing Date. For the fiscal year
ended September 30, 1996, the Acquired Business had positive earnings and
revenues of approximately $22 million, of which approximately $5.6 million was
attributable to investment income. The Company does not anticipate that the
acquisition will be material to the Company's fiscal 1998 earnings. For
additional information regarding the acquisition, see the Company's current
report on Form 8-K filed with the Securities and Exchange Commission relating to
the acquisition, which includes certain pro forma and historical financial
information relating to the Acquired Business.
The Company anticipates closing the purchase from NEFE on the date of
this Prospectus, which is expected to be on or before September 24, 1997. The
agreement is subject to standard closing conditions. NEFE is a not-for-profit
organization that currently owns and operates the College for Financial Planning
and the other divisions contemplated in this transaction. NEFE also owns the
NEFE High School Financial Planning Program, the Public Education Center and the
NEFE Press, which NEFE will continue to own and operate subsequent to the
acquisition.
With current enrollments of over 20,000 students, the College for
Financial Planning is one of the largest providers of financial planning
education programs in the United States, including the Certified Financial
Planner (CFP) Professional Education Program. For the past 25 years, the College
for Financial Planning has been a leader in educating financial services
professionals to better serve the financial planning needs of the general
public.
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<PAGE> 8
ACCREDITATION
In the Fall of 1996, NCA conducted its five-year reaffirmation visit of
UOP. The recommendations of the visiting NCA team (the "Team Report") included
the reaffirmation of UOP's continuing accreditation, approval of a planned
doctoral degree program in management, and the elimination of required prior
approval for all future geographic expansion by UOP.
On June 23, 1997, the Review Committee of NCA reviewed the Team Report.
The Review Committee recommended that NCA adopt the Team Report's
recommendations to reaffirm UOP's continuing accreditation and to permit UOP's
expansion into two new states (Oregon and Washington). The Review Committee also
recommended, however, that NCA not adopt the Team Report's recommendations to
approve a planned doctoral program in management and to eliminate the
requirement of prior approval for all future geographic expansion by UOP. The
Review Committee further recommended that a focus visit of UOP be conducted in
two years.
On August 8, 1997, NCA reaffirmed UOP's continuing accreditation,
approved UOP's expansion into Oregon and Washington, and recommended that a
focus visit of UOP be conducted in two years. NCA, however, did not adopt the
Team Report's recommendations to approve a planned doctoral program in
management and to eliminate the requirement of prior approval for all future
geographic expansion by UOP. The Company continues to believe that the planned
doctoral program in management merits approval and that NCA should eliminate the
requirement of prior approval for geographic expansion. The Company is committed
to geographic expansion and will continue to evaluate its alternatives to reduce
any restraints on growth imposed by various regulatory bodies to the extent it
believes such restraints to be unnecessary.
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RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective investors should carefully consider the factors discussed below in
evaluating the Company and its business before purchasing any of the shares of
Class A Common Stock offered hereby. This Prospectus contains forward-looking
statements which involve risks and uncertainties. The Company's actual results
could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those set forth in the
following risk factors and elsewhere in this Prospectus. See "Disclosure
Regarding Forward-Looking Statements."
UNCERTAIN AND CHANGING REGULATORY ENVIRONMENT
UOP, WIU and IPD client institutions are subject to extensive state and
federal regulations. The Higher Education Act of 1965, as amended (the "HEA"),
and the regulations promulgated thereunder (the "Regulations"), subject UOP, WIU
and IPD client institutions and all other higher education institutions eligible
to participate in federal financial aid programs under Title IV of the HEA
("Title IV Programs") to increased regulatory scrutiny. The HEA mandates
specific regulatory responsibilities for each of the following components of the
higher education regulatory triad: (i) the accrediting associations recognized
by the United States Department of Education (the "DOE"); (ii) the federal
government through the DOE and (iii) state higher education regulatory bodies.
All higher education institutions participating in Title IV Programs must first
be accredited by an association recognized by the DOE. Under the HEA,
accrediting associations are required to include the monitoring of certain
aspects of Title IV Program compliance as part of their accreditation
evaluations. The DOE reviews all such participating institutions for compliance
with all applicable HEA standards and regulations.
The most recent DOE program review began in March 1997 and, to date,
most of the fieldwork has been completed. UOP has not yet received any official
notification as to the results of the program review, but expects to receive
notification in the Fall of 1997. Because the DOE may not approve new locations
while a program review is in process, the financial aid for new students in new
campuses and learning centers may be affected until such time as the program
review is completed. The Company believes that such expected delays will not
have a material adverse affect on its results of operations because of the
availability of alternative financing and employer tuition reimbursement to many
of these students. However, should the DOE not complete its review for an
extended period of time, such a delay may have a material adverse affect on the
Company's ability to expand UOP's business.
New or revised interpretations of regulatory requirements could have a
material adverse effect on the Company. In addition, changes in or new
interpretations of other applicable laws, rules or regulations could have a
material adverse effect on the accreditation, authorization to operate in
various states, permissible activities and costs of doing business of UOP, WIU
and one or more of the IPD client institutions. The failure to maintain or renew
any required regulatory approvals, accreditation or state authorizations by UOP
or certain of the IPD client institutions could have a material adverse effect
on the Company.
FAILURE TO MAINTAIN ACCREDITATION
UOP, WIU and IPD client institutions are accredited by regional
accrediting associations recognized by the DOE. Accreditation provides the basis
for: (i) the recognition and acceptance by employers, other higher education
institutions and governmental entities of the degrees and credits earned by
students; (ii) the qualification to participate in Title IV Programs and (iii)
the qualification for authorization in certain states.
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<PAGE> 10
UOP was granted accreditation by NCA in 1978. UOP's accreditation was reaffirmed
in 1982, 1987, 1992 and 1997. The next focus evaluation visit is scheduled to
begin in 1999, and the next NCA reaffirmation visit is scheduled to begin in
2002. IPD-assisted programs offered by the IPD client institutions are evaluated
by the client institutions' respective regional accrediting associations. WIU is
accredited by NCA and is scheduled to have its next reaffirmation visit in the
Spring of 1998. The withdrawal of accreditation from UOP or certain IPD client
institutions would have a material adverse effect on the Company.
LIMITS ON TITLE IV PROGRAM FUNDING
Most UOP, WIU and IPD client institution students participate in Title
IV Programs. UOP and WIU derive approximately 44% and 8% of their net revenues
from students who participate in Title IV Programs, respectively. The IPD
percentages are estimated to be similar to those at UOP. The respective IPD
client institutions administer their own Title IV Programs. The Company's
students are eligible to receive Title IV financial aid because: (i) UOP, WIU
and IPD client institutions are accredited by an accrediting association
recognized by the DOE; (ii) the DOE has certified UOP's, WIU's and IPD client
institutions' Title IV Program eligibility and (iii) UOP, WIU and IPD client
institutions have applicable state authorization to operate and their operating
sites have been approved by the DOE.
The Regulations define the types of educational programs offered by an
institution that qualify for Title IV Program funds. For students enrolled in
qualified programs, the Regulations place limits on the amount of Title IV
Program funds that a student is eligible to receive in any one academic year (as
defined by the DOE). The Regulations also specify that, for undergraduate
programs, an academic year must consist of at least an equivalent 30 weeks of
instruction and a minimum of 24 credit hours. Because the Regulations define an
equivalent "week of instruction" as 12 hours of regularly scheduled instruction,
examinations or preparation for examinations (the "12-Hour Rule"), an academic
year would require a minimum of 360 hours (30 weeks multiplied by 12 hours per
week). Most of the Company's programs meet this 360 hour minimum and, therefore,
qualify for Title IV Program funds. The programs that do not qualify for Title
IV Program funds consist primarily of certificate, corporate and continuing
professional education programs. If the DOE determined that UOP's programs did
not qualify for Title IV Program funds, such determination would have a material
adverse effect on the Company.
UNCERTAINTY INVOLVING DOE AUDIT OF TITLE IV PROGRAMS
Effective September 1, 1995, the Company, through its newly formed WIU
subsidiary, completed the acquisition of Western International University
("Western"). In connection with the acquisition, the Company assumed the Title
IV liabilities of Western, which liabilities were subject to change based on the
results of the DOE's audit of Western's Title IV Programs. Although much of the
fieldwork was completed in early 1996, the final audit results and the amount
that the Company is responsible for had not been determined by the DOE as of the
date of this Prospectus. The original acquisition price of $2.1 million was
adjusted to $3.0 million at August 31, 1996 to reflect an increase in the
estimated liability to the DOE related to Western's processing of Title IV
financial aid and other related liabilities. Depending on the interpretation of
the various regulatory requirements, the final audit results and the Company's
liability may differ materially from the estimates currently recorded. Any
difference between the final amount and the estimates currently recorded will be
recorded as an increase or decrease, as applicable, to expense.
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FAILURE TO OBTAIN AUTHORIZATION TO EXPAND INTO NEW STATES
UOP, WIU and IPD client institutions are required to have authorization
to operate as degree-granting institutions in each state where they physically
provide educational programs. Certain states accept accreditation as evidence of
meeting minimum state standards for authorization. Other states, including
California, require separate evaluations for authorization. Depending on the
state, the addition of a degree program not offered previously or the addition
of a new location must be included in the institution's accreditation and be
approved by the appropriate state authorization agency. UOP, WIU and IPD client
institutions are currently authorized to operate in all states in which they
have physical locations. If UOP is unable to obtain authorization to operate in
certain new states, it may have a material adverse effect on the Company's
ability to expand UOP's business.
In addition, NCA requires UOP to obtain NCA's prior approval before UOP
is permitted to expand into new states. Although NCA recently approved UOP's
expansion into Oregon and Washington, NCA refused to adopt its visitation team's
recommendation to eliminate the requirement that UOP obtain prior approval for
all future geographic expansion by UOP. If UOP is unable to obtain NCA's
approval for any future geographic expansion, it may have a material adverse
effect on the Company's ability to expand UOP's business.
RELIANCE ON CURRENT MANAGEMENT
Dr. John Sperling, the founder of the Company, has been instrumental in
the development of the Company. The Company's development and operations to date
have been, and its continuing operations will be, substantially dependent on the
efforts of Dr. Sperling and the other members of current management. Dr.
Sperling's employment agreement allows him to terminate his employment at any
time upon 30 days notice. The loss of the services of any one or more members of
current management could have a material adverse effect on the Company's
business and results of operations.
REGULATORY CONSEQUENCES OF A CHANGE OF OWNERSHIP OR CONTROL
A change of ownership or control of the Company, depending on the type
of transaction that gives rise to a change, may have significant regulatory
consequences for UOP and WIU. Such a change of ownership or control could
trigger recertification by the DOE, reauthorization by certain state licensing
agencies or the evaluation of UOP's and WIU's accreditation by NCA. The DOE has
adopted the change of ownership or control standards used by the federal
securities laws. Upon a change of ownership or control sufficient to require the
Company to file a Form 8-K with the Commission, UOP and WIU would cease to be
eligible to participate in Title IV Programs until recertified by the DOE. This
recertification would not be required, however, if the transfer of ownership or
control was made upon a person's retirement or death and was made either to a
member of the person's immediate family or to a person with an ownership
interest in the Company who had been involved in its management for at least two
years preceding the transfer. In addition, certain states where UOP is presently
authorized have requirements governing change of ownership or control.
Currently, Arizona and California would require UOP and WIU, as applicable, to
be reauthorized upon a 20% and 25% change of ownership or control of the
Company, respectively. These states require a new application to be filed for
state authorization if such a change of ownership or control occurs. Moreover,
the Company is required to report to NCA any change in stock ownership of UOP,
WIU or Apollo. At that time, NCA may seek to evaluate the effect of such a
change of stock ownership on the continuing operations of UOP and WIU. If UOP is
not recertified by the DOE, does not obtain reauthorization from the necessary
state agencies or has
9
<PAGE> 12
its accreditation withdrawn as a consequence of any change in ownership or
control, it would have a material adverse effect on the Company.
VOTING CONTROL BY CURRENT MANAGEMENT
The holders of Class A Common Stock are not entitled to any voting
rights, while the holders of Class B Common Stock are entitled to one vote per
share on all matters on which the shareholders of the Company are entitled to
vote. As a result, the holders of the Company's Class B Common Stock, who
currently consist of the management of the Company, control the election of all
directors to the Company's Board of Directors and thereby control the policies
and operations of the Company without the vote of the holders of Class A Common
Stock. This concentration of voting control may have the effect of delaying,
deferring or preventing a change of control of the Company, including any
business combination with an unaffiliated party, or of impeding the ability of
the shareholders to replace management even if factors warrant such a change.
This concentration of voting control may also affect the price that investors
might be willing to pay in the future for shares of the Company's Class A Common
Stock.
SEASONALITY IN RESULTS OF OPERATIONS
The Company experiences seasonality in its results of operations
primarily as a result of changes in the level of student enrollments. While the
Company enrolls students throughout the year, second quarter (December to
February) average enrollments and related revenues generally are lower than
other quarters due to the holiday breaks in December and January. Second quarter
costs and expenses historically increase as a percentage of net revenues as a
result of certain fixed costs not significantly affected by the seasonal second
quarter declines in net revenues.
The Company experiences a seasonal increase in new enrollments in
August of each year when most other colleges and universities begin their Fall
semesters. As a result, instruction costs and services and selling and
promotional expenses historically increase as a percentage of net revenues in
the fourth quarter due to increased costs in preparation for the August peak
enrollments. These increased costs result in accounts payable levels being
higher in August than in any other month during the year. The Company
anticipates that these seasonal trends in the second and fourth quarters will
continue in the future. Historically, the third quarter of each fiscal year is
the highest in terms of operating profits and net income.
USE OF PROCEEDS
The Selling Securityholder will receive all of the proceeds from the
sale of the Class A Common Stock offered hereby. The Company will not receive
any of the proceeds from such sale.
SELLING SECURITYHOLDER
The shares to be sold by the Selling Securityholder were acquired in
connection with the Company's acquisition of certain assets of the Selling
Securityholder. See "Recent Developments." As of September ___, 1997, the
Selling Securityholder beneficially owned ________ shares of the Class A Common
Stock, which represented approximately ____% of the total shares of Class A
Common Stock outstanding on that date. After the completion of this offering,
and assuming that the Selling Securityholder disposes of all of the shares
10
<PAGE> 13
of Class A Common Stock covered by this Prospectus and does not acquire any
additional shares, the Selling Securityholder will not own any shares of Class A
Common Stock.
PLAN OF DISTRIBUTION
This Prospectus relates to the resale of ______ shares of Class A
Common Stock previously acquired by the Selling Securityholder. The resale of
the Class A Common Stock by the Selling Securityholder currently is not subject
to any underwriting agreement. The Selling Securityholder anticipates reselling
the shares as soon as practicable after the closing of the acquisition described
in "Recent Developments," although the Selling Securityholder anticipates it
will pursue such methods of resale as it determines will best realize the value
of the Company's shares of Class A Common Stock acquired by the Selling
Securityholder in the acquisition. In this regard, the Selling Securityholder
has had preliminary discussions with certain investment bankers concerning
different possible resale options. The Selling Securityholder has not currently
determined which option (or combination thereof) will best accomplish its
objective or whether or when any arrangement may be made. The options discussed
include, among others, the following: (i) executing one or more block trades on
the closing date of the acquisition or thereafter by entering into an agreement
as principal with a specific broker-dealer that would attempt to place the
shares with institutional or other investors or market-makers and (ii) entering
into an arrangement with a broker-dealer that would act as the Selling
Securityholder's agent and dispose of the securities in a series of transactions
over a period of time. The Selling Securityholder is continuing to consider
these options and may consider others with a view to realizing the value of the
Company's shares of Class A Common Stock acquired by the Selling Securityholder
in the acquisition.
The Company expects that the Selling Securityholder will sell the
shares covered by this Prospectus by one or more of the following methods,
without limitation: (a) block trades in which a broker or dealer so engaged may
purchase as principal or may attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as principal and resale by such
broker and dealer for its account pursuant to this Prospectus; (c) ordinary
brokerage transactions and transactions in which the broker solicits purchases;
(d) privately negotiated or face-to-face transactions between sellers and
purchasers without a broker-dealer; and (e) underwritten public offerings. In
effecting sales, brokers or dealers engaged by the Selling Securityholder may
arrange for other brokers or dealers to participate. Such broker or dealers may
receive commissions or discounts from the Selling Securityholder in amounts to
be negotiated. Such brokers and dealers and any other participating brokers or
dealers may be deemed to be "underwriters" within the meaning of the Securities
Act in connection with such sales. The Company has advised the Selling
Securityholder that Regulation M may apply to its sales in the market and has
informed it of the need for delivery of copies of this Prospectus. The Company
is not aware as of the date of this Prospectus of any agreements between the
Selling Securityholder and any broker-dealers with respect to the sale of the
Class A Common Stock offered by this Prospectus. The Selling Securityholder and
any broker-dealers that participate with the Selling Securityholder in the
distribution of the Class A Common Stock may be deemed to be "underwriters"
within the meaning of the Securities Act, in which case any commissions or
discounts received by such broker-dealers and any profit on resale of the Class
A Common Stock sold by them might be deemed to be underwriting discounts or
commissions under the Securities Act. All expenses of registration incurred in
connection with this offering are being borne by the Company, except for
brokerage commissions and other similar expenses incurred by the Selling
Securityholder, which will be borne by the Selling Securityholder.
In order to comply with certain states' securities laws, if applicable,
the shares of Class A Common Stock offered hereby may be sold in such
jurisdiction only through registered or licensed brokers or dealers.
11
<PAGE> 14
The Selling Securityholder is not restricted as to the price or prices
at which it may sell the Class A Common Stock. Sales of shares of the Class A
Common Stock at less than market prices may depress the market price of the
Company's Class A Common Stock. The Selling Securityholder may elect to sell
all, a portion or none of the Class A Common Shares offered hereunder.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 400,000,000
shares of Class A Common Stock, no par value ("Class A Common Stock"); 3,000,000
shares of Class B Common Stock, no par value ("Class B Common Stock"); and
1,000,000 shares of preferred stock, no par value ("Preferred Stock").
CLASS A COMMON STOCK
As of August 31, 1997, there were 50,226,803 shares of the Class A
Common Stock outstanding. The holders of Class A Common Stock do not have any
voting rights with respect to shares of the Class A Common Stock. The holders of
the Class A Common Stock have no preemptive, subscription or additional
conversion rights. Upon a liquidation or dissolution of the Company, holders of
Class A Common Stock are entitled to share ratably with the holders of Class B
Common Stock in any corporate assets remaining after the payment of all debts,
subject to any preferential rights of any outstanding Preferred Stock. The Class
A Common Stock is not subject to assessment or further calls, has no redemption
provisions and is entitled only to such dividends as may be declared from time
to time by the Board of Directors out of funds legally available therefor.
CLASS B COMMON STOCK
As of May 31, 1997, there were 547,819 shares of the Class B Common
Stock outstanding. The holders of Class B Common Stock are entitled to one vote
for each share held of record on all matters on which shareholders are entitled
to vote. The holders of the Class B Common Stock have no preemptive,
subscription or conversion rights except as described below. Upon a liquidation
or dissolution of the Company holders of Class B Common Stock are entitled to
share ratably with the holders of Class A Common Stock in any corporate assets
remaining after the payment of all debts, subject to any preferential rights of
any outstanding Preferred Stock. The Class B Common Stock is not subject to
assessment or further calls, has no redemption provisions and is entitled only
to such dividends as may be declared from time to time by the Board of Directors
out of funds legally available therefor. Each share of Class B Common Stock is
freely convertible into one share of Class A Common Stock at the option of the
Class B shareholder. All shares of Class B Common Stock will automatically
convert to shares of Class A Common Stock (on a share-for-share basis) at such
time as the number of shares of Class B Common Stock outstanding is less than
115,154, in which case holders of Class A Common Stock will be entitled to one
vote per share (including the Class A Common Stock issued upon the conversion of
the Class B Common Stock). No additional shares of Class B Common Stock may be
issued by the Company except pursuant to a recapitalization or stock split. All
of the Class B Common Stock is currently held by the Company's management and is
subject to a Shareholders' Agreement, dated as of September 7, 1994 (the
"Shareholders' Agreement"). Subject to the Shareholders' Agreement, shares of
the Class B Common Stock must first be offered to the Company and then to the
other holders of the Class B Common Stock before such shares may be transferred,
except in the case of transfers to existing holders of Class B Common Stock,
executive officers of the Company or to a trust created by a shareholder of
Class B Common Stock. Upon transfer to any party, other than an existing holder
of Class B Common Stock or an executive officer of the Company, shares of Class
B Common Stock must be converted to shares of Class A Common Stock (on a
share-for-share basis). Upon the death of any holder of Class B Common Stock,
that
12
<PAGE> 15
person's shares must be offered first to the Company and then to the other Class
B shareholders at the then fair market value. In addition, parties to the
Shareholders' Agreement agreed not to amend such agreement before December 5,
1999 without the prior consent of Smith Barney Inc.
PREFERRED STOCK
The Board of Directors has the authority, without further action by the
shareholders, to issue from time to time up to 1,000,000 shares of Preferred
Stock in one or more series and to fix the number of shares, designations,
voting powers, preferences, optional and other special rights and the
restrictions or qualifications thereof. The rights, preferences, privileges and
restrictions or qualifications of different series of Preferred Stock may differ
with respect to dividend rates, amounts payable on liquidation, voting rights,
conversion rights, redemption provisions, sinking fund provisions and other
matters. The issuance of Preferred Stock could decrease the amount of earnings
and assets available for distribution to holders of Class A Common Stock or
Class B Common Stock or could adversely affect the rights and powers, including
voting rights, if applicable, of holders of Class A Common Stock or Class B
Common Stock and could have the effect of delaying, deferring or preventing a
change in control of the Company. As of the date of this Prospectus there are no
shares of Preferred Stock outstanding. The Company has no present intention to
issue any shares of Preferred Stock.
