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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 23, 1997
REGISTRATION STATEMENT NO. 333-35465
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
AMENDMENT NO. 1
TO
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./ /
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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 23, 1997
PROSPECTUS
444,953 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 444,953 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 Selling Securityholder has entered into an agreement to sell all of the
Class A Common Stock registered hereby to BT Alex. Brown Incorporated ("BT Alex.
Brown") as described in "Plan of Distribution." The Company will not receive any
of the proceeds from the sale of Class A Common Stock by the Selling
Securityholder. 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. 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 22, 1997, the last reported
sales price of the Class A Common Stock, as reported by Nasdaq, was $38.875 per
share.
BT Alex. Brown may reoffer the Class A Common Stock from time to time in
block trades, in ordinary brokers' transactions through the facilities of Nasdaq
or otherwise, in a public offering, 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 Selling Securityholder
will receive the net proceeds from the sale to BT Alex. Brown as described in
"Plan of Distribution." 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
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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.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON
STOCK. SUCH TRANSACTIONS MAY INCLUDE THE PURCHASE OF SHARES FOLLOWING THE
OFFERING TO COVER A SHORT POSITION OR MAINTAIN THE PRICE OF THE COMMON STOCK.
SEE "PLAN OF DISTRIBUTION."
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. 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, including the
Company's Form 8-K relating to the acquisition of the business described in
"Recent Developments," 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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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 fourth 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 as of 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
444,953 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 had revenues of approximately $17 million,
excluding investment income earned on assets not being acquired by the Company
in the acquisition. 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 23, 1997. The
agreement is subject to standard closing conditions. NEFE is a not-for-profit
organization that owned and operated the College for Financial Planning and the
other divisions acquired by the Company in this transaction. NEFE currently 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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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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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
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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." Following the closing of the
acquisition, the Selling Securityholder beneficially will own 444,953 shares of
the Class A Common Stock, which represents approximately 1% 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 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.
10
<PAGE> 13
PLAN OF DISTRIBUTION
This Prospectus relates to the resale of 444,953 shares of Class A
Common Stock previously acquired by the Selling Securityholder. The Selling
Securityholder anticipates reselling the shares as soon as practicable after the
closing of the acquisition described in "Recent Developments." In this regard,
the Selling Securityholder has entered into an agreement whereby the Selling
Securityholder has agreed, subject to the terms of the agreement, to sell
the Class A Common Stock registered hereunder to BT Alex. Brown Incorporated
("BT Alex. Brown"). The price at which the Selling Securityholder will sell
shares to BT Alex. Brown will be the same as the Share Determination Price for
the business day on which the Closing Date occurs. See "Recent Developments --
Acquisition of Certain Assets of National Endowment for Financial Education". BT
Alex. Brown is a market maker in the Company's Class A Common Stock, and its
closing bid price will be averaged with the closing bid prices of two other
dealers in determining the Share Determination Price.
Subject to applicable limitations, BT Alex. Brown, in connection with
the resale of the Class A Common Stock, may place bids for or make purchases of
the Common Stock in the open market or otherwise, for long or short account, or
cover short positions incurred, to stabilize, maintain or otherwise affect the
price of the Class A Common Stock, which may be higher than the price that might
otherwise prevail in the open market. There can be no assurance that the price
of the Class A Common Stock will be stabilized, or that stabilizing, if
commenced, will not be discontinued at any time. Subject to applicable
limitations, BT Alex. Brown may also place bids or make purchases to reduce a
short position created in connection with this offering. BT Alex. Brown is not
required to engage in these activities and may end these activities at any time.
The Company and the Selling Securityholder have agreed to indemnify BT
Alex. Brown against certain liabilities, including liabilities under the
Securities Act.
BT Alex. Brown may reoffer the shares covered by this Prospectus from
time to time in block trades, in ordinary brokers' transactions through the
facilities of Nasdaq or otherwise, in a public offering, 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. In
effecting sales, BT Alex. Brown may also arrange for other brokers or dealers to
participate. Such brokers or dealers may receive commissions or discounts from
BT Alex. Brown in amounts to be negotiated. Such 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 Selling
Securityholder, BT Alex. Brown and any other 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. The Selling Securityholder has agreed to pay its
financial advisor engaged in connection with the acquisition the amount of $.06
per share in connection with the consummation of the transaction in addition to
a financial advisory fee.
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
BT Alex. Brown 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. BT Alex. Brown may elect to sell all, a portion or none of the
Class A Common Shares registered 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 August 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 50,671,756
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 506,718 shares immediately
following this 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 of the Company 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. The
financial statements of the Acquired Business as of September 30, 1996, and for
the year then ended, incorporated in this Prospectus by reference from the
Company's Report on Form 8-K, dated September 23, 1997, have been audited by
Deloitte & Touche LLP, independent accountants, as stated in their report
which is incorporated herein by reference and has been so incorporated in
reliance upon the report of such firm given upon their authority 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.
444,953
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 ....................................... $ 9,000
Legal Fees and Expenses .................................. $10,000
Accounting Fees and Expenses ............................. $10,000
Blue Sky Fees and Disbursements .......................... $ --
Miscellaneous ............................................ $ 2,697
-------
Total ............................................. $37,000
</TABLE>
* Previously paid.
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>
1 Letter Agreement between NEFE and Filed herewith
BT Alex. Brown Inc., dated
September 23, 1997 and related
indemnity agreements
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, *
L.L.P.
10.1 Asset Purchase Agreement by *
and among National Endowment
for Financial Education(R), Apollo
Online, Inc., and Apollo Group,
Inc., dated August 21, 1997
10.2 Assignment and Amendment of Filed herewith
Asset Repurchase Agreement by and
among National Endowment for
Financial Education, the College
of Financial Planning, Inc., Apollo
Online, Inc., and Apollo Group, Inc.,
dated September 23, 1997.
23.1 Consent of Price Waterhouse LLP, Filed herewith
Independent Accountants
23.2 Consent of Deloitte & Touche LLP, **
Independent Accountants
23.3 Consent of Snell & Wilmer, Included in Exhibit 5
L.L.P.
24 Powers of Attorney *
</TABLE>
* Previously filed.
** To be filed by subsequent amendment.
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
Amendment No. 1 to the 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 23, 1997.
APOLLO GROUP, INC., an Arizona corporation
By /s/ JOHN G. SPERLING
-----------------------------------------
John G. Sperling
President and Chief Executive Officer
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 23, 1997
- -------------------------------------- Chief Executive Officer
John G. Sperling (Principal Executive Officer)
/s/ * Senior Vice President and Director September 23, 1997
- --------------------------------------
William H. Gibbs
/s/ * Senior Vice President and Director September 23, 1997
- --------------------------------------
Jerry F. Noble
/s/ * Vice President of Administration, September 23, 1997
- -------------------------------------- Secretary and Director
Peter V. Sperling
/s/ JAMES W. HOGGATT Vice President of Finance and Chief September 23, 1997
- -------------------------------------- Financial Officer (Principal Financial and
James W. Hoggatt Accounting Officer)
/s/ * Vice President of Business Development September 23, 1997
- -------------------------------------- and Director
J. Jorge Klor de Alva
</TABLE>
II-4
<PAGE> 22
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ * Director September 23, 1997
- -----------------
Thomas C. Weir
/s/ * Director September 23, 1997
- ---------------------
Dino J. DeConcini
*By: /s/ JAMES W. HOGGATT
- --------------------------
James W. Hoggatt
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 1
EXECUTION VERSION
ASSIGNMENT AND AMENDMENT AGREEMENT
BY AND AMONG
NATIONAL ENDOWMENT FOR FINANCIAL EDUCATION,
THE COLLEGE FOR FINANCIAL PLANNING, INC.,
APOLLO ONLINE, INC., AND APOLLO GROUP, INC.