CERTAIN CHARTER PROVISIONS
The Company's Articles of Incorporation limit personal liability of
directors, to the Corporation or its shareholders, for monetary damages for
breach of their fiduciary duty as a director except to the extent such
limitation of liability is not permitted under Arizona law. Arizona law provides
that the liability of a director may not be eliminated or limited for: (i)
transactions in which a director receives a financial benefit to which the
director is not entitled; (ii) an intentional infliction of harm on the
corporation or the shareholders; (iii) liability for unlawful distributions in
violation of Arizona law or the Articles of Incorporation or (iv) an intentional
violation of criminal law. In addition, the Company's Bylaws provide that the
Company may indemnify any and all of its directors and officers, or former
directors and officers, to the fullest extent permitted by law or by the
Articles of Incorporation against claims and liabilities to which such persons
may become subject. Arizona law generally provides that indemnification is
permissible only when the director or officer acted in good faith and in a
manner reasonably believed to be in the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe the conduct was unlawful. Subject to that standard of care,
indemnification is mandatory under Arizona law for "outside directors" as
defined under Arizona law. Indemnification of directors is precluded in
connection with a proceeding by or in the right of the corporation in which the
director was adjudged liable to the corporation or in connection with any other
proceeding charging improper personal benefit to the director, whether or not
involving action in the director's official capacity, in which the director was
adjudged liable on the basis that personal benefit was improperly received by
the director.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Class A Common Stock is First
Chicago Trust Corporation of New York.
13
<PAGE> 16
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have 50,736,822
shares of Class A Common Stock outstanding, all of which will be freely
tradeable except 20,533,960 shares which are held by persons who are
"affiliates" of the Company for purposes of Rule 144.
In general, as Rule 144 currently provides, a person (or persons whose
shares are aggregated) who has beneficially owned "restricted" shares for at
least one year, including persons who may be deemed "affiliates" of the Company,
as that term is defined under Rule 144, would be entitled to sell (in accordance
with the provisions specified in the rule) within any three month period a
number of shares that does not exceed the greater of 1% of the then outstanding
shares of the Class A Common Stock (approximately 507,368 shares immediately
following the Offering) or the average weekly trading volume of each class of
such shares in the over-the-counter market during the four calendar weeks
preceding the date on which notice of the sale is filed with the Commission. An
"affiliate" of the Company may sell securities that are not "restricted" without
regard to the period of beneficial ownership but subject to the volume
limitations described above and other conditions of Rule 144, subject to
restrictions on affiliates. A person who is not deemed an "affiliate" of the
Company (and has not been for at least 90 days) and who has beneficially owned
his or her shares for at least two years, would be entitled to sell such shares
under Rule 144 without regard to the volume limitations described above, manner
of sale provisions, notice requirements or availability of public information.
No prediction can be made of the effect, if any, that sales of shares
or the availability of such shares for sale will have on the market price
prevailing from time to time. Nevertheless, sales by the existing shareholders
of substantial amounts of the Class A Common Stock in the public market could
adversely affect prevailing market conditions.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
the Company by Snell & Wilmer L.L.P., One Arizona Center, Phoenix, Arizona
85004-0001, counsel to the Company.
EXPERTS
The consolidated financial statements as of August 31, 1996 and 1995
and for each of the three years in the period ended August 31, 1996 incorporated
by reference in this Prospectus have been so incorporated in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
14
<PAGE> 17
================================================================================
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH
THIS OFFERING TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
----------
TABLE OF CONTENTS
PAGE
Available Information....................................2
Incorporation of Certain Documents by
Reference............................................2
Disclosure Regarding Forward-Looking
Statements...........................................3
The Company..............................................4
Recent Developments......................................5
Risk Factors.............................................7
Use of Proceeds.........................................10
Selling Securityholder..................................10
Plan of Distribution....................................11
Description of Capital Stock............................12
Shares Eligible for Future Sale.........................14
Legal Matters...........................................14
Experts.................................................14
- -
----------
================================================================================
================================================================================
APOLLO GROUP, INC.
----------
SHARES
OF
CLASS A
COMMON STOCK
----------
PROSPECTUS
----------
September __, 1997
================================================================================
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the issuance and distribution
of the securities being registered are as follows:
<TABLE>
<S> <C>
SEC Registration Fee ..................................... $ 5,303
Nasdaq Listing Fee ....................................... $10,200
Legal Fees and Expenses .................................. $10,000
Accounting Fees and Expenses ............................. $10,000
Blue Sky Fees and Disbursements .......................... $ --
Miscellaneous ............................................ $ 1,497
-------
Total ............................................. $37,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Articles of Incorporation limit personal liability of
directors, to the Corporation or its shareholders, for monetary damages for
breach of their fiduciary duty as a director except to the extent such
limitation of liability is not permitted under Arizona law. Arizona law provides
that the liability of a director may not be eliminated or limited for (i)
transactions in which a director receives a financial benefit to which the
director is not entitled; (ii) an intentional infliction of harm on the
corporation or the shareholders; (iii) liability for unlawful distributions in
violation of Arizona law or the Articles of Incorporation or (iv) an intentional
violation of criminal law. In addition the Company's Bylaws provide that the
Company may indemnify any and all of its directors and officers, or former
directors and officers, to the fullest extent permitted by law or by the
Articles of Incorporation against claims and liabilities to which such persons
may become subject. Arizona law generally provides that indemnification is
permissible only when the director or officer acted in good faith and in a
manner reasonably believed to be in the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe the conduct was unlawful. Subject to that standard of care
indemnification is mandatory under Arizona law for "outside directors" as
defined under Arizona law. Indemnification of directors is precluded in
connection with a proceeding by or in the right of the corporation in which the
director was adjudged liable to the corporation or in connection with any other
proceeding charging improper personal benefit to the director, whether or not
involving action in the director's official capacity, in which the director was
adjudged liable on the basis that personal benefit was improperly received by
the director.
For information regarding the Company's undertaking to submit to
adjudication the issue of indemnification for violation of the securities laws,
see Item 17 hereof.
In addition, the Company is paying directors' and officers' liability
insurance for claims up to $5,000,000.
<PAGE> 19
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT Page or
NUMBER Description Method of Filing
<S> <C> <C>
4 Restated and Amended Articles of Incorporated by reference to Exhibit
Incorporation of the Company 3.1 of the Company's Quarterly
Report on Form 10-Q for the
quarter ended November 30, 1996
5 Opinion of Snell & Wilmer, Filed herewith
L.L.P.
10 Asset Purchase Agreement by Filed herewith
and among National Endowment
for Financial Education(R), Apollo
Online, Inc., and Apollo Group,
Inc., dated August 21, 1997
23.1 Consent of Independent Filed herewith
Accountants
23.2 Consent of Snell & Wilmer, Included in Exhibit 5
L.L.P.
24 Powers of Attorney Included on Signature page
</TABLE>
II-2
<PAGE> 20
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended ("Securities Act"), each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Apollo
Group, Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Phoenix and State of
Arizona on September 11, 1997.
APOLLO GROUP, INC., an Arizona corporation
By /s/ JOHN G. SPERLING
-----------------------------------------
John G. Sperling
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John G. Sperling and James W. Hoggatt,
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this Form
S-3 Registration Statement and to sign any registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) of the
Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully and to
all intents and purposes as he might or could do in person hereby ratifying and
confirming all that said attorneys-in-fact and agents, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ JOHN G. SPERLING Chairman of the Board, President and September 11, 1997
- -------------------------------------- Chief Executive Officer
John G. Sperling (Principal Executive Officer)
/s/ WILLIAM H. GIBBS Senior Vice President and Director September 11, 1997
- --------------------------------------
William H. Gibbs
/s/ JERRY F. NOBLE Senior Vice President and Director September 11, 1997
- --------------------------------------
Jerry F. Noble
/s/ PETER V. SPERLING Vice President of Administration, September 11, 1997
- -------------------------------------- Secretary and Director
Peter V. Sperling
/s/ JAMES W. HOGGATT Vice President of Finance and Chief September 11, 1997
- -------------------------------------- Financial Officer (Principal Financial and
James W. Hoggatt Accounting Officer)
/s/ J. JORGE KLOR DE ALVA Vice President of Business Development September 11, 1997
- -------------------------------------- and Director
J. Jorge Klor de Alva
</TABLE>
II-4
<PAGE> 22
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ THOMAS C. WEIR Director September 11, 1997
- ------------------
Thomas C. Weir
/s/ DINO J. DECONCINI Director September 11, 1997
- ---------------------
Dino J. DeConcini
</TABLE>
II-5
<PAGE> 1
EXHIBIT 5
September 11, 1997
Apollo Group, Inc.
4615 East Elwood Street
Phoenix, Arizona 85040
Re: Common Stock of Apollo Group, Inc.
Gentlemen:
We have acted as counsel to Apollo Group, Inc., an Arizona corporation
(the "Company"), in connection with the preparation and filing with the United
States Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"), of the Company's
registration statement on Form S-3 (the "Registration Statement"), relating to
the registration for resale of 510,019 shares of the Company's Class A Common
Stock, no par value per share (the "Class A Common Shares"), which will be
issued in connection with the transactions contemplated by the Asset Purchase
Agreement, dated August 21, 1997 (the "Agreement"), by and among National
Endowment for Financial Education ("NEFE"), as Seller, and Apollo Online, Inc.,
as Buyer, and the Company, which Agreement is described therein and filed as an
exhibit thereto.
In arriving at the opinions expressed below, we have reviewed the
Agreement and the Registration Statement and the Exhibits thereto. In addition,
we have reviewed the originals or copies certified or otherwise identified to
our satisfaction of all such corporate records of the Company and such other
instruments and other certificates of public officials, officers and
representatives of the Company and such other persons, and we have made such
investigations of law, as we have deemed appropriate as a basis for the opinions
expressed below. In rendering the opinions expressed below, we have assumed that
the signatures on all documents that we have reviewed are genuine and that the
Class A Common Shares will conform in all material respects to the description
thereof set forth in the Registration Statement.
Based on the foregoing, we are of the opinion that the Class A Common
Shares to be issued pursuant to the Agreement have been duly authorized by all
necessary corporate action of the Company and, when issued in accordance with
such authorization and delivered and exchanged
<PAGE> 2
following consummation of the transactions contemplated by the Agreement, will
be validly issued, fully paid, and nonassessable.
The foregoing opinions are limited to the federal law of the United
States of America and the General Corporation Law of the State of Arizona.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Registration Statement and in the Prospectus included therein.
Very truly yours,
SNELL & WILMER L.L.P.
<PAGE> 1
EXHIBIT 10
ASSET PURCHASE AGREEMENT
BY AND AMONG
NATIONAL ENDOWMENT FOR FINANCIAL EDUCATION(R),
AS SELLER,
AND
APOLLO ONLINE, INC.,
AS BUYER
AND
APOLLO GROUP, INC.
AUGUST 21, 1997
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TABLE OF CONTENTS
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RECITALS ........................................................................... 1
AGREEMENT .......................................................................... 1
ARTICLE I--PURCHASE AND SALE ....................................................... 1
Section 1.1 Agreement to Sell ............................................ 1
(a) Purchased Assets ............................................. 1
(b) Excluded Assets .............................................. 2
Section 1.2 Agreement to Purchase ........................................ 2
Section 1.3 The Purchase Price ........................................... 2
(a) Purchase Price ............................................... 2
(b) Payment of Purchase Price .................................... 2
(c) Apollo Common Stock .......................................... 3
(d) Allocation of Purchase Price ................................. 6
Section 1.4 Assumption of Liabilities .................................... 6
Section 1.5 Closing Financial Statements ................................. 6
ARTICLE II--CLOSING; ITEMS TO BE DELIVERED; THIRD PARTY CONSENTS;
CHANGE IN NAME AND FURTHER ASSURANCES ..................................... 7
Section 2.1 Closing ....................................................... 7
Section 2.2 Items to Be Delivered at Closing .............................. 8
Section 2.3 Third Party Consents .......................................... 9
Section 2.4 Further Assurances ............................................ 9
ARTICLE III--REPRESENTATIONS AND WARRANTIES ........................................ 9
Section 3.1 Representations and Warranties of Seller ..................... 9
(a) Corporate Existence .......................................... 9
(b) Corporate Power and Authorization; Enforceable Obligations ... 9
(c) Interests in Other Entities .................................. 10
(d) Validity of Contemplated Transactions, etc ................... 10
(e) No Third Party Options ....................................... 11
(f) Financial Statements ......................................... 11
(g) Accounts Receivable and Notes Receivable ..................... 11
(h) Inventory .................................................... 12
(i) Tax and Other Returns and Reports ............................ 12
(j) Books of Account ............................................. 12
(k) Existing Conditions .......................................... 13
(l) Title to Tangible Purchased Assets ........................... 14
(m) Condition of Tangible Purchased Assets ....................... 14
(n) Compliance with Law; Authorizations .......................... 14
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(o) Litigation ................................................... 15
(p) Contracts and Commitments .................................... 15
(q) Additional Information ....................................... 16
(r) Labor Matters ................................................ 17
(s) Employee Benefit Plans and Arrangements ...................... 17
(t) Intellectual Property ........................................ 18
(u) Environmental Matters ........................................ 19
(v) Availability of Documents .................................... 20
(w) Purchased Assets ............................................. 20
(x) Deferred Tuition Fees ........................................ 20
(y) Business in the Ordinary Course .............................. 20
(z) Accreditation and CFP Board Recognition ...................... 20
(aa) Private Placement ........................................... 21
Section 3.2 Representations and Warranties of Buyer and Apollo ........... 21
(a) Corporate Existence .......................................... 21
(b) Corporate Power and Authorization ............................ 21
(c) Validity of Contemplated Transactions, etc ................... 21
(d) Buyer Required Consents ...................................... 22
(e) No Litigation ................................................ 22
(f) Sufficient Funds ............................................. 22
(g) SEC Reports and Financial Statements ......................... 22
(h) Existing Conditions .......................................... 23
Section 3.3 Survival of Representations and Warranties ................... 23
ARTICLE IV--AGREEMENTS PENDING CLOSING ............................................. 23
Section 4.1 Agreements of Seller Pending the Closing ..................... 23
(a) Business in the Ordinary Course .............................. 23
(b) Existing Condition ........................................... 23
(c) Maintenance of Physical Purchased Assets ..................... 24
(d) Employees and Business Relations ............................. 24
(e) Maintenance of Insurance ..................................... 24
(f) Compliance with Laws, etc .................................... 24
(g) Conduct of Business .......................................... 24
(h) Sale of Purchased Assets; Negotiations ....................... 24
(i) Access ....................................................... 24
(j) Press Releases ............................................... 25
(k) Confidentiality .............................................. 25
(l) Accrediting Bodies and CFP Board ............................. 25
(m) Required Filings ............................................. 25
(n) Risk of Loss ................................................. 25
(o) Refunds ...................................................... 25
(p) Non-Solicitation ............................................. 25
Section 4.2 Agreements of Buyer Pending the Closing ...................... 26
(a) Actions of Buyer ............................................. 26
(b) Confidentiality .............................................. 26
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(c) Press Releases ............................................... 26
(d) Accrediting Bodies and CFP Board ............................. 26
(e) Required Filings ............................................. 26
Section 4.3 Form 8-K ..................................................... 26
Section 4.4 Updated Schedules ............................................ 27
ARTICLE V--CONDITIONS PRECEDENT TO THE CLOSING ..................................... 27
Section 5.1 Conditions Precedent to Buyer's Obligations .................. 27
(a) Representations and Warranties True as of the Closing Date ... 27
(b) Compliance with this Agreement ............................... 27
(c) Closing Certificate .......................................... 27
(d) No Threatened or Pending Litigation .......................... 27
(e) Seller Required Consents ..................................... 28
(f) Accrediting Bodies ........................................... 28
(g) CFP Board Recognition ........................................ 28
(h) Material Adverse Changes ..................................... 28
(i) Lease Agreement .............................................. 28
(j) Opinion of Counsel ........................................... 29
(k) Consulting Agreement ......................................... 29
Section 5.2 Conditions Precedent to Seller's Obligations ................. 29
(a) Representations and Warranties True as of the Closing Date ... 29
(b) Compliance with this Agreement ............................... 29
(c) Closing Certificate .......................................... 29
(d) No Threatened or Pending Litigation .......................... 29
(e) Material Adverse Change ...................................... 29
(f) Lease Agreement .............................................. 29
(g) Buyer Required Consents ...................................... 30
(h) Registration Statement ....................................... 30
(i) Opinion of Counsel ........................................... 30
(j) Form 8-K ..................................................... 30
ARTICLE VI--INDEMNIFICATION ........................................................ 30
Section 6.1 General Indemnification Obligation of Seller ................. 30
Section 6.2 General Indemnification Obligation of Buyer .................. 31
Section 6.3 Indemnification Procedures ................................... 32
Section 6.4 Payment ...................................................... 33
Section 6.5 Arbitration .................................................. 34
Section 6.6 Other Rights and Remedies Not Affected ....................... 34
ARTICLE VII--POST-CLOSING MATTERS .................................................. 34
Section 7.1 Employees and Employee Benefit Plans ......................... 34
Section 7.2 Non-Solicitation ............................................. 37
Section 7.3 Discharge of Business Obligations ............................ 38
Section 7.4 Maintenance of Books and Records ............................. 38
Section 7.5 Payments Received ............................................ 38
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Section 7.6 Use of Names ................................................. 38
Section 7.7 UCC Matters .................................................. 39
Section 7.8 Covenant Not to Compete ...................................... 39
Section 7.9 Discharge of Obligations with Respect to Deferred Tuition Fees 40
Section 7.10 Confidentiality .............................................. 40
Section 7.11 Obligation to Students; Teach-Out Commitment ................. 40
Section 7.12 Transition of the Business ................................... 40
ARTICLE VIII--MISCELLANEOUS ........................................................ 41
Section 8.1 Termination .................................................. 41
Section 8.2 Brokers' and Finders' Fees ................................... 42
Section 8.3 Sales, Transfer and Documentary Taxes, etc ................... 42
Section 8.4 Expenses ..................................................... 42
Section 8.5 Contents of Agreement; Parties in Interest; etc .............. 42
Section 8.6 Assignment and Binding Effect ................................ 42
Section 8.7 Waiver ....................................................... 43
Section 8.8 Notices ...................................................... 43
Section 8.9 Governing Law; Jurisdiction .................................. 44
Section 8.10 No Benefit to Others ......................................... 44
Section 8.11 Headings, Gender and "Person" ................................ 44
Section 8.12 Schedules and Exhibits ....................................... 44
Section 8.13 Severability ................................................. 44
Section 8.14 Counterparts ................................................. 44
Section 8.15 Effective Date ............................................... 45
Section 8.16 Guarantee .................................................... 45
Schedule 1.1(a)--Purchased Assets .................................................. S-1
Schedule 1.1(b)--Excluded Assets ................................................... S-7
Schedule 1.3(c)(ii)--Registration Procedures ....................................... S-9
Schedule 1.3(d)--Allocation of Purchase Price ...................................... S-12
Schedule 1.4(a)--Assumed Liabilities ............................................... S-13
Schedule 1.4(a)(i)--Deferred Tuition Fees .......................................... S-14
Schedule 7.1(a)--Excluded Employees ................................................ S-15
Schedule 7.1(c)--Continuing Employee Base Pay ...................................... S-16
Exhibit A--Form of Assignment and Assumption Agreement and Bill of Sale
Exhibit B--Form of Lease Agreement
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Exhibit C--Assignment of Trademarks, Etc.
Exhibit D--Form of Opinion of Seller's Counsel
Exhibit E--Form of Consulting Agreement
Exhibit F--Form of Opinion of Buyer's Counsel
Disclosure Schedule:
Seller's Schedules
3.1(c) Interests in Other Entities
3.1(d) Validity of Contemplated Transactions, Etc.
3.1(e) No Third Party Options
3.1(k) Existing Conditions
3.1(l) Title to Tangible Purchased Assets
3.1(n) Compliance with Law; Authorizations
3.1(o) Litigation
3.1(p) Contracts and Commitments
3.1(q) Additional Information
3.1(s) Employee Benefit Plans and Arrangements
3.1(t) Intellectual Property
Buyer's Schedules
3.2(c) Validity of Contemplated Transactions, Etc.