This ASSIGNMENT AND AMENDMENT AGREEMENT (this "Agreement") is made and
entered into as of September 23, 1997, by and among National Endowment for
Financial Education(R), a Colorado non-profit corporation ("Seller"), The
College for Financial Planning, Inc., an Arizona corporation ("College"), Apollo
Online, Inc., an Arizona corporation ("Online"), and Apollo Group, Inc., an
Arizona corporation ("Apollo"). Seller, College, Online, and Apollo are referred
to herein each individually as a "Party" and collectively as the "Parties."
RECITALS
A. Seller, Online, and Apollo are parties to an Asset Purchase
Agreement, dated as of August 21, 1997 (the "Purchase Agreement"), pursuant to
which (1) Seller has agreed to sell, and Online has agreed to purchase, certain
assets of Seller and (2) Online has agreed to assume certain liabilities of
Seller.
B. As contemplated by Section 8.6 of the Purchase Agreement, Online
desires to assign all of its rights and obligations under the Purchase Agreement
to College, and College desires to assume all of such rights and obligations.
C. The Parties desire to amend the Purchase Agreement (1) to modify the
mechanism and timing by which the Apollo Common Stock is valued and the cash
portion of the Purchase Price is calculated, (2) to make corresponding changes
as necessary to accommodate the change described in clause (1), and (3) to
modify certain other provisions of the Purchase Agreement.
D. Capitalized terms used and not defined herein have the meanings
given to such terms in the Purchase Agreement.
AGREEMENT
In consideration of the mutual promises herein made and for other good
and valuable consideration, the sufficiency of which is hereby acknowledged, the
Parties hereby agree as follows:
Section 1. Assignment. Pursuant and subject to Section 8.6 of the
Purchase Agreement, Online hereby assigns, transfers, conveys, and delivers to
College all of Online's rights, obligations and interests under the Purchase
Agreement.
<PAGE> 2
EXECUTION VERSION
Section 2. Assumption. Pursuant and subject to Section 8.6 of the
Purchase Agreement, College hereby assumes and agrees to perform and fully
discharge all of Online's rights, obligations and interests under the Purchase
Agreement.
Section 3. Amendments.
(a) Share Determination Price. The final two sentences of
Section 1.3(b)(i) of the Purchase Agreement are hereby amended and
restated as follows:
"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 fourth 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 price
of shares of Apollo Common Stock made by Smith Barney, Inc.,
Alex. Brown & Sons Incorporated, and Montgomery Securities as
reported on the NASDAQ National Market, or if unavailable, as
reported by Bloomberg Financial Markets on that date."
(b) Payment of Cash Portion of Purchase Price. Section
1.3(b)(ii) of the Purchase Agreement is hereby amended and restated as
follows:
"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 Closing Date, payable by
wire transfer of immediately available funds (or next-day
funds if such wire transfer cannot be completed on the Closing
Date solely as a result of the time constraints of normal
banking procedures for wire transfers) to such account as
Seller designates on or before the Closing Date."
(c) Closing Date. Section 2.1 of the Purchase Agreement is
amended by (i) deleting the words "(with a pre-closing held the
business day prior to the Closing Date)" where they appear in such
Section; (ii) deleting the words "8:00 a.m. local time" where they
appear in such Section and replacing them with the words "2:00 p.m.
local time"; and (iii) deleting the words "September 24, 1997" where
they appear in such Section and replacing them with the words
"September 23, 1997".
(d) Third Party Consents. Section 2.3 of the Purchase
Agreement is hereby amended by deleting the words "Required Consent"
where they appear in such Section and replacing them with the words
"Seller Required Consent".