3.2(d) Buyer Required Consents
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INDEX OF DEFINED TERMS
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Accrediting Bodies ....................................................... 28
Adjustment Date .......................................................... 7
Affiliate ................................................................ 15
Agreement ................................................................ 1
Apollo Common Stock ...................................................... 2
Apollo SEC Documents ..................................................... 22
Arbitrator ............................................................... 7
Assumed Liabilities ...................................................... 6
Audited Financial Statements ............................................. 11
Authorizations ........................................................... 14
Business ................................................................. 1
Buyer Required Consents .................................................. 22
CFP Board ................................................................ 28
Claim Notice ............................................................. 32
Closing .................................................................. 7
Closing Balance Sheet .................................................... 7
Closing Date ............................................................. 7
Closing Financial Statements ............................................. 6
COBRA .................................................................... 37
Code ..................................................................... 17
Commission ............................................................... 3
Continuing Employees ..................................................... 34
Continuing Students ...................................................... 40
Contracts ................................................................ 15
Control .................................................................. 15
Controlled Group ......................................................... 17
DETC ..................................................................... 28
Employee Benefit Plan .................................................... 17
Environmental Laws ....................................................... 19
ERISA .................................................................... 17
Exchange Act ............................................................. 4
Excluded Activities ...................................................... 39
Excluded Assets .......................................................... 2
Excluded Liabilities ..................................................... 6
Financial Statements ..................................................... 11
Hazardous Substances ..................................................... 20
HSR Act .................................................................. 25
Indemnified Buyer Party .................................................. 30
Indemnified Seller Party ................................................. 31
Intellectual Property .................................................... 19
Inventories .............................................................. S-1
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Lease Agreement .......................................................... 28
Liabilities .............................................................. 6
Lien ..................................................................... 1
Loss ..................................................................... 30
Marked Materials ......................................................... 39
Multiemployer Plan ....................................................... 18
NCA ...................................................................... 28
Notice Period ............................................................ 32
Party .................................................................... 1
PBGC ..................................................................... 18
Permitted Liens .......................................................... 14
Person ................................................................... 44
Plan ..................................................................... 18
Purchase Price ........................................................... 2
Purchased Assets ......................................................... 1
Purchased Intellectual Property .......................................... 18
Release .................................................................. 20
Securities Act ........................................................... 3
Seller ................................................................... 1
Seller Required Consents ................................................. 10
Seller's Documents ....................................................... 10
Share Determination Price ................................................ 2
Subsidiaries ............................................................. 10
Tax Returns .............................................................. 12
Taxes .................................................................... 12
Unaudited Balance Sheet .................................................. 11
Unaudited Balance Sheet Date ............................................. 11
Unaudited Financial Statements ........................................... 11
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of August 21, 1997 by and between National Endowment for Financial
Education(R), a Colorado corporation ("Seller"), Apollo Online, Inc., an Arizona
corporation or its permitted assignee under Section 8.6 ("Buyer"), and Apollo
Group, Inc., an Arizona corporation ("Apollo"). Seller and Buyer are referred to
herein each individually as a "Party" and collectively as the "Parties."
RECITALS
A. Seller is engaged, in part, in the business of offering and
providing distance learning curricula designed for financial services
professionals. Such business operations of Seller have been carried on as a
distinct business through certain unincorporated divisions (collectively, the
"Divisions") under the following names: College for Financial Planning(R);
Institute for Wealth Management(R); Institute for Retirement Planning(R);
American Institute for Retirement Planners, Inc.; and Institute for Tax
Studies(R).
B. Upon the terms and subject to the conditions contained in this
Agreement, Buyer desires to purchase from Seller, and Seller desires to sell,
transfer and assign to Buyer, the assets that are held in connection with,
necessary for, or material to the business and operations of the Divisions (the
"Business") including those that are specifically described in Section 1.1(a).
Upon the terms and subject to the conditions contained in this Agreement, Buyer
has agreed to pay the Purchase Price, as more specifically described in Section
1.3, and to assume certain liabilities related to the Business, as more
specifically described in Section 1.4(a).
AGREEMENT
In consideration of the recitals and of the respective covenants,
representations, warranties and agreements herein contained, and intending to be
legally bound hereby, the Parties hereby agree as follows:
ARTICLE I--PURCHASE AND SALE
SECTION 1.1 Agreement to Sell.
(a) Purchased Assets. Upon and subject to the terms and
conditions of this Agreement, at the Closing and except as otherwise
specifically provided in this Section 1.1, Seller will sell, assign,
and transfer to Buyer all of Seller's right, title and interest in and
to all of the assets comprising the Business, including those set forth
on Schedule 1.1(a) and all goodwill associated therewith (collectively,
the "Purchased Assets"), free and clear of all Liens of any nature
whatsoever except Permitted Liens. For purposes of this Agreement,
"Lien" means any mortgage, pledge, hypothecation, claim, security
interest, encumbrance,
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lease, sublease, license, occupancy agreement, adverse claim or
interest, easement, covenant, encroachment, burden, title defect, title
retention agreement, voting trust agreement, equity, option, lien,
right of first refusal, or charge.
(b) Excluded Assets. The assets and rights of Seller that are
not Purchased Assets are referred to herein as "Excluded Assets." The
Excluded Assets include only the assets and rights specifically set
forth or referred to in Schedule 1.1(b).
SECTION 1.2 Agreement to Purchase. At the Closing, Buyer will purchase
the Purchased Assets from Seller, upon and subject to the terms and conditions
of this Agreement and in reliance on the representations, warranties and
covenants of Seller contained herein, in exchange for the Purchase Price. In
addition, at the Closing Buyer will assume and agree to pay, discharge or
perform, as applicable, the Assumed Liabilities. Except for the Assumed
Liabilities, Buyer will not assume or be responsible for any liabilities or
obligations of the Business or Seller.
SECTION 1.3 The Purchase Price.
(a) Purchase Price. The purchase price for the Purchased
Assets (the "Purchase Price") will be an amount equal to:
(i) $35,000,000, subject to adjustment as provided in
(ii) below. The Purchase Price shall be paid part in cash and
part in the form of shares of Apollo Common Stock (as defined
below) as further set forth in this Section 1.3.
(ii) The Purchase Price shall be adjusted as follows:
If, as reflected on the Closing Balance Sheet, (i) inventory
is less than $500,000, (ii) Accounts Receivable (as defined in
Schedule 1.1(a)) is less than $4,700,000, (iii) prepaids and
other current assets is less than $190,000, or (iv) accounts
payable and other accrued liabilities (with the exception of
the deferred tuition fees listed on Schedule 1.4(a)(i)) is
greater than $1,000,000, then Seller shall pay to Buyer on the
Adjustment Date the aggregate amount of such shortfall, in the
case of (i) through (iii), or excess, in the case of (iv).
(b) Payment of Purchase Price.
(i) On the Closing Date on account of the Purchase
Price, Buyer shall pay to Seller a portion of the Purchase
Price in the form of Apollo's Class A common stock, no par
value, which shall be and which Apollo represents and warrants
shall be duly authorized, validly issued, fully paid and
nonassessable, issued free of any preemptive rights, and free
and clear of all liens or other claims ("Apollo Common
Stock"). The aggregate number of shares (rounded up to the
nearest whole number) of Apollo Common Stock to be issued to
Seller will be equal to $17,500,000 divided by the Share
Determination Price, as defined in the following sentence, for
the fifth business day immediately prior to the Closing Date.
As used herein, the term "Share Determination Price" means,
for any applicable date, the average of the closing bid
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price of shares of Apollo Common Stock made by Smith Barney,
Inc., Alex. Brown & Sons Incorporated, Montgomery Securities
and Merrill Lynch & Co. as reported on the NASDAQ National
Market, or if unavailable, as reported by Bloomberg Financial
Markets on that date.
(ii) On the Closing Date on account of the Purchase
Price, Buyer shall pay to Seller an amount equal to (A)
$35,000,000 less (B) the product obtained by multiplying the
number of shares of Apollo Common Stock calculated in clause
(i) above times the Share Determination Price for the business
day immediately prior to the Closing Date, payable by wire
transfer of immediately available funds to such account as
Seller designates at least two business days before the
Closing Date.
(iii) Seller shall make any payment required to be
paid pursuant to the purchase price adjustments provided for
in this Section 1.3 within seven days after the Adjustment
Date, either by wire transfer of immediately available funds
or by delivery of a certified or bank cashier's check in the
amount of the applicable amount.
(c) Apollo Common Stock.
(i) No fractional shares of Apollo Common Stock will
be issued on account of the purchase under this Agreement.
(ii) Apollo will file as soon as practicable after,
and no later than two business days after, the date on which
Seller's Board of Trustees has approved this Agreement, a
registration statement on Form S-3 under the Securities Act of
1933, as amended (the "Securities Act"), relating solely to
the re-sale by Seller of the Apollo Common Stock and Apollo
will use its best efforts to cause the Securities and Exchange
Commission (the "Commission") to declare such registration
statement effective on the Closing Date; and in addition to
the following provisions of this Section 1.3(c), the
registration procedures set forth in Schedule 1.3(c)(ii) shall
apply to such registration;
(iii) Apollo represents and warrants that there are
no requirements to register or qualify such Apollo Common
Stock under any "blue sky" law, but to the extent any such
requirement does exist, Apollo will use its best efforts to
register or qualify such Apollo Common Stock for sale in such
states as Seller reasonably designates and to keep such
registration or qualification in effect for so long as the
registration statement filed under the Securities Act remains
in effect, provided, however, that Apollo will not be required
in connection therewith or as a condition thereto to (x)
qualify to do business or to file a general consent to service
of process in any such states or jurisdictions, unless Apollo
is already subject to service in such jurisdiction, (y)
subject itself to taxation in any such jurisdiction, or (z)
register as a securities broker or dealer in any such
jurisdiction;
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(iv) Apollo will prepare and file with the Commission
such amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be
necessary to update and keep such registration statement
effective continuously until the later of (A) disposition by
Seller of all of the Apollo Common Stock and (B) one year
after the Closing Date (exclusive of any period during which
any stop order shall be in effect suspending the effectiveness
and any suspension period under subsection (c)(v) of Schedule
1.3(c)(ii)) or, if the exemption under Rule 144 is not then
available, then for a period of three years after the Closing
Date, and to comply with the provisions of the Securities Act
with respect to the sale of all securities covered by such
registration statement; and
(v) All expenses incurred by Apollo or its affiliates
in complying with this Section 1.3(c), including, without
limitation, all registration and filing fees, printing
expenses, and fees and disbursements of counsel for Apollo and
its affiliates and any accountants, underwriters or brokers
will be borne by Apollo. All selling commissions applicable to
sales of Apollo Common Stock by Seller and all reasonable fees
and disbursements of counsel for Seller in connection
therewith will be borne by Seller.
(vi) Apollo will indemnify Seller and its officers,
directors and each Person that controls Seller within the
meaning of applicable federal securities laws (including
without limitation Section 11 and Section 12(2) of the
Securities Act and the rules and regulations promulgated
thereunder and the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations
promulgated thereunder) with respect to the registration
effected in compliance with this Section 1.3(c) against all
claims, losses, damages and liabilities (or actions in respect
thereto) and expenses (including reasonable attorneys' fees)
arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact (including any material
fact with respect to the effect of the transaction under this
Agreement on Apollo) contained in the registration statement
or related prospectus effected pursuant to Section 1.3(c)(ii)
of this Agreement (or, subject to the proviso at the end of
this paragraph of this clause (vi), in any document
incorporated therein by reference), or based on any omission
(or alleged omission) to state therein a material fact
(including any material fact with respect to the effect of the
transaction under this Agreement on Apollo) required to be
stated therein (or, subject to the proviso at the end of this
paragraph of this of clause (vi), in any document incorporated
therein by reference) or necessary to make the statements
therein (or, subject to the proviso at the end of this
paragraph of this clause (vi), in any document incorporated
therein by reference) not misleading, or any violation by
Apollo of any rule or regulation promulgated under any
securities law applicable to Apollo and relating to action or
inaction required of Apollo in connection with any such
registration, and will reimburse Seller for any legal and any
other expenses reasonably incurred in connection with
investigating or defending any such claim loss, damage,
liability or action; provided that Apollo will not be liable
in any case to the extent that any such claim, loss, damage or
liability arises out of or is based
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upon any such untrue statement or omission made therein in
reliance upon and in conformity with written information
furnished to Apollo by or on behalf of Seller specifically for
inclusion therein (or specifically for inclusion in any
document incorporated therein by reference). This indemnity
will be in addition to any liability which Apollo may
otherwise have.
Seller will indemnify Apollo and its officers, directors and
each Person that controls Apollo within the meaning of
applicable federal securities laws (including without
limitation Section 11 and Section 12(2) of the Securities Act
and the rules and regulations promulgated thereunder and the
Exchange Act and the rules and regulations promulgated
thereunder) with respect to the registration effected in
compliance with this Section 1.3(c) against all claims,
losses, damages and liabilities (or actions in respect
thereto) and expenses (including reasonable attorneys' fees)
arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in the
registration statement or related prospectus effected pursuant
to Section 1.3(c)(ii) of this Agreement (or in any document
incorporated therein by reference), or based on any omission
(or alleged omission) to state therein (or in any document
incorporated therein by reference) a material fact required to
be stated therein or necessary to make the statements therein
not misleading, but only to the extent that any such claim,
loss, damage or liability arises out of or is based upon any
such untrue statement or omission made therein in reliance
upon and in conformity with written information furnished to
Apollo by or on behalf of Seller specifically for inclusion
therein (or specifically for inclusion in any document
incorporated therein by reference) and will reimburse Apollo
for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim,
loss, damage, liability or action.
(vii) Apollo represents and warrants and covenants
that (a) the registration statement effected pursuant to
Section 1.3(c)(ii) and any amendment thereto and any
prospectus forming a part thereof and any amendment or
supplement thereto complies or will comply, as applicable,
with the Securities Act and the rules and regulations of the
SEC promulgated thereunder and (b) the registration statement
and any amendment thereto does not or will not, as applicable,
when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact necessary to
make the statements therein (or in any document incorporated
therein by reference) not misleading and (c) any prospectus
forming a part of the registration statement and any amendment
or supplement to such prospectus, does not include an untrue
statement of a material fact or omit to state a material fact
necessary in order make the statements, in the light of the
circumstances under which they were made, not misleading
(including, in each case, any material fact with respect the
effect of the transaction under this Agreement on Apollo);
provided that Apollo will not be liable in any case to the
extent that any such claim, loss, damage or liability arises
out of or is based upon any such untrue statement or omission
made therein in reliance upon and in conformity with written
information furnished to Apollo by or on behalf
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of Seller specifically for inclusion therein (or specifically
for inclusion in any document incorporated therein by
reference).
(d) Allocation of Purchase Price. The Purchase Price and the
Assumed Liabilities will be allocated among the Purchased Assets
acquired hereunder as described on Schedule 1.3(d). Seller and Buyer
hereby covenant and agree that they will not take a position on any
income tax return, before any governmental agency charged with the
collection of any income tax, or in any judicial proceeding that is in
any way inconsistent with the terms of this Section 1.3(d).
SECTION 1.4 Assumption of Liabilities.
(a) At the Closing Buyer will assume and agree to pay,
discharge and/or perform, as appropriate, all of the Liabilities set
forth on Schedule 1.4(a) (collectively, the "Assumed Liabilities").
(b) Except as provided in Section 1.4(a), Buyer will not
assume any Liability of Seller or the Business. All Liabilities of
Seller and/or the Business that are not assumed by Buyer are referred
to herein collectively as the "Excluded Liabilities."
(c) For purposes of this Agreement, "Liabilities" includes
without limitation any direct or indirect indebtedness, guaranty,
endorsement, claim, loss, damage, deficiency, cost, expense, obligation
or responsibility.
SECTION 1.5 Closing Financial Statements.
(a) Not later than 25 days after the Closing Date, Seller will
cause to be prepared and delivered to Buyer the balance sheet of the
Business at the Closing Date and the related statement of income,
statement of cash flows, and notes of the Business for the period from
the Unaudited Balance Sheet Date until the Closing Date (collectively,
the "Closing Financial Statements"), in accordance with generally
accepted accounting principles consistently applied by Seller in
accordance with past practice for the financial statements described in
Section 3.1(f). Such balance sheet will specifically identify all
assets reflected thereon that are not included in the Purchased Assets
and all Liabilities reflected thereon that are not Assumed Liabilities.
(b) Any dispute that may arise between Seller and Buyer as to
the Closing Financial Statements and/or the amount of the post-closing
adjustments pursuant to Section 1.3(a)(ii) will be resolved in the
following manner:
(i) if Buyer disputes the Closing Financial
Statements or the amount of the post-closing adjustments
pursuant to Section 1.3(a)(ii), then within 15 days after
Seller's delivery of the Closing Financial Statements pursuant
to Section 1.5(a), Buyer will notify Seller in writing that
Buyer disputes the Closing Financial Statements and/or the
amount of the post-closing adjustments pursuant to
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Section 1.3(a)(ii) and such notice will specify in reasonable
detail the nature of the dispute;
(ii) during the 15-day period following the date
Seller receives such notice, Seller and Buyer will attempt to
resolve such dispute and to determine the appropriateness of
the Closing Financial Statements and/or the post-closing
adjustments pursuant to Section 1.3(a)(ii); and
(iii) if at the end of the 15-day period specified in
Section 1.5(b)(ii), Seller and Buyer have failed to reach a
written agreement with respect to such dispute, the matter
will be referred to the Denver office of Arthur Andersen LLP,
independent certified public accountants (the "Arbitrator"),
which will act as an arbitrator and will issue its report as
to the Closing Financial Statements or the post-closing
adjustments pursuant to Section 1.3(a)(ii) within 60 days
after such dispute is referred to the Arbitrator. Each Party
will bear all costs and expenses incurred by it in connection
with such arbitration, except that the fees and expenses of
the Arbitrator hereunder will be borne equally by Seller and
Buyer. This provision for arbitration is specifically
enforceable by the Parties and the decision of the Arbitrator
in accordance with the provisions hereof will be final and
binding and there will be no right of appeal therefrom.
(c) References in this Agreement to the "Closing Balance
Sheet" mean the balance sheet of the Business at the Closing Date,
prepared and reviewed as described in this Section 1.5. The "Adjustment
Date" will be the later of (i) the 15th day after Seller's delivery of
the Closing Financial Statements pursuant to Section 1.5(a) and (ii)
the date on which all disputes concerning the Closing Financial
Statements and/or the post-closing adjustments pursuant to Section
1.3(a)(ii) are resolved pursuant to Section 1.5(b).
ARTICLE II--CLOSING; ITEMS TO BE DELIVERED; THIRD PARTY CONSENTS;
CHANGE IN NAME AND FURTHER ASSURANCES
SECTION 2.1 Closing. The closing (the "Closing") of the sale and
purchase of the Purchased Assets will take place (with a pre-closing held the
business day prior to the Closing Date) at the offices of Holme Roberts & Owen
LLP located at 1700 Lincoln Street, Suite 4100, Denver, Colorado, at 8:00 a.m.
local time (or such other time and place as the Parties shall agree), on
September 24, 1997 if all of the conditions under Article V have been satisfied
or waived on or before such date, provided that if the Parties shall agree to an
earlier date and all of the conditions under Article V shall have been satisfied
or waived on such earlier date, then on such earlier date, or, if all of such
conditions have not been satisfied or waived on or before September 24, 1997,
then on the date that is the business day that is three business days after the
satisfaction or waiver of all conditions under Article V, but in no event later
than 60 days after the date of this Agreement. The date on which the Closing
occurs is referred to herein as the "Closing Date."
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SECTION 2.2 Items to Be Delivered at Closing. At the Closing and
subject to the terms and conditions herein contained:
(a) Seller will deliver, or cause to be delivered, to Buyer
the following:
(i) an executed copy of the Assignment and Assumption
Agreement and Bill of Sale substantially in the form attached
hereto as Exhibit A;
(ii) an executed copy of the Lease Agreement
substantially in the form attached hereto as Exhibit B;
(iii) an executed original of the Assignment of
Trademarks, Etc. substantially in the form attached hereto as
Exhibit C; and
(iv) all of the Contracts, bids, quotations,
proposals, instruments, computer programs and software,
related object and source codes, manuals and guidebooks, price
books and price lists, customer and subscriber lists, mailing
lists and databases whether in the form of computer tapes or
otherwise (it being understood that, Seller, upon three days'
prior notice to Apollo at any time and from time to time, and
unless Apollo reasonably objects within such three-day period,
may access a copy of such mailing lists and databases and may
continue to use them free of charge after the Closing for 180
days after the Closing Date in connection with any activities
that do not constitute a breach of Seller's obligations under
Section 7.8), supplier lists, sales records, correspondences,
legal opinions, rulings issued by governmental entities, and
other documents, books, records, papers, files, office
supplies and data belonging to Seller that are part of the
Purchased Assets.
and simultaneously with such delivery, all such steps will be taken as
may be required to put Buyer in actual possession and operating control
of the Purchased Assets.
(b) Buyer will deliver, or cause to be delivered, to Seller
the following:
(i) the cash and Apollo Common Stock in accordance
with Section 1.3(b);
(ii) an executed copy of the Assignment and
Assumption Agreement and Bill of Sale substantially in the
form attached hereto as Exhibit A; and
(iii) an executed copy of the Lease Agreement
substantially in the form attached hereto as Exhibit B.
(c) At or before the Closing, the Parties will also deliver to
each other the agreements, opinions, certificates and other documents
and instruments referred to in Article V.
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SECTION 2.3 Third Party Consents. Notwithstanding anything to the
contrary in this Agreement, this Agreement does not constitute an agreement to
assign or transfer any Authorization, instrument, Contract, or other agreement
or arrangement or any claim, right or benefit arising thereunder or resulting
therefrom if an assignment or transfer or an agreement to make such an
assignment or transfer without the consent of a third party would constitute a
material breach or violation thereof or materially and adversely affect the
rights of Buyer or Seller thereunder; and any transfer or assignment to Buyer by
Seller of any interest under any such Authorization, instrument, Contract, or
other agreement or arrangement that requires the consent of a third party will
be made subject to such consent or approval being obtained. If any Required
Consent is not obtained on or before the Closing Date and Buyer waives such
Required Consent as a condition to its obligation to consummate the transactions
contemplated under this Agreement, then Seller and Buyer will continue to use
all reasonable efforts to obtain any such Required Consent after the Closing
Date until such time as such Required Consent has been obtained or it becomes
reasonably evident that such Required Consent is not reasonably obtainable, and
Seller will cooperate with Buyer in any lawful and economically feasible
arrangement to provide that Buyer will receive Seller's interest in the benefits
under any such Authorization, instrument, Contract, or other agreement or
arrangement, including performance by Seller as agent, if economically feasible,
but Buyer must undertake to pay or satisfy the corresponding liabilities for the
enjoyment of such benefit to the extent Buyer would have been responsible
therefor hereunder if such Required Consent had been obtained. Seller will pay
and discharge, and will indemnify and hold Buyer harmless from and against, any
and all out-of-pocket costs of seeking to obtain or obtaining any such Required
Consent whether before or after the Closing Date, as long as Seller has approved
in advance any such expenditure by Buyer in excess of $5,000.