2
<PAGE> 3
EXECUTION VERSION
(e) Deferred Tuition Fees. Section 3.1(x) of the Purchase
Agreement is hereby amended and restated as follows:
"All obligations and liabilities of Seller relating to
deferred tuition fees and deferred income are attached as
Schedule 1.4(a)(i), which Schedule will be provided by Seller
to Buyer within one business day after the Closing Date."
(f) Form 8-K. Section 4.3 of the Purchase Agreement is hereby
amended and restated as follows:
"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 no
later than the business day immediately following 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
five 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 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 file, no
later than the business day immediately following 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)."
(g) Updated Schedules. Section 4.4 of the Purchase Agreement
is hereby amended and restated as follows:
"Seller shall deliver to Apollo on or before 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."
(h) Form 8-K. Section 5.2(j) of the Purchase Agreement is
hereby amended and restated as follows:
"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 substantially ready for filing
no later than the business day immediately following the
Closing Date."
3
<PAGE> 4
EXECUTION VERSION
(i) Continuing Employees. Section 7.1(a) of the Purchase
Agreement is hereby amended and restated as follows:
"Buyer will hire those individuals who accept Buyer's offer of
employment (the "Continuing Employees"), it being understood
that for purposes of this Agreement all individuals that are
employees of Seller on the Closing Date will be deemed to be
Continuing Employees unless such employees either (i) are
included on Schedule 7.1(a) or (ii) have received and rejected
Buyer's offer of employment."
Section 4. Effect. Except as specifically amended by this Agreement,
the Purchase Agreement will remain in full force and effect. All references to
the "Agreement" in the Purchase Agreement will hereafter be deemed to refer to
the Purchase Agreement as amended hereby.
Section 5. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 6. Governing Law. 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.
* * * * *
4
<PAGE> 5
EXECUTION VERSION
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
NATIONAL ENDOWMENT FOR FINANCIAL
EDUCATION
By:
-------------------------------------
William L. Anthes
President and Chief Executive Officer
THE COLLEGE FOR FINANCIAL PLANNING,
INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
APOLLO ONLINE, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
APOLLO GROUP, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE> 1
September 23, 1997
BT Alex. Brown Incorporated
One South Street
Baltimore, Maryland 21202-3220
Dear Ladies and Gentlemen:
National Endowment for Financial Education ("NEFE") has entered into an
agreement for the sale of assets and related business operations of the College
for Financial Planning and certain related entities to Apollo Group, Inc.
("Apollo") for $35 million in cash and securities, the securities portion of
which will consist of 444,953 shares of Apollo Class A Common Stock delivered to
NEFE (the "Shares"). In this connection, Apollo has filed with the Securities
and Exchange Commission (the "Commission") a copy of the Asset Purchase
Agreement dated August 21, 1997, as amended (the "Agreement").
Pursuant to the Agreement, it is expected that the acquisition
transaction will close and NEFE will receive the Shares on or about September
23, 1997. The Agreement also provides that on the date of the closing of the
acquisition transaction (the "First Closing") a shelf registration statement on
Form S-3 (the "Registration Statement") with respect to the Shares will be
declared effective. NEFE warrants and represents that upon the First Closing, it
will have good and marketable title to the Shares, free and clear of all liens,
claims and encumbrances.
This will confirm that subject to the provisions of this letter, BT
Alex. Brown Incorporated ("BT Alex. Brown") has agreed to buy, as principal, the
Shares from NEFE at the time of the Second Closing (as defined below), and NEFE
has agreed to sell the Shares to BT Alex. Brown at the time of the Second
Closing (as defined below). The purchase price shall be the Share Determination
Price, on the date of the First Closing, as described in Section 1.3(b)(ii) of
the Agreement. BT Alex. Brown's agreement to purchase the Shares is subject to
the following:
<PAGE> 2
1) The Registration Statement shall be declared effective, and BT Alex.