SECTION 2.4 Further Assurances. From time to time after the Closing, at
Buyer's request Seller will execute, acknowledge and deliver to Buyer such other
instruments of conveyance and transfer and will take such other actions and
execute and deliver such other documents, certifications and further assurances
as Buyer may reasonably require to vest in Buyer, or to put Buyer in possession
of, any of the Purchased Assets, or to enable Buyer to complete, perform or
discharge any of the Assumed Liabilities. Each Party will cooperate with the
other Party and each Party will execute and deliver to the other Party such
other instruments and documents and take such other actions as may be reasonably
requested from time to time by the other Party as necessary to carry out,
evidence and confirm the intended purposes of this Agreement.
ARTICLE III--REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of Seller. Seller hereby
represents and warrants to Buyer as follows:
(a) Corporate Existence. Seller is a non-profit corporation
duly organized, validly existing and in good standing under the laws of
the State of Colorado.
(b) Corporate Power and Authorization; Enforceable
Obligations. Subject to the approval of Seller's Board of Trustees, (i)
Seller has the corporate power and authority to
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execute and deliver this Agreement and to perform its obligations
hereunder, (ii) Seller's execution and delivery of this Agreement, and
its performance of its obligations hereunder, have been duly authorized
by all necessary corporate action, and (iii) this Agreement has been,
and the other agreements, documents and instruments required to be
delivered by Seller in accordance with the provisions hereof
(collectively, "Seller's Documents") will be, duly executed and
delivered on behalf of Seller by duly authorized officers of Seller,
and this Agreement constitutes, and Seller's Documents when executed
and delivered will constitute, the valid and binding obligations of
Seller, enforceable against Seller in accordance with their respective
terms.
(c) Interests in Other Entities. Except as set forth in
Section 3.1(c) of the Disclosure Schedule, no shares of any corporation
or any ownership or other investment interest, either of record,
beneficially or equitably, in any association, partnership, joint
venture or other legal entity are included in the Purchased Assets. Any
entities set forth in Section 3.1(c) of the Disclosure Schedule are
hereinafter referred to collectively as the "Subsidiaries."
(d) Validity of Contemplated Transactions, etc. Except as set
forth in Section 3.1(d) of the Disclosure Schedule, neither Seller's
execution and delivery of this Agreement nor its performance of its
obligations hereunder does or will violate any of the following:
(i) any existing law, ordinance, or governmental rule
or regulation to which Seller is subject,
(ii) any judgment, order, writ, injunction, decree or
award of any court, arbitrator or governmental or regulatory
official, body or authority that is applicable to Seller, and
(iii) the articles of incorporation or bylaws of
Seller.
Except for approvals required by the Federal Trade Commission or other
agencies for purposes of complying with the HSR Act and the rules and
regulations promulgated thereunder and as set forth in Section 3.1(d)
of the Disclosure Schedule, no authorization, approval or consent of,
and no registration or filing with, any governmental or regulatory
official, body or authority or any other Person is required in
connection with the execution, delivery or performance of this
Agreement by Seller. Except as set forth in Section 3.1(d) of the
Disclosure Schedule, neither Seller's execution and delivery of this
Agreement nor its performance of its obligations hereunder does or will
result in the breach of, or require the consent of any other Person
under, or give any party the right to terminate, modify, accelerate or
otherwise change the existing rights or obligations of Seller under,
any Authorization or Contract or other document or oral or written
understanding to which Seller is a party or by which any Purchased
Asset may be bound. For purposes of this Agreement, "Seller Required
Consents" means those consents or approvals designated as "Seller
Required Consents" in Section 3.1(d) of the Disclosure Schedule.
Subject to Section 3.1(z),
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the Seller Required Consents constitute all of the consents or
approvals material to the Business as currently operated.
(e) No Third Party Options. Except as set forth in Section
3.1(e) of the Disclosure Schedule, there are no existing agreements
with, options held by, commitments to, or rights of, any Person to
acquire any of the Purchased Assets or any interest therein, except for
those Contracts entered into in the normal course of the Business
consistent with past practice for the sale of inventory of Seller.
(f) Financial Statements. Seller has delivered to Buyer true
and complete copies of (i) the audited financial statements of Seller
including the Business as at and for the one-year period ended
September 30, 1996, including a balance sheet, statements of income and
net assets and a statement of cash flows, together with a report
thereon by Seller's Accountants (the "Audited Financial Statements");
and (ii) unaudited financial statements of Seller including the
Business as at and for the ten-month period ended July 31, 1997,
including a balance sheet and statements of income and net assets (the
"Unaudited Financial Statements" and, together with the Audited
Financial Statements, the "Financial Statements"). The Audited
Financial Statements are complete and correct in all material respects
and have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved. The
Unaudited Financial Statements are complete and correct in all material
respects and have been prepared in all material respects on a basis
consistent with the Audited Financial Statements, except that the
Unaudited Financial Statements do not contain notes and may be subject
to normal audit adjustments. The Unaudited Balance Sheet specifically
identifies the assets and liabilities that, if the Closing had been
held on the Unaudited Balance Sheet Date, would have been transferred
to or assumed by Buyer in accordance herewith. References in this
Agreement to the "Unaudited Balance Sheet" mean the balance sheet of
the Business as of July 31 1997 referred to above; and references in
this Agreement to the "Unaudited Balance Sheet Date" mean July 31,
1997.
(g) Accounts Receivable and Notes Receivable. The accounts
receivable of Seller arising from the Business as set forth on the
Unaudited Balance Sheet or arising since the date thereof (i) are valid
and genuine; (ii) have arisen solely out of bona fide sales and
deliveries of goods, performance of services and other transactions in
the ordinary course of the Business consistent with past practice;
(iii) are not subject to valid defenses, set-offs or counterclaims; and
(iv) are collectible within 120 days after billing at the full recorded
amount thereof less, in the case of accounts receivable appearing on
the Unaudited Balance Sheet, the recorded allowance for collection
losses on the Unaudited Balance Sheet. The notes receivable of Seller
arising from the Business as set forth on the Unaudited Balance Sheet
or arising since the date thereof (i) are valid and genuine; (ii) have
arisen solely out of bona fide sales and deliveries of goods,
performance of services and other transactions in the ordinary course
of the Business consistent with past practice; (iii) are not subject to
valid defenses, set-offs or counterclaims; and (iv) are collectible
according to the terms thereof at the recorded amount thereof. The
allowance for collection losses on the Unaudited Balance
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Sheet has been determined in accordance with generally accepted
accounting principles consistent with past practice.
(h) Inventory. All inventory of Seller used in the conduct of
the Business and reflected on the Unaudited Balance Sheet or acquired
since the date thereof (i) was acquired and has been maintained in the
ordinary course of the Business and (ii) is valued at reasonable
amounts based on the ordinary course of the Business during the past
six months. Seller is not under any Liability with respect to the
return of inventory in the possession of wholesalers, retailers or
other customers.
(i) Tax and Other Returns and Reports. All federal, state,
local and foreign tax returns, reports, statements and other similar
filings required to be filed by Seller with respect to the Business
(collectively, the "Tax Returns") before the date hereof with respect
to any federal, state, local or foreign taxes, assessments, interest,
penalties, deficiencies, fees and other governmental charges or
impositions, (including without limitation all income tax, unemployment
compensation, social security, payroll, sales and use, excise,
privilege, property, ad valorem, franchise, license, school and any
other tax or similar governmental charge or imposition under laws of
the United States or any state or municipal or political subdivision
thereof or any foreign country or political subdivision thereof)
(collectively, the "Taxes") have been filed with the appropriate
governmental agencies in all jurisdictions in which such Tax Returns
are required to be filed, and all such Tax Returns properly reflect the
liabilities of Seller with respect to the Business for Taxes for the
periods, property or events covered thereby. All Taxes with respect to
the Business, including without limitation those that are called for by
the Tax Returns, or heretofore or hereafter claimed to be due by any
taxing authority from Seller, have been properly accrued or paid. The
accruals for Taxes contained in the Unaudited Balance Sheet are
adequate to cover the tax liabilities of Seller with respect to the
Business as of that date and nothing has occurred after that date to
make any of such accruals inadequate. Seller has not received any
notice of assessment or proposed assessment in connection with any Tax
Returns and there are no pending tax examinations of or tax claims
asserted against Seller or any of the Purchased Assets. Seller has not
extended, or waived the application of, any statute of limitations of
any jurisdiction regarding the assessment or collection of any Taxes.
There are no tax Liens (other than Liens for current taxes not yet due
and payable) on any of the Purchased Assets. Seller has made all
deposits required by law to be made with respect to employees'
withholding and other employment taxes, including without limitation
the portion of such deposits relating to taxes imposed upon Seller.
(j) Books of Account. The books, records and accounts of
Seller maintained with respect to the Business accurately and fairly,
in all material respects, reflect the transactions and the assets and
liabilities of Seller with respect to the Business. Seller has not
engaged in any transaction with respect to the Business, maintained any
bank account for the Business or used any of the funds of Seller in the
conduct of the Business except for transactions, bank accounts and
funds that have been and are reflected in the normally maintained books
and records of the Business.
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(k) Existing Conditions. Except as set forth in Section 3.1(k)
of the Disclosure Schedule and except as may otherwise expressly be
permitted by this Agreement, since the Unaudited Balance Sheet Date,
Seller with respect to the Business has not:
(i) incurred any Liabilities in excess of $10,000,
other than Liabilities incurred in the ordinary course of the
Business consistent with past practice, or discharged or
satisfied any Lien in excess of $10,000, or paid any
Liabilities in excess of $10,000, other than in the ordinary
course of the Business consistent with past practice, or
failed to pay or discharge when due any Liabilities with
respect to which the failure to pay or discharge has caused or
will cause damage to, or risk of loss of, any Purchased Asset
with a value in excess of $10,000;
(ii) sold, assigned or transferred any assets with a
value in excess of $10,000 that would have been included in
the Purchased Assets if the Closing had been held on the
Unaudited Balance Sheet Date or on any date since then, except
for the sale of such assets in the ordinary course of the
Business consistent with past practice;
(iii) mortgaged, pledged or subjected any of the
Purchased Assets to any Lien except for Permitted Liens;
(iv) made or suffered any amendment or termination of
any Contract involving in excess of $10,000 to which it is a
party or by which it is bound, or canceled, modified or waived
any debts or claims in excess of $10,000 held by it, or waived
any rights of substantial value whether or not in the ordinary
course of the Business;
(v) suffered any damage, destruction or loss in
excess of $10,000, whether or not covered by insurance,
adversely affecting the Purchased Assets or the Business or
suffered any repeated, recurring or prolonged shortage,
cessation or interruption of supplies or utility or other
services required to conduct the Business;
(vi) suffered any material adverse change in the
Purchased Assets or the business, operations or condition
(financial or otherwise) of the Business;
(vii) received notice or had knowledge of any actual
or threatened labor troubles, strike or other occurrence,
event or condition of any similar character with respect to
Seller's employees that has had or will have an adverse effect
on the Purchased Assets or the Business;
(viii) made commitments or agreements for capital
expenditures or capital additions or betterments exceeding in
the aggregate $10,000, except such as may be involved in
ordinary repair, maintenance or replacement of any of the
Purchased Assets;
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(ix) increased the salaries or other compensation of,
or made any advance (excluding advances for ordinary and
necessary business expenses) or loan to, any of its employees
or made any increase in, or any addition to, other benefits to
which any of its employees may be entitled;
(x) changed any of the accounting principles followed
by it or the methods of applying such principles;
(xi) entered into any transaction other than in the
ordinary course of the Business consistent with past practice;
or
(xii) received notice or become aware of any
condition which would result in student cancellations and/or
student note defaults to increase above a level substantially
consistent with the past experience of the Business in the
ordinary course.
(l) Title to Tangible Purchased Assets. Seller has good and
valid title to all of its tangible assets that are included in the
Purchased Assets, including without limitation all assets reflected in
the Unaudited Balance Sheet (except for inventory sold since the date
thereof in the ordinary course of the Business consistent with past
practice) free and clear of all Liens except for (i) Liens for Taxes
not yet due and payable or which are being contested in good faith and
by appropriate proceedings and (ii) Liens disclosed in Section 3.1(l)
of the Disclosure Schedule (such Liens described in clauses (i) and
(ii), the "Permitted Liens").
(m) Condition of Tangible Purchased Assets. All tangible
assets that are included in the Purchased Assets are in good operating
condition and repair, subject to normal wear and maintenance, are
usable in the ordinary course of the Business and substantially conform
to all applicable laws, ordinances, codes, rules and regulations, and
Authorizations relating to their manufacture, use and operation.
(n) Compliance with Law; Authorizations. Seller is not in
violation of any law, ordinance, or governmental or regulatory rule or
regulation, whether federal, state, local or foreign, to which the
Business or the Purchased Assets are subject. Seller owns, holds, or
lawfully uses in the operation of the Business all franchises,
licenses, permits, easements, rights, applications, filings,
registrations and other authorizations (collectively, "Authorizations")
that are necessary for the conduct of the Business as now conducted or
for the ownership and use of the Purchased Assets, free and clear of
all Liens other than Permitted Liens; it being understood that the term
"Authorizations" does not include any rights, applications, filings,
registrations and other authorizations relating to any Accrediting Body
or the CFP Board. All Authorizations are listed and described in
Section 3.1(n) of the Disclosure Schedule. Seller is not in default,
nor has Seller received any notice of any claim of default, with
respect to any Authorization. No Authorization will be adversely
affected by consummation of the transactions contemplated hereby. No
director, officer, employee or former employee of Seller or any
Affiliate of Seller, or any other Person, owns or has any interest in
any Authorization that Seller owns, holds or uses in the operation of
the Business
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as now conducted. For purposes of this Agreement, "Affiliate" of any
Person means any Person that directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control
with, the first Person. "Control" (including the terms "controlled by"
and "under common control with") means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of
voting securities, by contract or credit arrangement, as trustee or
executor, or otherwise.
(o) Litigation. Except as set forth in Section 3.1(o) of the
Disclosure Schedule, no litigation, including any arbitration,
investigation or other proceeding of or before any court, arbitrator or
governmental or regulatory official, body or authority is pending or,
to the best knowledge of Seller, threatened against Seller with respect
to the Business, the Purchased Assets or the transactions contemplated
by this Agreement. Seller is not a party to or subject to the
provisions of any judgment, order, writ, injunction, decree or award of
any court, arbitrator or governmental or regulatory official, body or
authority that will adversely affect the Business, the Purchased Assets
or the transactions contemplated hereby.
(p) Contracts and Commitments.
(i) Section 3.1(p) of the Disclosure Schedule
contains a list, which is correct and complete, of all
agreements, contracts, commitments and other instruments and
arrangements (whether written or oral) of the types described
below (y) by which any Purchased Asset is bound or affected or
(z) to which Seller is a party or by which it is bound in
connection with the Business or the Purchased Assets
(collectively, the "Contracts"):
(A) except with respect to employees who are
not Continuing Employees, employment, consulting,
agency, collective bargaining or other similar
contracts, agreements, and other instruments and
arrangements relating to or for the benefit of
current, future or former employees, officers,
directors, sales representatives, distributors,
dealers, agents, independent contractors or
consultants;
(B) orders and other contracts for the
purchase or sale of materials, supplies, products or
services, each of which involves aggregate payments
in excess of $20,000;
(C) contracts with respect to which the
aggregate amount that could reasonably be expected to
be paid or received by Seller with respect to the
Business thereunder in the future exceeds $20,000 per
annum or $40,000 in the aggregate;
(D) sales agency, manufacturer's
representative, marketing or distributorship
agreements;
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(E) contracts, agreements or arrangements
with respect to the representation of the Business in
foreign countries;
(F) except with respect to any person who is
not a Continuing Employee, contracts, agreements or
commitments with any employee, director, officer or
Affiliate of Seller;
(G) leases under which Seller is either
lessor or lessee;
(H) loan agreements, indentures, letters of
credit, mortgages, security agreements, pledge
agreements, deeds of trust, bonds, notes, guarantees,
and other agreements and instruments relating to the
borrowing of money or obtaining of or extension of
credit;
(I) licenses, licensing arrangements and
other contracts providing in whole or in part for the
use of, or limiting the use of, any Intellectual
Property; or
(J) any other contracts, agreements or
commitments that are material to the Business.
(ii) All Contracts are in full force and effect and
enforceable against each party thereto. There does not exist
under any Contract any event of default or event or condition
that, after notice or lapse of time or both, would constitute
a violation, breach or event of default thereunder on the part
of Seller or, to the best knowledge of Seller, any other party
thereto except as set forth in Section 3.1(p) of the
Disclosure Schedule.
(q) Additional Information. Section 3.1(q) of the Disclosure
Schedule contains lists and/or summary descriptions, which are correct
and complete, of the following:
(i) all inventory, equipment, furniture and fixtures
of Seller included in the Purchased Assets as of the Unaudited
Balance Sheet Date, specifying such items as owned or leased;
(ii) the name and address of every bank and other
financial institution with which Seller maintains any account,
lockbox or safe deposit box for the Business, and the account
numbers and names of Persons having signing authority or other
access thereto; and
(iii) the names and titles of all employees of Seller
engaged in the conduct of the Business.
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(r) Labor Matters.
(i) Seller has not suffered any strike, slowdown,
picketing or work stoppage by any union or other group of
employees affecting the Business.
(ii) With respect to the Business, Seller is not a
party to any collective bargaining agreement, no such
agreement determines the terms and conditions of employment of
any employee of Seller, no collective bargaining agent has
been certified as a representative of any of the employees of
Seller, and no representation campaign or election is now in
progress with respect to any of the employees of Seller.
(s) Employee Benefit Plans and Arrangements.
(i) Section 3.1(s) of the Disclosure Schedule sets
forth a complete and correct list of all "employee benefit
plans" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
bonus, retirement, pension, profit-sharing, thrift, incentive,
employment, severance, deferred or other compensation or
welfare benefit plans, programs, agreements or arrangements
of, or applicable to employees of, Seller that are maintained
on the Closing Date and that cover any Continuing Employees or
that have been maintained, administered, or contributed to by
Seller or any member of a controlled or affiliated group
within the meaning of Section 414(b), (c), (m) or (o) of the
Code (a "Controlled Group") of which Seller is a member since
January 1, 1992 (each, an "Employee Benefit Plan"). Seller has
furnished Buyer with a true and complete copy of the
descriptions of the Employee Benefit Plans furnished to
employees.
(ii) Seller and each member of a Controlled Group of
which Seller is a member that is participating or has
participated in an Employee Benefit Plan, and each Employee
Benefit Plan, is in material compliance with all requirements
of any and all applicable statutes, orders, and governmental
rules and regulations as in effect from time to time,
including without limitation ERISA, the Internal Revenue Code
of 1986, as amended (the "Code"), and judicial interpretations
thereof.
(iii) Neither Seller nor any member of a Controlled
Group has contributed to or incurred any liability, whether
primary or secondary, to a multiemployer plan (as defined in
Section 3(37) of ERISA.
(iv) Seller, either directly or indirectly as a
member of a Controlled Group, does not have any liability that
remains unsatisfied as of the date hereof (A) for the
termination of any single employer plan under Sections 4062 or
4064 of ERISA or any multiple employer plan under Section 4063
of ERISA, (B) for any interest payments under Section 302(e)
of ERISA or Section 412(m) of the Code, (C) for any excise tax
imposed by Sections 4971 or 4975 of the Code, (D) for any
minimum funding contributions under Section 302(c)(11) of
ERISA or Section 412(c)(11) of
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the Code, (E) for any accumulated funding deficiency within
the meaning of Section 412(a) of the Code, whether or not
waived, or (F) to the Internal Revenue Service, the Department
of Labor, the Pension Benefit Guaranty Corporation (the
"PBGC"), or any employee benefit plan or plan within the
meaning of Section 3(3) of ERISA (each, a "Plan") or any
multiemployer plan as defined in Section 3(37) of ERISA (each,
a "Multiemployer Plan") under Subtitles D or E of Title IV of
ERISA or under Subchapter D of Chapter I of Subtitle A of the
Code.
(v) Seller and the members of its Controlled Group
have complied in all material respects with the notice and
continuation coverage requirements of Section 4980B of the
Code and Sections 601 through 608 of ERISA.
(t) Intellectual Property.
(i) Section 3.1(t) of the Disclosure Schedule, which
is correct and complete, sets forth all Intellectual Property
that (A) Seller owns and/or has the right to use pursuant to
license, sublicense, agreement or permission, and (B) is
included in the Purchased Assets (the "Purchased Intellectual
Property"). The Purchased Intellectual Property is free from
any Liens (other than Permitted Liens) and, except as noted in
the Agreements identified in Section VIII of Section 3.1(t) of
the Disclosure Schedule, free from any requirement of any
royalty payments, license fees, charges or other payments,
conditions or restrictions. The Purchased Intellectual
Property comprises all of the Intellectual Property necessary
for Buyer to conduct and operate the Business as now conducted
by Seller, subject to the provisions of Section 3.1(z).
(ii) Immediately after Closing, Buyer's ownership
and/or right to use the Purchased Intellectual Property (A)
will be the same as Seller's immediately before the Closing
and (B) will be free from any Liens (other than Permitted
Liens) and, except as noted in the Agreements identified in
Section VIII of Section 3.1(t) of the Disclosure Schedule,
free from any requirement of any royalty payments, license
fees, charges or other payments, conditions or restrictions.
(iii) Section 3.1(t) of the Disclosure Schedule sets
forth all agreements (A) pursuant to which Seller has licensed
Purchased Intellectual Property, or has permitted any Person
to use any of the Purchased Intellectual Property, and (B)
pursuant to which Seller has had Purchased Intellectual
Property licensed to it, or has otherwise been permitted to
use Purchased Intellectual Property. All of such agreements
(X) are in full force and effect in accordance with their
terms and no default exists thereunder by Seller, or to the
knowledge of Seller, by any other party thereto, (Y) are free
and clear of all Liens (other than Permitted Liens), and (Z)
except as may be provided in Contracts specifically identified
in Section 3.1(d) of the Disclosure Schedule as requiring
consents for assignment, do not contain any change-in-control
provisions or other terms or conditions that will become
applicable or inapplicable as a result of the Closing.
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(iv) Except as set forth in Section 3.1(t) of the
Disclosure Schedule, no claim or demand has been made, nor is
there any proceeding that is pending, or to Seller's
knowledge, threatened, that (A) challenges Seller's rights in
the Purchased Intellectual Property, (B) asserts that any of
the Purchased Intellectual Property infringes or otherwise
conflicts with a Person's alleged Intellectual Property, or
(C) claims that any default exists under any agreement listed
in Section 3.1(t) of the Disclosure Schedule. None of the
Purchased Intellectual Property is subject to any outstanding
order, ruling, decree, judgment or stipulation by or with any
court, arbitrator, or administrative agency, or has been the
subject of any litigation within the five years prior to the
Closing Date, whether or not resolved in favor of Seller.
(v) For purposes of this Agreement, "Intellectual
Property" means any and all (A) trademarks, service marks,
trade names, logos, business and product names, slogans, and
registrations and applications for registration thereof; (B)
works in which copyright may be claimed (including software),
and registrations and applications for registration thereof;
(C) inventions, processes, designs, formulae, trade secrets,
know-how, confidential and technical information, product
specifications and confidential business information
(including all of the foregoing as they relate to software);
(D) intellectual property rights similar to any of the
foregoing; and (E) copies and tangible embodiments thereof (in
whatever form or medium, including electronic media).
(u) Environmental Matters.
(i) Seller has complied and is in compliance in all
material respects with all applicable Environmental Laws
pertaining to the Business and its operation or any of the
Purchased Assets and their use and ownership. Seller has not
received any notice of any alleged violation by Seller of any
applicable Environmental Law relating to any of the Purchased
Assets or the Business.
(ii) For purposes of this Agreement:
(A) "Environmental Laws" means all
applicable laws relating to the protection of the
environment, to human health and safety, or to any
emission, discharge, generation, processing, storage,
holding, abatement, existence, Release, threatened
Release or transportation of any Hazardous
Substances, including without limitation (x) the
Comprehensive Environmental Response, Compensation
and Liability Act, the Resource Conservation and
Recovery Act, and the Occupational Safety and Health
Act, (y) all other requirements pertaining to
reporting, licensing, permitting, investigation or
remediation of emissions, discharges, Releases or
threatened Releases of Hazardous Substances into the
air, surface water, groundwater or land, or relating
to the manufacture, processing, distribution, use,
sale, treatment, receipt, storage, disposal,
transport or handling of Hazardous
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Substances, and (z) all other requirements pertaining
to the protection of the health and safety of
employees or the public.
(B) "Hazardous Substances" means any
substance that: (x) is or contains asbestos, urea
formaldehyde foam insulation, polychlorinated
biphenyls, petroleum or petroleum-derived substances
or wastes, radon gas or related materials (y)
requires investigation, removal or remediation under
any Environmental Law, or is defined, listed or
identified as a "hazardous waste" or "hazardous
substance" thereunder, or (z) is toxic, explosive,
corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous and
is regulated by any governmental authority or
Environmental Law.
(C) "Release" means any releasing,
disposing, discharging, injecting, spilling, leaking,
leaching, pumping, dumping, emitting, escaping,
emptying, seeping, dispersal, migration,
transporting, placing and the like, including without
limitation, the moving of any materials through, into
or upon, any land, soil, surface water, ground water
or air, or otherwise entering into the environment.
(v) Availability of Documents. Seller has made available to
Buyer copies of all documents and other instruments listed in the
Disclosure Schedule. Such copies are true and complete and include all
amendments, supplements and modifications thereto or waivers currently
in effect thereunder.
(w) Purchased Assets. Subject to the provisions of Section
3.1(z), the Purchased Assets include all rights, assets and properties
necessary to the conduct of the Business by Buyer in the manner it is
presently conducted by Seller and no Excluded Assets, either
individually or in the aggregate, are material to the Business.
(x) Deferred Tuition Fees. All obligations and liabilities of
Seller relating to deferred tuition fees and deferred income are
attached as Schedule 1.4(a)(i).
(y) Business in the Ordinary Course. Since the Unaudited
Balance Sheet Date, Seller has operated the Business solely in the
ordinary course consistent with past practice.
(z) Accreditation and CFP Board Recognition. (i) Seller and/or
the Business has the accreditations of NCA and DETC as follows: NCA has
accredited the College for Financial Planning and DETC has accredited
the Masters Program and (ii) the Certified Financial Planner(R)
Professional Education Program that is included in the Purchased Assets
is recognized by the CFP Board as a "Registered Program." Seller is not
in violation of the terms of such accreditations of NCA and DETC with
respect to the College for Financial Planning and the Masters Program
or such recognition by the CFP Board with respect to the Certified
Financial Planner(R) Professional Education Program, and Seller has not
received notice of, or notice of any action (other than any actions
contemplated by this Agreement)
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that would reasonably be expected to result in, any suspension or
termination of same; provided it is understood that Seller makes no
representation in this Agreement as to (1) the ability to obtain the
CFP Board's consent to Seller's assignment to Buyer of the existing
License Agreement between Seller and the CFP Board (however, Seller
represents that such failure to obtain such consent will not have a
material adverse effect on the Business) or (2) the effect, if any, on
the accreditations of NCA and DETC and the recognition by the CFP Board
that consummation of the transactions contemplated by this Agreement
may have. The accreditations of NCA and DETC and the recognition by the
CFP Board set forth above comprise all of the rights of their nature
necessary for Seller to conduct and operate the Business as currently
conducted by Seller.
(aa) Private Placement. Seller, Buyer and Apollo understand
that the Apollo Common Stock is being issued by Apollo to Seller under
this Agreement in reliance upon the exemption pursuant to Section 4(2)
of the Securities Act, and that Seller is not receiving such Apollo
Common Stock with a view to or in connection with the distribution
thereof. Seller represents that it has no present intention of
reselling the Apollo Common Stock other than under the registration
statement effected by Apollo pursuant to Section 1.3(c)(ii) of this
Agreement or otherwise in compliance with the Securities Act or an
exemption thereunder.
SECTION 3.2 Representations and Warranties of Buyer and Apollo. Buyer
and Apollo each represents and warrants to Seller as follows:
(a) Corporate Existence. Buyer and Apollo are corporations
duly organized, validly existing and in good standing under the laws of
their respective jurisdictions of incorporation.
(b) Corporate Power and Authorization. Buyer and Apollo each
have the corporate power and authority to execute and deliver this
Agreement and to perform their respective obligations hereunder. Each
of Buyer's and Apollo's execution and delivery of this Agreement, and
the performance of their respective obligations hereunder, have been
duly authorized by all necessary corporate and shareholder action. This
Agreement has been, and the other agreements, documents and instruments
required to be delivered by Buyer and/or Apollo in accordance with the
provisions hereof ("Buyer's Documents") will be, duly executed and
delivered on behalf of Buyer and/or Apollo, as applicable, by duly
authorized officers of Buyer and/or Apollo, as applicable, and this
Agreement constitutes, and Buyer's Documents when executed and
delivered will constitute, the valid and binding obligations of Buyer
and/or Apollo, as applicable, enforceable against Buyer and/or Apollo,
as applicable, in accordance with their respective terms.
(c) Validity of Contemplated Transactions, etc. Except as set
forth in Section 3.2(c) of the Disclosure Schedule, neither Buyer's nor
Apollo's execution and delivery of this Agreement nor the performance
of their respective obligations hereunder does or will violate any of
the following:
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(i) any existing law, ordinance, or governmental rule
or regulation to which Buyer or Apollo is subject,
(ii) any judgment, order, writ, injunction, decree or
award of any court, arbitrator or governmental or regulatory
official, body or authority that is applicable to Buyer or
Apollo, and
(iii) the articles of incorporation or bylaws of
Buyer or Apollo.
(d) Buyer Required Consents. Except for approvals required by
the Federal Trade Commission or other agencies for purposes of
complying with the HSR Act and the rules and regulations promulgated
thereunder, the filing with the Commission of the registration
statement described in Section 1.3(c)(ii), and as set forth in Section
3.2(d) of the Disclosure Schedule, no authorization, approval or
consent of, and no registration or filing with, any governmental or
regulatory official, body or authority or any other Person is required
in connection with the execution, delivery or performance of this
Agreement by Buyer or Apollo. Except as set forth in Section 3.2(d) of
the Disclosure Schedule, neither Buyer's nor Apollo's execution and
delivery of this Agreement nor the performance of their respective
obligations hereunder does or will result in the breach of, or require
the consent of any other Person under, or give any party the right to
terminate, modify, accelerate or otherwise change the existing rights
of Apollo or Buyer under, any contract or other document or oral or
written understanding to which Buyer or Apollo is a party. For purposes
of this Agreement, "Buyer Required Consents" means those consents or
approvals designated as "Buyer Required Consents" in Section 3.2(d) of
the Disclosure Schedule.
(e) No Litigation. No litigation, including any arbitration,
investigation or other proceeding of or before any court, arbitrator or
governmental or regulatory official, body or authority is pending or,
to the best knowledge of Buyer or Apollo, threatened against Buyer or
Apollo or that relates to the transactions contemplated by this
Agreement, nor does either Buyer or Apollo know of any reasonably
likely basis for any such litigation, arbitration, investigation or
proceeding, the result of which could adversely affect the transactions
contemplated hereby. Neither Buyer nor Apollo is a party to or subject
to the provisions of any judgment, order, writ, injunction, decree or
award of any court, arbitrator or governmental or regulatory official,
body or authority that may adversely affect the transactions
contemplated hereby.
(f) Sufficient Funds. On the Closing Date, Buyer will have
sufficient funds available to pay the Purchase Price.
(g) SEC Reports and Financial Statements. Apollo has filed
with the SEC, and has heretofore made available to Seller true and
complete copies of, all forms, reports, schedules, statements and other
documents required to be filed by it and its subsidiaries since January
1, 1995 under the Exchange Act or the Securities Act (as such documents
have been amended since the time of their filing, collectively, the
"Apollo SEC Documents"). As of their respective dates or, if amended,
as of the date of the last such amendment, the Apollo
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SEC Documents, including, without limitation, any financial statements
or schedules included therein (a) did not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading
and (b) complied with the applicable requirements of the Exchange Act
and the Securities Act, as the case may be, and the applicable rules
and regulations of the SEC thereunder. Each of the consolidated
financial statements included in the Apollo SEC Documents have been
prepared from, and are in accordance with, the books and records of
Apollo and/or its consolidated subsidiaries, comply with applicable
accounting requirements and with the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated in the notes
thereto) and fairly present in all material respects the consolidated
financial position and the consolidated results of operations and cash
flows (and changes in financial position, if any) of Apollo and its
consolidated subsidiaries as at the dates thereof or for the periods
presented therein.
(h) Existing Conditions. Since the date of the last Apollo SEC
Document filed prior to the date of this Agreement and heretofore
provided to Seller, (i) Apollo and its subsidiaries have conducted
their respective businesses in the ordinary course of business
consistent with past practice and (ii) there has been no material
adverse change in the assets, business, operations or condition
(financial or otherwise) of Apollo and its subsidiaries.
SECTION 3.3 Survival of Representations and Warranties.
(a) Except as set forth in Section 3.3(b), the representations
and warranties contained in this Agreement will survive for eighteen
months after the Closing Date.
(b) The representations and warranties of Seller contained in
Section 3.1(i) (Tax and Other Returns and Reports) will survive as to
any Tax covered by such representations and warranties for so long as
any statute of limitations for such Tax remains open, in whole or in
part, including without limitation by reason of waiver of such statute
of limitations.
ARTICLE IV--AGREEMENTS PENDING CLOSING
SECTION 4.1 Agreements of Seller Pending the Closing. Seller covenants
and agrees that from the date hereof until the Closing and except as otherwise
agreed to in writing by Buyer:
(a) Business in the Ordinary Course. The Business will be
conducted solely in the ordinary course consistent with past practice.
(b) Existing Condition. Seller will not cause or knowingly
permit to occur any of the events or occurrences described in Section
3.1(k).
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(c) Maintenance of Physical Purchased Assets. Seller will
continue to maintain and service the tangible Purchased Assets in a
manner consistent with past practice.
(d) Employees and Business Relations. Seller will use its best
efforts to keep available the services of the present employees and
agents of the Business and to maintain the relations and goodwill with
all Accrediting Bodies, the CFP Board, all students, suppliers,
customers, distributors and any others having business relations with
the Business.
(e) Maintenance of Insurance. Seller will maintain without
material change all insurance policies relating to the Business, it
being understood that Seller's obligation to maintain such insurance
will terminate as of the Closing Date.
(f) Compliance with Laws, etc. Seller will comply with all
laws, ordinances, rules, regulations and orders applicable to the
Purchased Assets or the Business.
(g) Conduct of Business. Seller will not knowingly take any
action that would result in a breach of any of its representations and
warranties hereunder and Seller will use reasonable efforts to ensure
that on the Closing Date the representations and warranties of Seller
contained in this Agreement will be true, except as specifically
contemplated by this Article IV, as though such representations and
warranties were made on and as of such date. Furthermore, Seller will
cooperate with Buyer and use its best efforts to cause all of the
conditions to the obligations of Buyer and Seller under this Agreement
to be satisfied as soon as possible on or before the Closing Date.
(h) Sale of Purchased Assets; Negotiations. Effective from and
after execution by Seller of this Agreement, Seller will not directly
or indirectly sell or encumber any of the Purchased Assets, other than
in the ordinary course of business consistent with past practice, or
initiate or participate in any discussions or negotiations or enter
into any agreement to do any of the foregoing and Seller will not
provide any confidential Information concerning the Business or the
Purchased Assets to any third party other than in the ordinary course
of business, it being understood that prior to the date hereof Seller
has provided confidential Information concerning the Business and the
Purchased Assets to certain third parties in connection with the
proposed sale thereof.
(i) Access. As long as Buyer gives reasonable notice to the
President of Seller or the President's designee, Seller will allow
Buyer's officers, employees, counsel, accountants and other
representatives reasonable access to, and the right to inspect, during
normal business hours, all of the properties, assets, records,
Contracts and other documents relating to the Purchased Assets and/or
the Business and will permit them to consult with Seller's officers,
employees, accountants, counsel and agents for the purpose of making
such investigation of the Business as Buyer desires to make in
connection with its reasonable verification of the representations and
warranties of Seller contained herein or its reasonable preparation for
the transfer of the Business and the Purchased Assets at the Closing,
but such investigation will not unreasonably interfere with Seller's
business operations. Furthermore,
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Seller will permit Buyer and its agents to make such physical
inventories and inspections of the Purchased Assets as Buyer may from
time to time reasonably request.
(j) Press Releases. Except as required by applicable law,
Seller will not give notice to third parties or otherwise make any
public statement or release concerning this Agreement or the
transactions contemplated hereby except for such written Information as
has been approved in writing as to form and content by Buyer, which
approval may not be unreasonably withheld.
(k) Confidentiality. Seller will continue to fulfill its
obligations under that certain confidentiality agreement, dated as of
May 8, 1997, by and between Buyer and Seller, to the extent those
obligations do not conflict with this Agreement. If any of such
obligations do conflict with this Agreement, then this Agreement will
govern.
(l) Accrediting Bodies and CFP Board. Seller will reasonably
cooperate with and assist Buyer in obtaining reasonable assurance that
(i) Buyer, the Business and/or the Purchased Assets will be accredited
by at least one Accrediting Body immediately after the Closing to the
same extent Seller, the Business and/or the Purchased Assets are
accredited as of the date hereof and (ii) immediately after the Closing
the Certified Financial Planner(R) Professional Education Program that
is included in the Purchased Assets will continue to be recognized by
the CFP Board as a "Registered Program."
(m) Required Filings. Seller has filed or will, as promptly as
practicable, file or supply, or cause to be filed or supplied, all
applications, notifications and Information required to be filed or
supplied by it pursuant to applicable law in connection with this
Agreement, the sale and transfer of the Purchased Assets pursuant
hereto and the consummation of the other transactions contemplated
thereby, including but not limited to filings pursuant to the
Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as amended (the
"HSR Act").
(n) Risk of Loss. Until the Closing Date, the risk of loss or
damage to the Purchased Assets and all liability of Seller or the
Business to third persons will be borne by Seller.
(o) Refunds. Seller will pay in a timely fashion and in a
manner consistent with past practice in the ordinary course all tuition
refunds that are requested by students prior to the Closing Date.
(p) Non-Solicitation. Seller will not solicit any Person who
is then an employee of Seller to remain an employee of Seller on and
after Closing except the Excluded Employees and Seller will not solicit
any Person who is then an employee of Buyer to become an employee of
Seller on and after Closing.
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SECTION 4.2 Agreements of Buyer Pending the Closing. Buyer covenants
and agrees that from the date hereof until the Closing and except as otherwise
agreed to in writing by Seller:
(a) Actions of Buyer. Buyer will not knowingly take any action
that would result in a breach of any of its representations and
warranties hereunder and Buyer will use reasonable efforts to ensure
that on the Closing Date the representations and warranties of Seller
contained in this Agreement will be true, except as specifically
contemplated by this Article IV, as though such representations and
warranties were made on and as of such date. Furthermore, Buyer will
cooperate with Seller and use reasonable efforts to cause all of the
conditions to the obligations of Buyer and Seller under this Agreement
to be satisfied as soon as possible on or before the Closing Date.
(b) Confidentiality. Buyer will continue to fulfill its
obligations under that certain confidentiality agreement, dated as of
May 8, 1997, by and between Buyer and Seller, to the extent those
obligations do not conflict with this Agreement. If any of such
obligations do conflict with this Agreement, then this Agreement will
govern.
(c) Press Releases. Except as required by applicable law,
Buyer will not give notice to third parties or otherwise make any
public statement or releases concerning this Agreement or the
transactions contemplated hereby except for such written Information as
has been approved in writing as to form and content by Seller, which
approval may not be unreasonably withheld.
(d) Accrediting Bodies and CFP Board. Buyer will reasonably
cooperate with and assist Seller in obtaining reasonable assurance that
(i) Buyer, the Business and/or the Purchased Assets will be accredited
by at least one Accrediting Body immediately after the Closing to the
same extent Seller, the Business and/or the Purchased Assets are
accredited as of the date hereof and (ii) immediately after the Closing
the Certified Financial Planner(R) Professional Education Program that
is included in the Purchased Assets will continue to be recognized by
the CFP Board as a "Registered Program."
(e) Required Filings. Buyer has filed or will, as promptly as
practicable, file or supply, or cause to be filed or supplied, all
applications, notifications and Information required to be filed or
supplied by it pursuant to applicable law in connection with this
Agreement, the sale and transfer of the Purchased Assets pursuant
hereto and the consummation of the other transactions contemplated
thereby, including but not limited to filings pursuant to the HSR Act.
Buyer will be responsible for the filing fee, except as otherwise
agreed by the Parties.
SECTION 4.3 Form 8-K. As soon as practicable after execution of this
Agreement, (i) Seller and Apollo shall cooperate with each other in order to
enable Apollo to file with the Commission on the Closing Date its Form 8-K with
respect to its acquisition of the Business pursuant to applicable rules and
regulations under the Exchange Act, and (ii) Seller will provide not later than
ten business days prior to the Closing Date (together with the forms of
auditors' report and consent that will be required to be signed in connection
therewith) such historical financial statements of the
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Business as required to be included therein pursuant to such rules and
regulations. Subject to Seller's fulfillment of its obligations under clause
(ii) of the preceding sentence, Apollo will provide the definitive filing form
of its Form 8-K to Seller at least two business days before the Closing Date and
Apollo will file immediately upon the Closing on the Closing Date the Form 8-K
containing all financial and other Information required thereby in compliance
with the requirements of the Exchange Act with respect to the acquisition of the
Business together with a contemporaneous press release in compliance with
Section 4.2(c).
SECTION 4.4 Updated Schedules. Seller shall deliver to Apollo within
two business days prior to the Closing Date updated schedules disclosing any
additional required Information or any inaccuracy, whether or not any such
Information or inaccuracy is material, as of such date with respect to Seller's
representations contained in Section 3.1 of this Agreement.