Brown shall be advised of such fact, on or before the Second Closing (as defined
below);
2) The closing date for the purchase of the Shares by BT Alex. Brown,
(the "Second Closing") will be the third business day after the day that both
(i) the Registration Statement shall have been declared effective by the
Commission and (ii) the First Closing, in which NEFE shall have received the
Shares, shall have occurred (e.g., if such effectiveness and the First Closing
occur on September 23, 1997, then the Second Closing shall occur on September
26, 1997);
3) On or before the effectiveness of this letter, Apollo and NEFE,
respectively, will have executed the letters regarding indemnity and other
matters that are attached hereto as Exhibits A and B, respectively, and shall
have delivered such letter to BT Alex. Brown;
4) BT Alex. Brown may terminate its obligation to purchase the Shares
by providing written notice to NEFE, prior to the Second Closing, if any of the
following has occurred:
(i) since the respective dates as of which information is given in the
Registration Statement and the accompanying prospectus, any material adverse
change in or affecting the condition, financial or otherwise, of Apollo or the
earnings, business, management, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of Apollo; (ii) any outbreak or
escalation of hostilities or declaration of war or national emergency or other
national or international calamity or crisis or material and adverse change in
economic or political conditions if the effect of such outbreak, escalation,
declaration, emergency, calamity, crisis or material and adverse change on the
financial markets of the United States would, in BT Alex. Brown's reasonable
judgment, make it impracticable to market the Shares or to enforce contracts for
the sale of the Shares; (iii) suspension of trading in securities generally on
the New York Stock Exchange or the American Stock Exchange or limitation on
prices (other than limitations on hours or numbers of days of trading) for
securities on either such Exchange; (iv) the enactment, publication, decree or
other promulgation of any statute, regulation, rule or order of any court or
other governmental authority which in BT Alex. Brown's reasonable opinion
materially and
-2-
<PAGE> 3
adversely affects the business or operations of Apollo taken as a whole; (v)
declaration of a banking moratorium by United States or New York State
authorities; (vi) the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the use of the accompanying
prospectus, or of the institution of any proceedings for that purpose; or (vii)
the suspension of trading for more than one hour of Apollo's common stock by the
NASDAQ Stock Market, the Commission or any other governmental authority.
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return one copy.
Very truly yours,
National Endowment for Financial Education
------------------------------------------
William L. Anthes
President
Acknowledged and Agreed:
BT Alex. Brown Incorporated
- ------------------------------------------
By:
--------------------------------------
Its: Managing Director
<PAGE> 4
EXHIBIT A--APOLLO INDEMNITY LETTER
<PAGE> 5
APOLLO
September 23, 1997
BT Alex. Brown Incorporated
One South Street
Baltimore, Maryland 21202-3220
Ladies and Gentlemen:
Apollo Group, Inc. (the "Company") has filed a registration statement
on Form S-3 (the "Registration Statement") relating to the resale of 444,953
shares of the Class A Common Stock of the Company (the "Shares"). The Shares
will be issued by the Company directly to the National Endowment for Financial
Education (the "Selling Shareholder"), and may be offered for sale through BT
Alex. Brown Incorporated ("BT Alex. Brown").
The Registration Statement includes a prospectus (the "Prospectus")
meeting the requirements of the Securities Act of 1933 (the "Act"). Each
preliminary prospectus included in the Registration Statement prior to the time
it becomes effective is herein referred to as a "Preliminary Prospectus." Any
reference herein to any Preliminary Prospectus or the Prospectus shall be deemed
to refer to and include the documents incorporated by reference therein and any
amendments and supplements thereon.