ARTICLE V--CONDITIONS PRECEDENT TO THE CLOSING
SECTION 5.1 Conditions Precedent to Buyer's Obligations. The obligation
of Buyer to consummate the transactions contemplated under this Agreement is
subject to the fulfillment or satisfaction, before or at the Closing, of each of
the following conditions precedent:
(a) Representations and Warranties True as of the Closing
Date. The representations and warranties of Seller contained in this
Agreement or in any schedule, certificate or document delivered by
Seller to Buyer pursuant to the provisions hereof will have been true
in all material respects on the date hereof (unless specifically
qualified by materiality, in which case it will have been true on the
date hereof) and will be true in all material respects on the Closing
Date (unless specifically qualified by materiality, in which case it
will be true on the Closing Date) with the same effect as though such
representations and warranties were made as of such date, except to the
extent that a representation or warranty is made as of a particular
earlier date, in which case such representation or warranty shall be
true and correct in the manner specified above as of such particular
date and shall be deemed to have been made on the Closing Date.
(b) Compliance with this Agreement. Seller will have performed
and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it before or at the
Closing.
(c) Closing Certificate. Buyer will have received a
certificate signed by an officer of Seller and dated the Closing Date,
certifying that the conditions specified in Sections 5.1(a) and 5.1(b)
have been fulfilled and certifying that Seller has obtained all Seller
Required Consents.
(d) No Threatened or Pending Litigation. As of the Closing
Date, no suit, action or other proceeding, or injunction or final
judgment relating thereto, will be threatened or be pending before any
court or governmental or regulatory official, body or authority in
which
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it is sought to restrain or prohibit, or to obtain damages or other
relief in connection with, this Agreement or the consummation of the
transactions contemplated hereby.
(e) Seller Required Consents. Seller will have obtained all
Seller Required Consents. In respect of the notifications of Buyer and
Seller pursuant to the HSR Act, the applicable waiting period and any
extensions thereof will have expired or been terminated.
(f) Accrediting Bodies. At least one Accrediting Body will
have provided reasonably satisfactory written evidence that immediately
after the Closing Buyer, the Business and/or the Purchased Assets will
be accredited by such Accrediting Body to the same extent Seller, the
Business and/or the Purchased Assets are accredited by such Accrediting
Body as of the date hereof; it being understood that this condition
will be deemed satisfied even if such accreditation is conditional, as
long as any such conditions (i) relate to the conduct of the Business
after the Closing or (ii) are or will be within the control of Buyer as
of and/or after the Closing. The Parties agree that if at least one
Accrediting Body provides the written evidence required by the
preceding sentence, but after the Closing Buyer loses such
accreditation or conditional accreditation due to its own action or
inaction or otherwise, then such loss will be the sole responsibility
of Buyer, and Seller will have no liability with respect thereto. For
purposes of this Agreement, "Accrediting Bodies" means each of (i) the
Commission on Institutions of Higher Education of the North Central
Association of Colleges and Schools ("NCA") and (ii) the Distance
Education and Training Council ("DETC").
(g) CFP Board Recognition. The CFP Board will have provided
evidence that is reasonably satisfactory to Buyer that immediately
after the Closing the Certified Financial Planner(R) Professional
Education Program that is included in the Purchased Assets will
continue to be recognized by the CFP Board as a "Registered Program";
it being understood that this condition will be deemed satisfied even
if such approval is conditional, as long as any such conditions (i)
relate to the conduct of the Business after the Closing or (ii) are or
will be within the control of Buyer as of and/or after the Closing. The
Parties agree that if the CFP Board provides the evidence required by
the preceding sentence, but after the Closing the Certified Financial
Planner(R) Professional Education Program loses such recognition due to
Buyer's action or inaction or otherwise, then such loss will be the
sole responsibility of Buyer, and Seller will have no liability with
respect thereto. For purposes of this Agreement, "CFP Board" means the
Certified Financial Planner Board of Standards, Inc., a Colorado
non-profit corporation.
(h) Material Adverse Changes. As of the Closing Date, there
will have been no material adverse change in the Purchased Assets or
the business, operations or condition (financial or otherwise) of the
Business.
(i) Lease Agreement. Seller and Buyer will have executed and
delivered the lease agreement substantially in the form attached hereto
as Exhibit B (the "Lease Agreement") with respect to Seller's building
located at 4695 South Monaco Street, Denver, Colorado.
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(j) Opinion of Counsel. Buyer shall have received the opinion
of Holme Roberts & Owen LLP dated as of the Closing Date, substantially
in the form attached hereto as Exhibit D.
(k) Consulting Agreement. Dr. William Anthes and Buyer will
have executed and delivered the consulting agreement substantially in
the form attached hereto as Exhibit E.
SECTION 5.2 Conditions Precedent to Seller's Obligations. The
obligation of Seller to consummate the transactions contemplated under this
Agreement is subject to the fulfillment or satisfaction, before or at the
Closing, of each of the following conditions precedent:
(a) Representations and Warranties True as of the Closing
Date. The representations and warranties of Buyer contained in this
Agreement or in any schedule, certificate or document delivered by
Buyer to Seller pursuant to the provisions hereof will have been true
in all material respects on the date hereof (unless specifically
qualified by materiality, in which case it will have been true on the
date hereof) and will be true in all material respects on the Closing
Date (unless specifically qualified by materiality, in which case it
will be true on the Closing Date) with the same effect as though such
representations and warranties were made as of such date, except to the
extent that a representation or warranty is made as of a particular
earlier date, in which case such representation or warranty shall be
true and correct in the manner specified above as of such particular
date and shall be deemed to have been made on the Closing Date.
(b) Compliance with this Agreement. Buyer will have performed
and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it before or at the
Closing.
(c) Closing Certificate. Seller will have received a
certificate signed by an officer of Buyer and dated the Closing Date
certifying that the conditions specified in Sections 5.2(a) and 5.2(b)
have been fulfilled and certifying that Buyer has obtained all Buyer
Required Consents set forth in Section 3.2(d) of the Disclosure
Schedule.
(d) No Threatened or Pending Litigation. As of the Closing
Date, no suit, action or other proceeding, or injunction or final
judgment relating thereto, will be threatened or be pending before any
court or governmental or regulatory official, body or authority in
which it is sought to restrain or prohibit, or to obtain damages or
other relief in connection with, this Agreement or the consummation of
the transactions contemplated hereby.
(e) Material Adverse Change. As of the Closing Date, there
will have been no material adverse change in the assets, business,
operations or condition (financial or otherwise) of Apollo and its
subsidiaries.
(f) Lease Agreement. Seller and Buyer will have executed and
delivered the Lease Agreement.
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(g) Buyer Required Consents. Buyer will have obtained all
Buyer Required Consents. In respect of the notifications of Buyer and
Seller pursuant to the HSR Act, the applicable waiting period and any
extensions thereof will have expired or been terminated.
(h) Registration Statement. Buyer or Buyer's counsel shall
have confirmed to Seller's counsel that Buyer shall have received oral
notice from the Commission that the registration statement with respect
to the Apollo Common Stock is scheduled to be declared effective by the
Commission, at a time mutually acceptable to Apollo and Seller on the
Closing Date after the Closing.
(i) Opinion of Counsel. Seller shall have received the opinion
of Snell & Wilmer dated as of the Closing Date, substantially in the
form attached hereto as Exhibit F.
(j) Form 8-K. Seller shall have been advised by Apollo that
pursuant to Section 4.3 of this Agreement the Form 8-K containing all
financial and other Information required thereby in compliance with the
requirements of the Exchange Act with respect to the acquisition of the
Business is ready for immediate filing on the Closing Date with the
Commission immediately after the Closing.
ARTICLE VI--INDEMNIFICATION
SECTION 6.1 General Indemnification Obligation of Seller.
(a) Except as provided in Section 6.1(b), from and after the
Closing until the date that is eighteen months after the Closing Date
Seller will reimburse, indemnify and hold harmless Buyer, its officers,
directors, employees, agents, advisers, representatives and Affiliates
and any of their successors and assigns (each, an "Indemnified Buyer
Party") from and against, and pay or reimburse each Indemnified Buyer
Party for, any and all claims, liabilities, obligations, losses, fines,
costs, royalties, proceedings, deficiencies or damages, including
out-of-pocket expenses and reasonable attorneys' and accountants' fees
incurred in the investigation or defense of any of the same or in
asserting any of their respective rights hereunder (each, a "Loss" and
collectively, "Losses"), resulting from or arising out of:
(i) any inaccuracy of any representation and warranty
of Seller contained in this Agreement;
(ii) any failure of Seller to perform any covenant or
agreement hereunder or fulfill any other obligation in respect
hereof;
(iii) any Excluded Liabilities or Excluded Assets; or
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(iv) the operation of the Business by Seller or
Seller's ownership, operation or use of the Purchased Assets
before the Closing to the extent allocable or attributable
thereto.
(b) Notwithstanding the foregoing, Seller will not be required
to indemnify any Indemnified Buyer Party pursuant to Sections 6.1(a)(i)
or 6.1(a)(iv)(i) unless and until the aggregate amount of all claims
against Seller under such Section exceeds $100,000 and then only to the
extent of such excess or (ii) to the extent the amount of such
indemnification would exceed the Purchase Price.
(c) Seller will not be required to indemnify any Indemnified
Buyer Party with respect to any claim for indemnification pursuant to
Section 6.1(a)(iv) to the extent such Losses result from or arise out
of any Assumed Liability or constitute Losses for which Buyer is
required to indemnify Seller under Section 6.2(a).
SECTION 6.2 General Indemnification Obligation of Buyer.
(a) Except as provided in Section 6.2(b), from and after the
Closing until the date that is eighteen months after the Closing Date
Buyer will reimburse, indemnify and hold harmless Seller, its officers,
directors, employees, agents, advisers, representatives and Affiliates
and any of their successors or assigns (each, an "Indemnified Seller
Party") from and against, and pay or reimburse the Indemnified Seller
Parties for, any and all Losses resulting from or arising out of:
(i) any inaccuracy of any representation and warranty
of Buyer and/or Apollo contained in this Agreement;
(ii) any failure of Buyer to perform any covenant or
agreement hereunder or fulfill any other obligation in respect
hereof;
(iii) any Assumed Liability; and
(iv) the operation of the Business by Buyer or
Buyer's ownership, operation or use of the Purchased Assets
from and after the Closing to the extent allocable or
attributable thereto.
(b) Notwithstanding the foregoing, Buyer will not be required
to indemnify any Indemnified Seller Party pursuant to Sections
6.2(a)(i) or 6.2(a)(iv)(i) unless and until the aggregate amount of
all claims against Seller under such Section exceeds $100,000 and then
only to the extent of such excess or (ii) to the extent the amount of
such indemnification would exceed the Purchase Price.
(c) Buyer will not be required to indemnify any Indemnified
Seller Party with respect to any claim for indemnification pursuant to
Section 6.2(a)(iv) to the extent such
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Losses result from or arise out of any Excluded Liability or constitute
Losses for which Seller is required to indemnify Buyer under Section
6.1(a).
SECTION 6.3 Indemnification Procedures.
(a) If any claim or demand for which Seller would be liable to
an Indemnified Buyer Party hereunder is asserted by an Indemnified
Buyer Party against Seller or is asserted against or sought to be
collected from an Indemnified Buyer Party by a third party, the
Indemnified Buyer Party will promptly notify Seller of such claim or
demand, specifying the nature of such claim or demand and the amount or
the estimated amount thereof to the extent then feasible (which
estimate will not be conclusive of the final amount of such claim and
demand) (the "Claim Notice"). Seller will have ten days from the
personal delivery or mailing of the Claim Notice (the "Notice Period")
to notify the Indemnified Buyer Party, (i) whether or not Seller
disputes its liability to the Indemnified Buyer Party hereunder with
respect to such claim or demand and (ii) notwithstanding any such
dispute, whether or not Seller desires, at its sole cost and expense,
to defend the Indemnified Buyer Party against any such claim or demand
that is being asserted by a third party.
(b) If Seller disputes its liability with respect to such
claim or demand or the amount thereof (whether or not Seller desires to
defend the Indemnified Buyer Party against such claim or demand as
provided in Section 6.3(c)), such dispute will be resolved in
accordance with Section 6.5. Pending the resolution of any dispute by
Seller of its liability with respect to any claim or demand, such claim
or demand may not be settled without the prior written consent of both
of Seller and the Indemnified Buyer Party.
(c) If Seller notifies the Indemnified Buyer Parties within
the Notice Period that it desires to defend the Indemnified Buyer Party
against such claim or demand then, except as hereinafter provided,
Seller will have the right to defend the Indemnified Buyer Party by
appropriate proceedings, which proceedings will be promptly settled or
prosecuted to a final conclusion in such a manner as to avoid any risk
of the Indemnified Buyer Party becoming subject to liability for any
other matter; but Seller may not, without the prior written consent of
the Indemnified Buyer Party, consent to the entry of any judgment
against the Indemnified Buyer Party or enter into any settlement or
compromise that does not include, as an unconditional term thereof, the
giving by the claimant or plaintiff to the Indemnified Buyer Party of a
release, in form and substance satisfactory to the Indemnified Buyer
Party, as the case may be, from all liability in respect of such claim
or litigation. If any Indemnified Buyer Party desires to participate
in, but not control, any such defense or settlement, it may do so at
its sole cost and expense. If, in the reasonable opinion of the
Indemnified Buyer Party, any such claim or demand or the litigation or
resolution of any such claim or demand involves an issue or matter that
could have a materially adverse effect on the business, operations or
assets of the Indemnified Buyer Party, including without limitation the
administration of the tax returns and responsibilities under the tax
laws of any Indemnified Buyer Party, then the Indemnified Buyer Party
will have the right to control the defense or settlement of any such
claim or demand and its reasonable costs and expenses will be included
as part of the indemnification obligation of Seller hereunder; but the
Indemnified
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Buyer Party may not settle any such claim or demand without the prior
written consent of Seller, which consent may not be unreasonably
withheld. If the Indemnified Buyer Party elects to exercise such right,
Seller will have the right to participate in, but not control, the
defense or settlement of such claim or demand at its sole cost and
expense.
(d) Amount of Liability.
(i) If an Indemnified Buyer Party has a claim against
Seller hereunder that does not involve a claim or demand being
asserted against or sought to be collected from it by a third
party and Seller does not notify the Indemnified Buyer Party
within the Notice Period that it disputes such claim, then the
amount of such claim will be conclusively deemed a liability
of Seller hereunder.
(ii) If Seller elects not to defend an Indemnified
Buyer Party against a claim or demand (either by not giving
the Indemnified Buyer Party timely notice as provided above or
otherwise), then the amount of any such claim or demand will
be conclusively deemed to be a liability of Seller hereunder,
unless Seller disputes its liability to the Indemnified Buyer
Party hereunder, as provided in Section 6.3(b), in which event
such dispute will be resolved as provided in Section 6.5.
(iii) If Seller elects to defend an Indemnified Buyer
Party against a claim or demand, or if such claim or demand is
defended by the Indemnified Buyer Party (but no Indemnified
Buyer Party will have any obligation to defend any such claim
or demand), then that portion thereof as to which such defense
is unsuccessful will be conclusively deemed to be a liability
of Seller hereunder, unless Seller disputes its liability to
the Indemnified Buyer Party hereunder, as provided in Section
6.3(b), in which event such dispute will be resolved as
provided in Section 6.5.
(e) All claims for indemnification by an Indemnified Seller
Party under this Agreement will be asserted and resolved under the
procedures set forth above, substituting in the appropriate place
"Indemnified Seller Party" for "Indemnified Buyer Party" and variations
thereof and "Buyer" for "Seller."
SECTION 6.4 Payment. Upon the determination of any liability under
Sections 6.3 or 6.5, the appropriate Party will pay to the Indemnified Seller
Party or Indemnified Buyer Party, as applicable, within ten days after such
determination, the amount of any claim for indemnification made hereunder. If
the Indemnified Seller Party or Indemnified Buyer Party, as applicable, is not
paid in full for any such claim pursuant to the foregoing provisions promptly
after the other Party's obligation to indemnify has been determined in
accordance herewith, it will have the right, notwithstanding any other rights
that it may have against any other Person, to set off the unpaid amount of any
such claim against any amounts owed by it under any agreements entered into
pursuant to this Agreement, Seller's Documents or Buyer's Documents. Upon the
payment in full of any claim, either by setoff or otherwise, the Person making
payment will be subrogated to the rights of the Indemnified Seller Party or
Indemnified Buyer Party, as applicable, against any Person with respect to the
subject matter of such claim.
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SECTION 6.5 Arbitration.
(a) All disputes under this Article VI will be settled by
arbitration in Denver, Colorado, before a single arbitrator pursuant to
the rules of the American Arbitration Association. Any Party may
commence arbitration at any time by giving written notice to the other
Party that such dispute has been referred to arbitration under this
Section 6.5. The arbitrator will be selected by the joint agreement of
Seller and Buyer, but if they do not so agree within 20 days after the
date of the notice referred to above, the selection will be made
pursuant to the rules of the American Arbitration Association from the
panels of arbitrators maintained by such Association. This provision
for arbitration is specifically enforceable by the Parties and any
decision rendered by the arbitrator will be final and binding upon the
Parties so long as such award is accompanied by a written opinion of
the arbitrator giving the reasons for the award, and there will be no
right of appeal therefrom. Each Party will pay its own expenses of
arbitration and the expenses of the arbitrator will be equally shared;
but if in the opinion of the arbitrator any claim for indemnification
or any defense or objection thereto was unreasonable, the arbitrator
may assess, as part of the award, all or any part of the arbitration
expenses of the other Party (including reasonable attorneys' fees) and
of the arbitrator against the Party raising such unreasonable claim,
defense or objection.
(b) To the extent that arbitration may not be legally
permitted hereunder and the Parties may not at the time of such dispute
mutually agree to submit such dispute to arbitration, any Party may
commence a civil action in a court of appropriate jurisdiction to solve
disputes hereunder. Nothing contained in this Section 6.5 will prevent
the Parties from settling any dispute by mutual agreement at any time.
SECTION 6.6 Other Rights and Remedies Not Affected. The indemnification
rights of the Parties under this Article VI are independent of and in addition
to such rights and remedies as the Parties may have at law or in equity or
otherwise for any misrepresentation, breach of warranty or failure to fulfill
any agreement or covenant hereunder on the part of any Party, including without
limitation the right to seek specific performance, rescission or restitution,
none of which rights or remedies are affected or diminished hereby.
ARTICLE VII--POST-CLOSING MATTERS
SECTION 7.1 Employees and Employee Benefit Plans.
(a) Buyer will, within three days after the date hereof, offer
employment to those individuals who are employees of Seller on the
Closing Date, other than the employees named or described on Schedule
7.1(a), for positions that are at least comparable to the positions in
which such individuals are employed as of the Closing Date. Buyer will
hire those individuals who accept Buyer's offer of employment (the
"Continuing Employees"). The Continuing Employees will become employees
of Buyer effective at 5:00 p.m. Denver time on the Closing Date and
will no longer be employees of Seller. Commencing at
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5:00 p.m. Denver time on the Closing Date, Buyer will have sole
responsibility for the payment of wages, overtime, sick pay, taxes,
withholdings, and employee benefits (except as provided in (d) below)
with respect to the Continuing Employees, accruing after 5:00 p.m.
Denver time on the Closing Date. Buyer shall not assume any liability
of Seller with respect to Continuing Employees, regardless of the
source or nature of such obligation, including, but not limited to, any
liability for accrued but unpaid salaries, wages, vacation or sick pay
or incentive compensation, and Seller shall remain liable therefore and
shall also remain responsible for payment of any retention, change in
control, or other similar compensation or benefits which are or become
payable as a result of the consummation of the purchase and sale
transaction under this Agreement. Buyer shall not assume any Employee
Benefit Plan (as such term is defined in Section 3.1(s)(i) above) or
any liability under any Employee Benefit Plan. Nothing contained in
this Agreement will be construed as a guaranty to Buyer that any number
of the employees will accept offers of employment with Buyer. Buyer
will be solely responsible for any and all communications it makes to
any employee of Seller during the process of making offers of
employment. Buyer will comply with all laws in connection with its
communications to Seller's employees, the process of offering
employment to them, and the hiring and transition of such employees.
(b) Within five business days after the Closing Date, Seller
will transmit to Buyer the Forms W-4 and W-5 that were furnished to
Seller by the Continuing Employees. Buyer will effect all tax
withholdings in accordance with the Forms W-4 and W-5 received from
Seller with respect to each Continuing Employee. Buyer will report all
wages paid and taxes withheld by Buyer and Seller for the calendar year
in which the Closing Date occurs. Buyer and Seller will each attach the
statement required by Revenue Procedure 96-60 to the Form 941 filed by
each for the year in which the Closing Date occurs. Buyer and Seller
agree to comply with all requirements of Revenue Procedure 96-60 and to
cooperate with each other in complying with such requirements.
(c) Buyer will provide the Continuing Employees with base pay
that is no less than the base pay provided to the Continuing Employees
by Seller as of the Unaudited Balance Sheet Date (as set forth in
Schedule 7.1(c) attached hereto), provided, however, that beginning
January 1, 1998, Buyer may adjust the base pay of the Continuing
Employees in accordance with Buyer's customary compensation policies
for similarly situated employees.