The Company represents, warrants and covenants:
a) The Registration Statement with respect to the Shares has been
prepared in conformity with the requirements of the Act and the Rules and
Regulations (the "Rules and Regulations") of the Securities and Exchange
Commission;
b) The Registration Statement and the Prospectus comply or will comply
in all material respects, as the case may be, to the requirements of, the Act
and the Rules and Regulations. The documents incorporated by reference in the
Prospectus, at the time they were filed with the Commission conformed at the
time of filing, in all material respects to the requirements of the Securities
Exchange Act of 1934 or the Act, as applicable, and the Rules and
<PAGE> 6
Regulations of the Commission thereunder. The Registration Statement and any
amendment thereto, does not contain and will not contain, as the case may be,
any untrue statement of a material fact and does not omit nor will not omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and the Prospectus and any amendments and
supplements thereto does not contain and will not contain, as the case may be,
any untrue statement of a material fact and does not omit nor will not omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, provided that the Company 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 the Company by or on
behalf of the Selling Shareholder or BT Alex. Brown specifically for inclusion
therein (or specifically for inclusion in any document incorporated therein by
reference); and
c) The Company will advise BT Alex. Brown promptly: (i) of any request
of the Commission for amendment to the Registration Statement or for supplement
to the Prospectus or for any additional information and (ii) the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the use of the Prospectus, or of the institution of any proceedings
for that purpose.
The Company agrees to indemnify and hold harmless BT Alex. Brown and
each person, if any, who controls BT Alex. Brown within the meaning of the Act
against any losses, claims, damages or liabilities to which BT Alex. Brown or
such controlling person may become subject under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained or incorporated by
reference in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances under which they were made, and will reimburse BT Alex. Brown and
each such controlling person for any legal or other expenses reasonably incurred
by BT Alex. Brown or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding and
expenses reasonably incurred in responding to a subpoena or governmental inquiry
whether or not BT Alex. Brown or such controlling person is a party to any
action or proceeding; provided, however, that the Company will not be liable in
such case to the extent that any such loss, claim, damage or liability arises or
is based upon 1) any sale of Shares to any person by BT Alex. Brown if BT Alex.
Brown failed to send or give a copy of the Prospectus, as the same may be
amended or supplemented, to that person within the time required by the Act, and
that the untrue statement or alleged untrue statement of a material fact was
corrected in the Prospectus, or 2) any such untrue statement or omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Selling Shareholder or BT Alex. Brown
specifically for inclusion therein (or specifically for inclusion in any
document incorporated therein by reference). This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
2
<PAGE> 7
In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to this Agreement, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the "indemnifying
party"). In case any such proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein, and, to the
extent it shall wish, jointly with any other indemnifying party, to assume the
defense thereof, with counsel satisfactory to such indemnified party and shall
pay as incurred the reasonable fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel at its own expense. Notwithstanding the
foregoing, the indemnifying party shall pay as incurred the fees and expenses of
the counsel retained by the indemnified party in the event (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees
and expenses of more than one separate firm for all such indemnified parties.
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment.
If the indemnification provided for herein is unavailable or
insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and BT Alex. Brown on the other from the offering of the
Shares. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and BT Alex. Brown on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and BT Alex. Brown on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering received by the Company bear to the total commissions and other
compensation received by BT Alex. Brown. The relative fault shall be determined
by reference to, among other things, the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
3
<PAGE> 8
The parties agree that it would not be just and equitable if
contributions pursuant to this Agreement were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to above shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Agreement, BT Alex. Brown shall not be
required to contribute any amount in excess of the commissions and other
compensation applicable to the Shares sold through BT Alex. Brown. In addition,
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
In any proceeding relating to the Registration Statement, the
Prospectus or any supplement or amendment thereto, each party against whom
indemnification or contribution may be sought hereunder hereby consents to the
jurisdiction of any court having jurisdiction over any other contributing party.
Very truly yours,
APOLLO GROUP, INC.