(d) Seller and Buyer shall make arrangements for the
Continuing Employees to continue their coverage under Seller's group
medical and dental plans and group life insurance plan (or identical
plans) from 5:00 p.m. Denver time on the Closing Date through December
31, 1997, either (i) through Buyer becoming a participating sponsor of
such plans from 5:00 p.m. Denver time on the Closing Date through
December 31, 1997 or (ii) through the issuance to Buyer of a plan or
plans or a policy or policies identical to Seller's plans and policies
in effect on the Closing Date, for the period from 5:00 p.m. Denver
time on the Closing Date through December 31, 1997. Thereafter, Buyer
will provide the Continuing Employees with group health coverage and
group life insurance coverage that is at least the same as the group
health coverage and group life insurance coverage provided to the other
employees of Buyer. If coverage from 5:00 p.m. Denver time on the
Closing Date through
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December 31, 1997 is provided by Buyer's becoming a participating
sponsor of Seller's plans, Buyer shall pay to Seller the amount of $334
per Continuing Employee per month (during such Continuing Employee's
employment by Buyer) on the tenth day of each month between the Closing
Date and December 31, 1997 as Buyer's share of the premium for the
Continuing Employees' group medical, dental and life insurance coverage
from the Closing Date through December 31, 1997. Seller shall assume
and bear any remaining liability. If coverage from 5:00 p.m. Denver
time on the Closing Date through December 31, 1997 is provided through
a policy or policies issued to Buyer, Seller shall reimburse Buyer on
the tenth day of each month occurring between the Closing Date and
December 31, 1997 for any amount paid or incurred by Buyer for coverage
in excess of $334 per Continuing Employee per month (during such
Continuing Employee's employment by Buyer) for the months between the
Closing Date and December 31, 1997. If coverage from the Closing Date
through December 31, 1997 is provided through Buyer's becoming a
participating sponsor of Seller's group medical and dental plans,
continuation coverage for a Continuing Employee who terminates
employment after the Closing Date and before January 1, 1998 shall be
transferred to Buyer's group health plan on January 1, 1998 for the
remainder of the continuation period.
(e) The Continuing Employees shall commence participation in
Buyer's employee benefit plans and policies, other than the group
medical and dental plan and group life insurance plan, as of 5:00 p.m.
on the Closing Date; it being understood that at such time each
Continuing Employee will be advanced full vacation time and sick time
for the then current fiscal year of Buyer. The Continuing Employees
shall commence participation in Buyer's group medical and dental plan
and group life insurance plan as of 12:00 a.m. on January 1, 1998.
Buyer agrees to credit and continue to credit each Continuing Employee
with service under its benefit plans for periods of employment with
Seller, with such service credit to be granted for purposes of
eligibility to participate in the plan, eligibility for benefits (but
not the amount of benefits), eligibility for retirement and vesting
purposes under such employee benefit plans or policies that Buyer
maintains or will maintain for Continuing Employees including, but not
limited to, participation and vesting in qualified retirement plans,
enrollment in health care plans, enrollment in and benefits under life
insurance plans and arrangements, vacation eligibility, sick and other
leave policies, and severance benefits; provided however, that the
maximum number of years of service that may be credited under any plan
maintained by Buyer that is intended to be qualified under Section
401(a) of the Code shall be five.
(f) Buyer will use its best efforts to provide that
pre-existing condition restrictions imposed in connection with medical,
dental and vision benefits under Buyer's plans will not apply to the
Continuing Employees and ensure that any pre-existing condition
restrictions that are applied to the Continuing Employees comply with
the requirements of applicable law; provided, however, that Buyer will
not be required to pay any additional premium with respect to any
waiver of pre-existing condition limitations.
(g) Buyer will cause the qualified retirement plan of Buyer in
which Continuing Employees participate to accept a direct rollover of
eligible rollover distributions (within the
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meaning of Section 402(c) of the Code) from Seller's defined benefit
pension plan (under Section 401(a) of the Code) by the Continuing
Employees.
(h) Buyer will not relocate any Continuing Employee to a new
job location outside the Denver metropolitan area for a minimum period
of six months after the Closing Date.
(i) Buyer will reimburse each Continuing Employee for the
tuition for any individual course or courses (but not for a program of
courses) for which the Continuing Employee was registered on the
Closing Date on the same basis as under Seller's educational benefits
program. Thereafter, each Continuing Employee will be eligible to
participate in Buyer's tuition reimbursement plan on the same terms and
conditions as generally applicable to other employees of Buyer.
(j) Buyer will pay and be responsible for all liability, cost,
expense, taxes and sanctions under Section 4980B of the Code, interest
and penalties imposed upon, incurred by, or assessed against Buyer or
Seller that arise by reason of or relate to any failure to comply with
the health care continuation requirements of Section 4980B of the Code
and Sections 601 through 608 of ERISA ("COBRA") which failure occurs on
or after the Closing Date with respect to any initial qualifying event
(as defined in Section 4980B(f)(3) of the Code) that occurs on or after
the Closing Date, with respect to any Continuing Employee or any
qualified beneficiary (as defined in Section 4980B(g)(1) of the Code)
of such Continuing Employee. Seller will pay and be responsible for all
liability and cost, expenses, taxes and sanctions under Section 4980B
of the Code, interest and penalties imposed upon, incurred by, or
assessed against Buyer or Seller that arise by reason of or relate to
any failure to comply with the health care continuation coverage
requirements of COBRA, which failure occurs with respect to any
qualifying event that either occurs prior to the Closing Date, that
occurs on or after the Closing Date, with respect to a Continuing
Employee's qualified beneficiary or beneficiaries who elected COBRA
continuation coverage for a qualifying event that occurred prior to the
Closing Date, or that occurs because of the termination of the
Continuing Employees' employment with Seller, with respect to any
Continuing Employee or any qualified beneficiary of a Continuing
Employee. Seller shall retain the obligation to comply with the notice
and continuation coverage requirements with respect to employees of
Seller (and their covered dependents) other than the Continuing
Employees.
SECTION 7.2 Non-Solicitation. Effective as of the Closing Date, Seller
will terminate all employment agreements between Seller and any of the
Continuing Employees. Effective as of the Closing Date and until the third
anniversary of the Closing Date, (a) without Buyer's consent, Seller will not
directly or indirectly solicit any Person who is then an employee of Buyer or
any Continuing Employee who has terminated his or her employment with Buyer
within 180 days after the Closing Date and (b) without Seller's consent, Buyer
will not directly or indirectly solicit any Person who is then an employee of
Seller or any Person who is an employee of Seller on the date immediately after
the Closing Date and who has terminated his or her employment with Seller within
180 days after the Closing Date.
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SECTION 7.3 Discharge of Business Obligations. From and after the
Closing Date Seller will pay and discharge, in accordance with past practice but
not less than on a timely basis, all obligations and liabilities incurred before
the Closing Date in respect of Excluded Liabilities, including without
limitation any Liabilities to employees, trade creditors and clients of the
Business.
SECTION 7.4 Maintenance of Books and Records. Buyer will preserve until
the fifth anniversary of the Closing Date all records possessed or to be
possessed by Buyer relating to the Business or any of the Purchased Assets
before the Closing Date. After the Closing Date and upon Seller's prior written
request, Buyer will provide Seller with access during regular business hours to
(a) the officers and employees of Buyer and Apollo and (b) the books of account
and records of Buyer and Apollo, but, in each case, only to the extent relating
to the Purchased Assets or the Business before the Closing Date, and Seller and
its representatives will have the right to make copies of such books and
records; but the foregoing right of access may not be exercised in such a manner
as to unreasonably interfere with the normal operations and business of Buyer
and Apollo and, with respect to any of such information that constitutes trade
secrets or confidential business information of Buyer, Seller and its
representatives will use due care to not disclose such information except (x) as
required by law, (y) with the prior written consent of Buyer, which consent may
not be unreasonably withheld, or (z) where such information becomes available to
the public generally, or becomes generally known to competitors of Buyer,
through sources other than Seller, its Affiliates or its officers, directors or
representatives.
SECTION 7.5 Payments Received. Each Party agrees that after the Closing
it will hold and will promptly transfer and deliver to the other Party, from
time to time as and when received, any cash, checks with appropriate
endorsements (using their best efforts not to convert such checks into cash), or
other property that they may receive on or after the Closing which property
belongs to the other Party, including without limitation any insurance proceeds,
and will account to the other Party for all such receipts. From and after the
Closing, Buyer will have the right and authority to endorse without recourse the
name of Seller on any check or any other evidences of indebtedness received by
Buyer on account of the Business and the Purchased Assets transferred to Buyer
hereunder.
SECTION 7.6 Use of Names.
(a) From and after the Closing Date, Seller will sign such
consents and take such other action as Buyer may reasonably request to
permit Buyer to transfer all rights, title and interest in and to the
names "College for Financial Planning(R)"; "Institute for Wealth
Management(R)"; "Institute for Retirement Planning(R)"; "American
Institute for Retirement Planners, Inc."; and "Institute for Tax
Studies(R)" and variants thereof. From and after the Closing Date,
Seller will not itself use any of the foregoing names or any names
similar thereto or variants thereof.
(b) Except for those marks set forth in Section 7.6(a), to the
extent the trademarks, service marks, brand names or trade, corporate
or business names of Seller or of any of its Affiliates or divisions
(other than the Divisions) are used by the Divisions or the Business on
stationery, signage, invoices, receipts, forms, packaging, advertising
and promotional materials, product, training and service literature and
materials, computer
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programs or like materials ("Marked Materials") or appear on Inventory
at the Closing, Buyer may use such Marked Materials or sell such
Inventory for a period of 30 days after the Closing without altering or
modifying such Marked Materials or Inventory, or removing such
trademarks, service marks, brand names, or trade, corporate or business
names, but Buyer may not thereafter use such trademarks, service marks,
brand names or trade, corporate or business names in any other manner
except that Buyer may use such trademarks, service marks, brand names
and trade, corporate or business names (i) with the prior written
consent of Seller or (ii) until such Inventory or Marked Materials are
exhausted, as long as such Inventory and Marked Materials indicate in a
conspicuous manner reasonably satisfactory to Seller that Seller and
its Affiliates are no longer affiliated with the Business, that Seller
and its Affiliates are not responsible for such use and make no
representations or warranties in connection therewith, and that such
use is the sole responsibility of Buyer.
SECTION 7.7 UCC Matters. From and after the Closing Date, Seller will
promptly refer all inquiries with respect to ownership of the Purchased Assets
or the Business to Buyer. In addition, Seller will execute such documents and
financing statements as Buyer may request from time to time to evidence transfer
of the Purchased Assets to Buyer, including any necessary assignments of
financing statements.
SECTION 7.8 Covenant Not to Compete.
(a) Seller and each of its Affiliates agrees that for five
years after the Closing Date, it will not, directly or indirectly,
operate, join, control or participate in management, operation or
control of, any corporation, proprietorship or partnership as more than
a five percent owner in such business where such business is
competitive with (i) the Business as it exists on the date hereof, (ii)
or any programs or services currently being developed by the Business
to be offered as professional education to the general public or for
continuing professional education or (iii) the business of Buyer or
Apollo as it exists on the date hereof substantially as described in
Apollo's 1996 Form 10-K and Apollo SEC Documents filed since then and
before the date hereof; it being understood, however, that this
prohibition will not be violated by Seller's direct or indirect
involvement in any Excluded Activity.
(b) The Parties specifically acknowledge and agree that the
remedy at law for any breach of this Section 7.8 will be inadequate and
that Buyer, in addition to any other relief available to it, will be
entitled to temporary and permanent injunctive relief without the
necessity of proving actual damage. If any provision of this Section
7.8 is ever deemed to exceed the limitation provided by applicable law,
then the Parties agree that such provisions will be reformed to set
forth the maximum limitations permitted.
(c) For purposes of this Agreement, "Excluded Activities"
means the sponsorship, creation, publication, production, marketing and
distribution of educational products and services provided directly or
indirectly to the general public, or to segments of the general public,
whether for free or for a reasonable charge, including without
limitation (i) continuation and expansion of all activities currently
carried out as part of Seller's NEFE High School Financial Planning
Program(SM), Seller's Public Education Center or the NEFE
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Press(R), (ii) the sponsorship, creation, publication, production,
marketing and distribution of books, tapes, compact disks, videotapes,
newsletters and periodicals, (iii) the sponsorship, creation,
publication, production, marketing and distribution of financial
planning programs or tools for use by the general public, (iv) the
sponsorship, creation, and maintenance of one or more world wide web
sites, (v) the sponsorship, production and marketing of conferences
and/or seminars and the creation, publication, production, marketing
and distribution of materials related thereto, and (vi) research and
development activities related to any of the foregoing; provided,
however, that "Excluded Activities" shall not include any activity for
which educational credit is given or any activity for which Seller
charges a fee which (1) is in excess of $100 and (2) is beyond an
amount to cover Seller's full direct and indirect costs with respect to
the activity as determined according to generally accepted accounting
principles.
SECTION 7.9 Discharge of Obligations with Respect to Deferred Tuition
Fees. From and after the Closing Date Buyer will pay and discharge, on a timely
basis, all obligations and liabilities of Seller existing immediately before the
Closing relating to the deferred tuition fees of the Business disclosed
specifically on Schedule 1.4(a)(i). In the event that Seller has obligations and
liabilities existing immediately before the Closing relating to deferred tuition
fees which have not been disclosed specifically on Schedule 1.4(a)(i), Buyer
shall pay and discharge all such obligations, and Seller shall be liable to
Buyer equal to the amount of such deferred tuition fees which were not so
disclosed on such Schedule.
SECTION 7.10 Confidentiality. From and after the Closing Date Seller
will use due care to avoid disclosing any confidential Information relating to
(a) the transactions contemplated by this Agreement, (b) the Purchased Assets,
or (c) the Business, to any third party other than Seller's officers, directors
and representatives and except (x) as required by law, (y) with the prior
written consent of Buyer, or (z) where such Information becomes available to the
public or becomes known to competitors of Buyer through sources other than
Seller, its Affiliates or its officers, directors or representatives.
SECTION 7.11 Obligation to Students; Teach-Out Commitment. From and
after the Closing Date Buyer will (a) use its best efforts to treat Continuing
Students in the same manner as such students have been treated by Seller before
the Closing Date, including making timely mailings and being responsive to
student questions and complaints, (b) subject to Buyer's obligations in Section
4.2(d), use its best efforts to fulfill the "Teach-Out Commitment" required by
DETC with respect to the accreditation of Buyer by DETC; provided however, it is
understood that all Liabilities of Seller relating to the Teach-Out Commitment
are Assumed Liabilities as set forth in Schedule 1.4(a), and (c) use its best
efforts to ensure that student cancellations and/or student note defaults will
not increase above a level consistent with the past experience of the Business.
For purposes of this Agreement, "Continuing Students" means all students
enrolled as of the Closing Date in courses and/or programs offered by the
Business.
SECTION 7.12 Transition of the Business. At the Closing, in accordance
with Section 2.2, Buyer will be given actual possession and operating control of
the Purchased Assets. To the extent that certain Excluded Assets cannot be
readily separated from the Purchased Assets, each Party will
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use its best efforts to cooperate with the other Party, in such a manner as to
not unreasonably interfere with the normal operations and business of Buyer or
Seller, in order to separate the Excluded Assets from the Purchased Assets not
later than 90 days following the Closing Date. For example, in accordance with
the foregoing, Buyer will be given actual possession and operating control of
all software, hardware, and Information contained thereon that is included in
the Purchased Assets, and, to the extent that such software or hardware contains
Information relating to the Excluded Assets, Seller will have 90 days to access
such software or hardware in order to make copies of any Information relating to
the Excluded Assets. Upon request through a single contact person designated by
Buyer, for 90 days following the Closing Date Seller shall have reasonable
access to Continuing Employees during regular working hours for purposes of
assisting Seller in the separation of the Purchased Assets from the Excluded
Assets and toward effecting Seller's ability to operate on a stand-alone basis.
ARTICLE VIII--MISCELLANEOUS
SECTION 8.1 Termination.
(a) Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated by written notice of
termination at any time before the Closing Date only as follows:
(i) by mutual consent of Seller and Buyer;
(ii) by Buyer, (A) at any time if the representations
and warranties of Seller contained in Section 3.1 were
incorrect in any material respect when made or at any time
thereafter, or (B) upon written notice to Seller given at any
time after 60 days after the date hereof (or such later date
as is specified in a writing authorized on behalf of Seller
and Buyer) if all of the conditions precedent set forth in
Section 5.1 have not been met; or
(iii) by Seller, (A) at any time if the
representations and warranties of Buyer contained in Section
3.2 were incorrect in any material respect when made or at any
time thereafter, or (B) upon written notice to Buyer given at
any time after 60 days after the date hereof (or such later
date as is specified in a writing authorized on behalf of
Seller and Buyer) if all of the conditions precedent set forth
in Section 5.2 have not been met.
(b) If this Agreement is terminated and abandoned pursuant to
the provisions of this Section 8.1, this Agreement (except for Section
4.2(b), which will continue in force) will become void and have no
effect, without any liability on the part of any of the Parties or
their directors or officers or stockholders in respect of this
Agreement, unless the termination was the result of the representations
and warranties of a Party being materially incorrect when made or the
material breach by such Party of a covenant or agreement hereunder, in
which event the Party whose representations and warranties were
incorrect or who breached such
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covenant or agreement will be liable to the other Party for all costs
and expenses of the other Party in connection with the preparation,
negotiation, execution and performance of this Agreement.
SECTION 8.2 Brokers' and Finders' Fees.
(a) Seller represents and warrants to Buyer that, with the
exception of Parchman, Vaughan & Company, L.L.C., all negotiations
relative to this Agreement have been carried on by it directly without
the intervention of any Person that may be entitled to any brokerage or
finder's fee or other commission in respect of this Agreement or the
consummation of the transactions contemplated hereby, and Seller agrees
to indemnify and hold harmless Buyer against any and all claims,
losses, liabilities and expenses that may be asserted against or
incurred by it as a result of Seller's dealings, arrangements or
agreements with any such Person.
(b) Except for Montgomery Securities, Buyer represents and
warrants that all negotiations relative to this Agreement have been
carried on by it directly without the intervention of any Person who
may be entitled to any brokerage or finder's fee or other commission in
respect of this Agreement or the consummation of the transactions
contemplated hereby, and Buyer agrees to indemnify and hold harmless
Seller against any and all claims, losses, liabilities and expenses
that may be asserted against or incurred by, it as a result of Buyer's
dealings, arrangements or Agreements with or any such Person.
SECTION 8.3 Sales, Transfer and Documentary Taxes, etc. Buyer will pay
all federal, state and local sales, documentary and other transfer taxes, if
any, due as a result of the purchase, sale or transfer of the Purchased Assets
in accordance herewith whether imposed by law on Seller or Buyer and Buyer will
indemnify, reimburse and hold harmless Seller in respect of the liability for
payment of or failure to pay any such taxes or the filing of or failure to file
any reports required in connection therewith.
SECTION 8.4 Expenses. Except as otherwise provided in this Agreement,
each Party will pay its own expenses incidental to the preparation of this
Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby.
SECTION 8.5 Contents of Agreement; Parties in Interest; etc. This
Agreement sets forth the entire understanding of the Parties with respect to the
transactions contemplated hereby. It may not be amended or modified except by
written instrument duly executed by each of the Parties. Any and all previous
agreements and understandings between the Parties regarding the subject matter
hereof, whether written or oral, are superseded by this Agreement.
SECTION 8.6 Assignment and Binding Effect. This Agreement may not be
assigned before the Closing by any Party without the prior written consent of
the other Party, except that Buyer may assign its rights and obligations under
this Agreement to any wholly owned subsidiary of Apollo provided that such
wholly owned subsidiary shall assume and agree to perform and fully discharge,
as of the date of this Agreement as if such subsidiary itself had signed this
Agreement on the date
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hereof, all of Buyer's agreements and obligations under this Agreement, and for
all purposes of this Agreement such subsidiary shall be deemed to be included in
all references to "Buyer" contained in this Agreement as if such subsidiary had
signed this Agreement as Buyer on the date hereof, and no such assignment shall
relieve the assigning party from its obligations hereunder. Subject to the
foregoing, all of the terms and provisions of this Agreement are and will be
binding upon, and inure and will inure to the benefit of, and are and will be
enforceable by, the successors and assigns of Seller and Buyer.
SECTION 8.7 Waiver. Any term or provision of this Agreement may be
waived at any time by the Party entitled to the benefit thereof by a written
instrument duly executed by such Party.
SECTION 8.8 Notices. Any notice, request, demand, waiver, consent,
approval or other communication that is required or permitted hereunder must be
in writing and will be deemed given only if delivered personally or sent by
facsimile (with printed confirmation of transmission) or by registered or
certified mail, postage prepaid, as follows:
If to Seller, to:
National Endowment for Financial Education
4695 South Monaco Street
Denver, Colorado 80237-3403
Attention: William L. Anthes
Facsimile: 303-220-0838
With a required copy to:
Holme Roberts & Owen LLP
1700 Lincoln Street
Suite 4100
Denver, Colorado 80203-4541
Attention: Donald J. Hopkins
Facsimile: 303-866-0200
If to Buyer, to:
Apollo Group, Inc.
4615 E. Elwood Street
Phoenix, Arizona 85040
Attention: William H. Gibbs
Facsimile: 602-921-8538
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With a required copy to:
Snell & Wilmer L.L.P.
One Arizona Center
Phoenix, Arizona 85004
Attention: Jon S. Cohen
Facsimile: 602-382-6070
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as of
the date so delivered, sent by facsimile (with printed confirmation of
transmission) or mailed.
SECTION 8.9 Governing Law; Jurisdiction. This Agreement will be
governed in all respects, including as to validity, interpretation and effect,
by the internal laws of the State of Colorado, without giving effect to the
conflict of laws rules thereof.
SECTION 8.10 No Benefit to Others. The representations, warranties,
covenants and agreements contained in this Agreement are for the sole benefit of
the Parties and, in the case of Article VI, the Indemnified Seller Parties and
the Indemnified Buyer Parties, and their heirs, executors, administrators, legal
representatives, successors and assigns, and they will not be construed as
conferring any rights on any other Persons.
SECTION 8.11 Headings, Gender and "Person". All section headings
contained in this Agreement are for convenience of reference only, do not form a
part of this Agreement and will not affect in any way the meaning or
interpretation of this Agreement. Words used herein, regardless of the number
and gender specifically used, will be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine, or
neuter, as the context requires. Any reference to a "Person" herein includes an
individual, firm, corporation, limited liability company, partnership, limited
liability partnership, trust, governmental authority or body, association,
unincorporated organization or any other entity.
SECTION 8.12 Schedules and Exhibits. All Exhibits and Schedules
referred to herein are intended to be and hereby are specifically made a part of
this Agreement.
SECTION 8.13 Severability. If any part of this Agreement, including any
phrase, sentence, clause, Section or subsection, is invalid or unenforceable in
any jurisdiction, then such part will be ineffective only to the extent of such
invalidity or unenforceability, without affecting the validity or enforceability
of any other provisions hereof, and any such invalidity or unenforceability in
any jurisdiction will not affect the validity or enforceability of such
provision in any other jurisdiction.
SECTION 8.14 Counterparts. This Agreement may be executed in any number
of counterparts and any Party may execute any such counterpart, each of which
when executed and delivered will be deemed to be an original and all of which
counterparts taken together will constitute but one and the same instrument.
This Agreement will become binding when one or more
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counterparts taken together have been executed and delivered by the Parties. It
will not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.
SECTION 8.15 Effective Date. The obligations of Seller under this
Agreement will become effective (except as provided in Sections 4.1(h) and
4.1(p) which will be effective as stated therein) only upon the approval of the
Agreement by Seller's Board of Trustees and the delivery to Buyer of notice of
such approval (such date of approval and notice thereof being referred to herein
as the "Effective Date"). If the Effective Date shall have not occurred on or
before September 12, 1997, then (i) this Agreement will be terminated and will
have no further force or effect (except for Section 4.2(b) and this Section
8.15, which will continue in force) and (ii) no Party will have any liability or
obligation hereunder (except for Buyer's obligations under Section 4.2(b) and
this Section 8.15, which will continue in force) and (iii) Seller shall pay to
Buyer not later than the next business day after September 12, 1997, the sum of
$350,000 and shall reimburse Buyer for the filing fee paid by Buyer in
connection with the filings pursuant to the HSR Act, as described in Section
4.2(e). In consideration of the obligations of Seller under the preceding
sentence, the obligations of Apollo and Buyer under this Agreement will become
effective upon the signing of this Agreement.
SECTION 8.16 Guarantee. Apollo hereby unconditionally guarantees to
Seller and its Affiliates the full and timely payment and performance of all of
the obligations and agreements of Buyer under this Agreement, the Lease
Agreement and the Assignment and Assumption Agreement and Bill of Sale. The
foregoing guarantee includes the guarantee of the payment of all damages, costs
and expenses that might become recoverable as a result of the nonperformance of
any of the obligations or agreements so guaranteed or as a result of the
nonperformance of this guarantee. Any guaranteed person may, at its option,
proceed against Apollo for the performance of any such obligation or agreement,
or for damages for default in the performance thereof, without first proceeding
against any other party or against any of its properties. Apollo further agrees
that its guarantee is an irrevocable guarantee and will continue in effect
notwithstanding any extension or modification of any guaranteed obligation, any
assumption of any such guaranteed obligation by any other party, or any other
act or thing that might otherwise operate as a legal or equitable discharge of a
guarantor and Apollo hereby waives all special suretyship defenses and notice
requirements.
* * * * *
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IN WITNESS WHEREOF, the Parties have duly executed this Agreement on
the date first written.
APOLLO
APOLLO GROUP, INC.
By:______________________________________
Its:_____________________________________
BUYER
APOLLO ONLINE, INC.
By:______________________________________
Its:_____________________________________
SELLER
NATIONAL ENDOWMENT FOR
FINANCIAL EDUCATION
_________________________________________
By: William L. Anthes
President and Chief Executive
Officer
<PAGE> 55
SCHEDULE 1.1(a)--PURCHASED ASSETS
1. The Business as a going concern.
2. The names "College for Financial Planning(R)"; "Institute for Wealth
Management(R)"; "Institute for Retirement Planning(R)"; "American
Institute for Retirement Planners, Inc."; and "Institute for Tax
Studies(R)."
3. All assets and properties reflected on the Closing Balance Sheet,
except as specifically indicated thereon.
4. The following assets, properties and/or rights of Seller constituting,
or used primarily in the conduct of, the Business, except as otherwise
expressly set forth or referred to in Section 1.1(b):
(a) all equipment, tools, furniture, furnishings, goods, and other
tangible personal property (including, but not limited to, any
of the foregoing purchased subject to any conditional sales or
title retention agreement in favor of any other Person),
including those through which no line has been drawn on the
attached list (NEFE Inventory);
(b) all credits, prepaid expenses, deferred charges, advance
payments, security deposits and prepaid items;
(c) all notes and accounts receivable held by Seller and all
notes, bonds and other evidences of indebtedness of and rights
to receive payments from any Person held by Seller ("Accounts
Receivable");
(d) all supplies and inventories (collectively, the
"Inventories"), including without limitation Inventories held
at any location controlled by Seller and Inventories
previously purchased and in transit to Seller at such
locations;
(e) to the extent permitted by applicable law, all rights under
any Contract (copies of which have been provided to Buyer and
a list of which is attached hereto), instrument, registration,
license, certificate of occupancy, other permit or approval of
any nature, or other document, commitment, arrangement,
undertaking, practice or authorization, including without
limitation any right to receive payment for products sold or
services rendered, and to receive goods and services, pursuant
to such agreements and to assert claims and take other
rightful actions in respect of breaches, defaults and other
violations of such Contracts, arrangements, licenses, leases
and other agreements and otherwise;
(f) all rights (including but not limited to any and all
Intellectual Property rights) in and to the products sold or
leased and in and to any products or other Intellectual
Property rights under research or development before or on the
Closing Date;
(g) all Intellectual Property and all rights thereunder or in
respect thereof, including without limitation rights to sue
for and remedies against past, present and future
infringements thereof, and rights of priority and protection
of interests therein under the laws of any jurisdiction
worldwide and all tangible embodiments thereof;
(h) all books, records, manuals and other materials (in any form
or medium), including without limitation all such items
maintained at Seller's headquarters, advertising materials,
catalogs, price lists, correspondence, mailing lists and
databases (it being understood that Seller, upon three days'
prior notice to Apollo at any time and from time to time, and
unless Apollo reasonably objects within such three-day period,
may
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access a copy of such mailing lists and databases and may
continue to use them free of charge after the Closing for 180
days after the Closing Date in connection with any activities
that do not constitute a breach of Seller's obligations under
Section 7.8), customer lists, student records, photographs,
production data, sales and promotional materials, purchasing
materials, manufacturing and quality control records and
procedures, research and development files, data and
laboratory books, Intellectual Property disclosures, media
materials and plates, accounting records, sales order files
and litigation files;
(i) to the extent requested by Buyer, copies of personnel records
and payroll records that (i) relate to Continuing Employees
and (ii) are material to Buyer's operation of the Business
after the Closing;
(j) all rights to causes of action, lawsuits, judgments, claims
and demands of any nature available to or being pursued by
Seller with respect to the Business or the ownership, use,
function or value of any Purchased Asset, whether arising by
way of counterclaim or otherwise;
(k) all guarantees, warranties, indemnities and similar rights in
favor of Seller with respect to any Purchased Asset;
(l) all rights in and to products sold or leased (including
without limitation products hereafter returned or repossessed
and unpaid sellers' rights of rescission, replevin,
reclamation and rights to stoppage in transit)
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LIST OF CONTRACTS
ACAT
Adjunct Faculty Agreement
Affiliate Agreement (entered into with those affiliates listed on the pages
attached hereto)
AIRP
Building Maintenance Agreements
Aramark (Coffee Service)
A.B.P./IKON (Canon Copier & Fax Machine Maintenance)
U.S. West (Local Phone Service - No actual contract exists; just
monthly billing)
AT&T (Long Distance Phone Service)
Rolm (Phone Equipment Maintenance)
Pyderion (ACD Phone Reports via Rolm)
Infortext (Phone Reports)
Pitney Bowes Credit Corporation (PBCC) (Mail Equipment Maintenance)
Selectronics (Typewriter Maintenance)
UPS (Air and Ground Package Shipping & UPS OnLine(TM) Software)
PURCHASE ORDERS: (See separate listing attached)
Xerox (Docutech & Fax Machine Maintenance)
CFP Board of Standards
Denver Post Agreement
Digest Contract with A.B. Hirschfeld Press, Inc.
Dow Jones Financial Publishing
ETS Marketing Agreement
Hay Management Consultants
IBCFP Testing Services, Inc.
ICFP Agreement
ICI
Information Systems Contracts
International Agreement - Australia ("ITC")
International Agreement - France ("ISEFI")
International Agreement - Japan ("JAFP")
International Agreement - Nigeria ("FF&T")
Investment News
Kane, Dalsimer, Sullivan, Kurucz, Levy, Eisele & Richard, LLP
License Agreement
Live Review Class Agreement
Marriott City Center Agreement
Micro Mash Agreement (Draft)
Mid-America Industries Marketing Agreement
NASD
Plaza Communications
Securities Data Publishing
Sheridan Ross & McIntosh
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Simon Direct Inc.
Special Purpose Marketing, Inc.
Testing Center Agreement
Trade Agreement - ICFP
Trade Agreement - Dow Jones Financial Publishing
Trade Agreement - Securities Data Publishing
S-4
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AFFILIATES
S-5
<PAGE> 60
PURCHASE ORDERS
S-6
<PAGE> 61
SCHEDULE 1.1(b)--EXCLUDED ASSETS
1. The endowment fund and related investments owned by Seller.
2. All of Seller's assets, properties and rights through which a line has
been drawn on the list (NEFE Inventory) attached to Schedule 1.1(a).
3. All of Seller's cash or cash equivalents in transit, in hand or in bank
accounts.
4. Any of Seller's land, structures (including without limitation the
building located at 4695 South Monaco Street, Denver, Colorado),
improvements or fixtures or any water lines, rights of way, uses,
licenses, easements, hereditaments, tenements or appurtenances
belonging or appertaining thereto.
5. All of Seller's corporate records, seals, articles of incorporation,
minute books, tax returns, or other records having to do with the
corporate organization, existence or history of Seller.
6. The names and marks "National Endowment for Financial Education(R)" and
"NEFE(R)" and any name or mark derived from or including any of the
foregoing.
7. All of Seller's rights relating to its world wide web site, which is
currently maintained by Seller at http://www.nefe.org/, and all world
wide web sites directly or indirectly linked thereto; it being
understood that after the Closing Seller will modify such sites by
making all necessary and/or appropriate changes in light of the
transactions contemplated in this Agreement.
8. All of the rights that accrue or will accrue to Seller under this
Agreement.
9. All of the rights to any of Seller's claims for any federal, state,
local, or foreign tax refunds.
10. Books of account relating to the business of Seller as such will exist
following the Closing Date.
11. The Rabbi trust (The College for Financial Planning Irrevocable Trust
Agreement for Deferred Compensation Plan).
12. Any asset related to any employee benefit plan of Seller, as defined in
Section 3.1(s).
13. Seller's Pension Plan and any rights or interest therein.
14. The offices and the furniture and related equipment located therein and
office supplies used by the Excluded Employees.
15. The trade name NATIONAL ENDOWMENT FOR FINANCIAL EDUCATION.
16. The following U.S. trademark/service mark registrations and
applications:
NEFE Reg. No. 1,875,734
NEFE Reg. No. 1,926,187
NEFE Ser. No. 75/186,369
NEFE PRESS Reg. No. 1,917,259
NATIONAL ENDOWMENT FOR Reg. No. 1,895,548
FINANCIAL EDUCATION
NATIONAL ENDOWMENT FOR Reg. No. 1,890,694
FINANCIAL EDUCATION
NATIONAL ENDOWMENT FOR Reg. No. 1,879,215
FINANCIAL EDUCATION
NATIONAL ENDOWMENT FOR Ser. No. 75/186,370
FINANCIAL EDUCATION
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NEFE HIGH SCHOOL Ser. No. 75/139,888
FINANCIAL PLANNING PROGRAM
17. The following foreign trademark/service mark registrations and
applications:
NATIONAL ENDOWMENT FOR App. No. 381533 E.E.C.
FINANCIAL EDUCATION
NEFE App. No. n/a E.E.C.
18. The internet domain name "nefepress.org".
19. The following copyrighted (unregistered) works:
Public Education Materials
High School Financial Planning Program
20. The following copyrighted (registered) works:
The Wealth Care Kit, May 1995 (TX 4-350-341, 8/5/96)
The ABCs of Managing Your Money, October 1993 (TX 4-244-550, 3/20/96)
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SCHEDULE 1.3(c)(ii)--REGISTRATION PROCEDURES
In connection with the registration statement effected by Apollo
pursuant to Section 1.3(c)(ii) and in addition to the agreements contained in
Section 1.3(c) with respect to such registration:
(a) Apollo shall furnish to Seller, prior to the filing thereof with
the Commission, a copy of the registration statement, and each amendment thereof
and each amendment or supplement, if any, to the prospectus included therein.
(b) Apollo shall ensure that (i) any registration statement and any
amendment thereto and any prospectus forming part thereof and any amendment or
supplement thereto complies with the Securities Act and the rules and
regulations thereunder, (ii) any registration statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any prospectus
forming part of any registration statement, and any amendment or supplement to
such prospectus, does not include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements, in the light
of the circumstances under which they were made, not misleading; provided that
Apollo will not be liable in any case to the extent that any such claim, loss,
damage or liability arises out of or is based upon any such untrue statement or
omission made therein in reliance upon and in conformity with written
information furnished to Apollo by or on behalf of Seller specifically for
inclusion therein (or in any document incorporated therein by reference).
(c) Apollo shall advise Seller:
(i) when the registration statement and any amendment
thereto has been filed with the Commission and when the
registration statement or any post-effective amendment thereto
has become effective; and
(ii) of any request by the Commission for amendments
or supplements to the registration statement or the prospectus
included therein or for additional information.
(iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the registration
statement or the initiation of any proceedings for that
purpose;
(iv) of the receipt by Apollo of any notification
with respect to the suspension of the qualification of the
securities included therein for sale in any jurisdiction or
the initiation or threatening of any proceeding for such
purpose; and
(v) of the happening of any event that requires the
making of any changes in the registration statement or the
prospectus so that, as of such date, the statements therein
are not misleading and do not omit to state a material fact
required to be
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stated therein or necessary to make the statements therein (in
the case of the prospectus, in light of the circumstances
under which they were made) not misleading (which shall
include a notice requiring Seller to suspend using such
registration statement or such prospectus for up to but not
longer than 30 days, within which time Seller agrees to
suspend using such registration statement and prospectus and
Apollo agrees to make such changes or take such other action
as necessary to enable Seller to use on or before the end of
such 30-day period and thereafter such registration statement
and prospectus).
(d) Apollo shall use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of the registration statement at the earliest
possible time.
(e) Apollo shall furnish to Seller, without charge, at least one copy
of such registration statement and any post-effective amendment thereto,
including financial statements and schedules, and, if Seller so requests, all
exhibits (including those incorporated by reference).
(f) Apollo shall deliver to Seller, without charge, as many copies of
the prospectus included in such registration statement and any amendment or
supplement thereto as Seller may reasonably request and Apollo consents to the
use of the prospectus or any amendment or supplement thereto by Seller in
connection with the offering and sale of the securities covered by the
prospectus or any amendment or supplement thereto.
(g) Apollo shall cooperate with Seller to facilitate the timely
preparation and delivery of certificates representing securities to be sold
pursuant to any registration statement free of any restrictive legends and in
such denominations and registered in such names as Seller may request prior to
sales of securities pursuant to such registration statement.
(h) Upon the occurrence of any event contemplated by paragraph
(c)(1)(v) above, Apollo shall promptly prepare a post-effective amendment to the
registration statement or an amendment or supplement to the related prospectus
or file any other required document so that, as thereafter delivered to
purchasers of the securities included therein, the prospectus will not include
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(i) Apollo shall take such action as Seller may reasonably request to
the extent required to enable Seller to sell the Apollo Common Stock without
registration under the Securities Act within the limitations of the exemption as
provided by Rule 144 under the Securities Act (or any successor rule).
(j) Seller shall furnish to Apollo for inclusion in the registration
statement and the prospectus included therein such information of a "selling
security holder" as required by Item 507 of Regulation S-K and the proposed
method of distribution by Seller as required by Item 508 of Regulation S-K.
S-10
<PAGE> 65
(k) Seller shall notify Apollo in writing promptly after its
disposition of all Apollo Common Stock pursuant to the registration statement.
S-11
<PAGE> 66
SCHEDULE 1.3(d)--ALLOCATION OF PURCHASE PRICE
The Purchase Price will be allocated first to tangible assets in the
same amount reflected on the Closing Balance Sheet, except that if any asset has
an appraised value substantially different than the amount on the Closing
Balance Sheet, then the appraised value, determined at the cost of Buyer, will
be used. After this first allocation, then an amount will be allocated to
prepaid rent to reflect the fair value, determined at the cost of Buyer, of the
15 months of free rent contemplated in this Agreement and the Lease Agreement.
Thereafter, the balance of the Purchase Price will be allocated to goodwill and
other intangible assets.
Buyer will be responsible for preparing IRS Form 8594 and will be
responsible for forwarding it to Seller for filing with Seller's appropriate
income tax returns.
S-12
<PAGE> 67
SCHEDULE 1.4(a)--ASSUMED LIABILITIES
1. All Liabilities related to deferred tuition fees and deferred income as
specifically listed on Schedule 1.4(a)(i).
2. All accounts payable and accrued liabilities reflected on the Closing
Balance Sheet not exceeding $1,000,000, but excluding any amounts
related to:
(a) unpaid salaries or wages, including any "stay bonuses" payable
to certain employees of Seller;
(b) the Rabbi Trust (The College for Financial Planning
Irrevocable Trust Agreement for Deferred Compensation Plan);
(c) any Liability related or attributable to any of Seller's
Employee Benefit Plans as defined in Section 3.1(s); and any
other items specifically excluded from Assumed Liabilities.
3. All Liabilities relating to the "Teach-Out Commitment" required by DETC
with respect to the accreditation of Buyer by DETC.
4. All Liabilities relating to any Contract assigned to Buyer as part of
the Purchased Assets.
5. All Liabilities set forth in Section 7.1 to be fulfilled by Buyer.
6. The capital lease obligation with respect to Xerox Corporation as
reflected on the Closing Balance Sheet.
S-13
<PAGE> 68
SCHEDULE 1.4(a)(i)--DEFERRED TUITION FEES
See attached printout (to be delivered at Closing).
S-14
<PAGE> 69
SCHEDULE 7.1(a)--EXCLUDED EMPLOYEES
NAME POSITION
- ---- --------
Anthes, William President
Christy, Sharon Secretary to President
Kaus, David Controller
Linville, Carolyn Project Coordinator, Public Education Center
Neiser, Brent Director, Public Education Center
Rudolph, Mary Part Time, Secretary, High School
Schiever, Elizabeth Director, High School Program
Sigman, Geraldine Secretary, Public Education Center
Sumner, Margaret Part Time, Secretary, Pres. Office
S-15
<PAGE> 70
SCHEDULE 7.1(c)--CONTINUING EMPLOYEE BASE PAY
Note: This information has been provided to Buyer by Seller in writing but is
not included in this schedule in the interest of the privacy of
Continuing Employees.
S-16
<PAGE> 71
EXHIBIT A--FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT AND BILL OF SALE
See attached
<PAGE> 72
EXHIBIT B--FORM OF LEASE AGREEMENT
See attached
<PAGE> 73
EXHIBIT C--ASSIGNMENT OF TRADEMARKS, ETC.
ASSIGNMENT
This is an Assignment by National Endowment for Financial Education, a
Colorado corporation ("Assignor"), in favor of Apollo Online, Inc., an Arizona
corporation ("Assignee"), to be effective upon complete execution of the
signature block provided below ("Effective Date").
WHEREAS, Assignor is the owner of rights in the trademarks, services
marks, trade names, logos, business and product names, slogans, and
registrations and applications for registration thereof, identified in Schedule
I attached hereto;
WHEREAS, Assignor and Assignee, as of August 21, 1997, have entered
into an Asset Purchase Agreement wherein Assignor is transferring all of
Assignor's right, title and interest in and to the trademarks, services marks,
trade names, logos, business and product names, slogans, and registrations and
applications for registration thereof identified in Schedule I, together with
the goodwill symbolized thereby.
NOW THEREFORE, in consideration of the sum of one dollar ($1.00) and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Assignor does hereby assign and transfer to Assignee all of
Assignor's right, title and interest in and to the trademarks, services marks,
trade names, logos, business and product names, slogans, and registrations and
applications for registration thereof identified in Schedule I, together with
the goodwill symbolized thereby.
Signed this day of , 1997.
--- -----------
ASSIGNOR
NATIONAL ENDOWMENT FOR
FINANCIAL EDUCATION
-----------------------------------------
By: William L. Anthes
President and Chief Executive Officer
<PAGE> 74
EXHIBIT D--FORM OF OPINION OF SELLER'S COUNSEL
See attached
<PAGE> 75
EXHIBIT E--FORM OF CONSULTING AGREEMENT
See attached
<PAGE> 76
EXHIBIT F--FORM OF OPINION OF BUYER'S COUNSEL
See attached
<PAGE> 1
[Price Waterhouse LLP Letterhead]
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated October 14, 1996 appearing on page 29 of Apollo Group, Inc.'s Annual
Report on Form 10-K for the year ending August 31, 1996. We also consent to the
references to us under the heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
Phoenix, Arizona
September 9, 1997