By:
--------------------------
Title:
-----------------------
Accepted and Agreed
BT Alex. Brown Incorporated
By:
-------------------------------
4
<PAGE> 9
EXHIBIT B--NEFE INDEMNITY LETTER
<PAGE> 10
NATIONAL ENDOWMENT FOR FINANCIAL EDUCATION
4695 South Monaco Street
Denver, Colorado 80237-3403
September 23, 1997
BT Alex. Brown Incorporated
One South Street
Baltimore, Maryland 21202-3220
Ladies and Gentlemen:
Apollo Group, Inc. (the "Company") has filed a registration statement
on Form S-3 (the "Registration Statement") relating to the resale of 444,953
shares of the Class A Common Stock of the Company (the "Shares"). The Shares
will be issued by the Company directly to the National Endowment for Financial
Education (the "Selling Shareholder"), and may be offered for sale through BT
Alex. Brown Incorporated ("BT Alex. Brown").
The Registration Statement includes a prospectus (the "Prospectus")
meeting the requirements of the Securities Act of 1933 (the "Act"). Each
preliminary prospectus included in the Registration Statement prior to the time
it becomes effective is herein referred to as a "Preliminary Prospectus." Any
reference herein to any Preliminary Prospectus or the Prospectus shall be deemed
to refer to and include the documents incorporated by reference therein and any
amendments and supplements thereon.
NEFE agrees to indemnify and hold harmless BT Alex. Brown and each
person, if any, who controls BT Alex. Brown within the meaning of the Act
against any losses, claims, damages or liabilities to which BT Alex. Brown or
such controlling person may become subject under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained or incorporated by
reference in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances under which they were made, but only to the extent that any such
loss, claim, damage or liability
<PAGE> 11
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 the Selling Shareholder specifically for inclusion
therein (or specifically for inclusion in any document incorporated therein by
reference), and will reimburse BT Alex. Brown and each such controlling person
for any legal or other expenses reasonably incurred by BT Alex. Brown or such
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, action or proceeding and expenses reasonably incurred
in responding to a subpoena or governmental inquiry whether or not BT Alex.
Brown or such controlling person is a party to any action or proceeding;
provided, however, that the Company will not be liable in such case to the
extent that any such loss, claim, damage or liability arises or is based upon
any sale of Shares to any person by BT Alex. Brown if BT Alex. Brown failed to
send or give a copy of the Prospectus, as the same may be amended or
supplemented, to that person within the time required by the Act, and that the
untrue statement or alleged untrue statement of a material fact was corrected in
the Prospectus.
In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to this Agreement, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the "indemnifying
party"). In case any such proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein, and, to the
extent it shall wish, jointly with any other indemnifying party, to assume the
defense thereof, with counsel satisfactory to such indemnified party and shall
pay as incurred the reasonable fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel at its own expense. Notwithstanding the
foregoing, the indemnifying party shall pay as incurred the fees and expenses of
the counsel retained by the indemnified party in the event (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees
and expenses of more than one separate firm for all such indemnified parties.
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment.
If the indemnification provided for herein is unavailable or
insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by NEFE
on the one hand and BT Alex.
2
<PAGE> 12
Brown on the other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law then each indemnifying party shall contribute to such amount paid or payable
by such indemnified party in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of NEFE on the one hand
and BT Alex. Brown on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by NEFE on the one hand and BT
Alex. Brown on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering received by NEFE bear to the total
commissions and other compensation received by BT Alex. Brown. The relative
fault shall be determined by reference to, among other things, the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this Agreement were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to above shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Agreement, BT Alex. Brown shall not be
required to contribute any amount in excess of the commissions and other
compensation applicable to the Shares sold through BT Alex. Brown. In addition,
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
In any proceeding relating to the Registration Statement, the
Prospectus or any supplement or amendment thereto, each party against whom
indemnification or contribution may be sought hereunder hereby consents to the
jurisdiction of any court having jurisdiction over any other contributing party.
Very truly yours,
NATIONAL ENDOWMENT FOR FINANCIAL
EDUCATION
By:
------------------------------------
Title: William L. Anthes, its President
Accepted and Agreed
BT Alex. Brown Incorporated
By:
3
<PAGE> 1
EXHIBIT 23.1
[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 22, 1997
