SECOND MODIFICATION AGREEMENT
BY THIS SECOND MODIFICATION AGREEMENT (the "Agreement"),
made and entered into as of the 13th day of August, 1998, XXXXX
FARGO BANK, NATIONAL ASSOCIATION, a national banking association,
whose address is 000 Xxxx Xxxxxxxxxx, Post Office Box 29742,
MAC #4101-251, Xxxxxxx, Xxxxxxx 00000-0000 (hereinafter called
"Lender"), and APOLLO GROUP, INC., an Arizona corporation, whose
address is 0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx
00000 (hereinafter called "Company"), in consideration of the
mutual covenants herein contained and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby confirm and agree as follows:
SECTION 1. RECITALS.
1.1 Company and Lender entered into a Loan Agreement dated
November 17, 1997 (as amended, the "Loan Agreement"), which
provided for, among other things, a revolving line of credit (the
"RLC") in the amount of $10,000,000.00, evidenced by a Revolving
Promissory Note dated November 17, 1997, executed by the Company
(the "RLC Note"), all upon the terms and conditions contained
therein. The Loan Agreement was modified by that Modification
Agreement dated as of February 5, 1998. All undefined
capitalized terms used herein shall have the meaning given them
in the Loan Agreement.
1.2 As of the date hereof, prior to the effect of the
modifications contained herein, the outstanding principal balance
of the RLC is $0. Lender has issued for the account of the
Company two (2) standby letters of credit in the amount of
$44,007.00 and $1,630,715.00, originally issued on November 13,
1997 and subsequently amended from time to time.
1.3 Company and Lender desire to modify the Loan Agreement
as set forth herein.
SECTION 2. LOAN AGREEMENT.
2.1 The following definition in Section 2.1 of the Loan
Agreement is hereby amended to read as follows:
"Maximum Letter of Credit Balance" means $3,500,000.00.
2.2 Article 7 of the Loan Agreement is hereby amended by
the addition of the following as Section 7.13:
"Section 7.13 Year 2000 Covenant. Borrower shall
ensure that the following are Year 2000 Compliant in a
timely manner, but in no event later than December 31, 1999:
(a) Borrower itself; and (b) any other major commercial
properties and entities in which Borrower holds a
controlling interest. Borrower shall further make
reasonable inquiries of and request reasonable validation
that each of the following are similarly Year 2000
Compliant: (x) all major tenants or other entities from
which Borrower receives payments; and (y) all major
contractors, suppliers, service providers and vendors of
Borrower. As used in this paragraph, "major" shall mean
properties or entities the failure of which to be Year 2000
Compliant would have a material adverse economic impact upon
Borrower. The term "Year 2000 Compliant" shall mean, in
regard to any property or entity, that all software,
hardware, equipment, goods or systems utilized by or
material to the physical operations, business operations, or
financial reporting of such property or entity
(collectively, the "systems") will properly perform date
sensitive functions before, during and after the year 2000.
In furtherance of this covenant, Borrower shall, in addition
to any other necessary actions, perform a comprehensive
review and assessment of all systems of Borrower, and shall
adopt a detailed plan, with itemized budget, for the
testing, remediation, and monitoring of such systems.
Borrower shall, within thirty business days of Lender's
written request, provide to Lender such certifications or
other evidence of Borrower's compliance with the terms of
this paragraph as Lender may from time to time reasonably
require.
SECTION 3. OTHER MODIFICATIONS, RATIFICATIONS AND AGREEMENTS.
3.1 All references to the Loan Agreement in the Loan
Agreement, the RLC Note and the other documents delivered with
respect to the RLC (the "Loan Documents") are hereby amended to
refer to the Loan Agreement as hereby amended.
3.2 Company acknowledges that the indebtedness evidenced by
the RLC Note is just and owing, that the balance thereof is
correctly shown in the records of Lender as of the date hereof,
and Company agrees to pay the indebtedness evidenced by the RLC
Note according to the terms thereof, as herein modified.
3.3 Company hereby reaffirms to Lender each of the
representations, warranties, covenants and agreements of Company
set forth in the RLC Note and the Loan Agreement, with the same
force and effect as if each were separately stated herein and
made as of the date hereof.
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3.4 Company hereby ratifies, reaffirms, acknowledges, and
agrees that the RLC Note and the Loan Agreement, represent valid,
enforceable and collectible obligations of Company, and that
there are no existing claims, defenses, personal or otherwise, or
rights of setoff whatsoever with respect to any of these
documents or instruments. In addition, Company hereby expressly
waives, releases and absolutely and forever discharges Lender and
its present and former shareholders, directors, officers,
employees and agents, and their separate and respective heirs,
personal representatives, successors and assigns, from any and
all liabilities, claims, demands, damages, action and causes of
action, whether known or unknown and whether contingent or
matured, that Company may now have, or has had prior to the date
hereof, or that may hereafter arise with respect to acts,
omissions or events occurring prior to the date hereof. To the
best of Company's knowledge, Company further acknowledges and
represents that no event has occurred and no condition exists
that, after notice or lapse of time, or both, would constitute a
default under this Agreement, the RLC Note or the Loan Agreement.
3.5 All terms, conditions and provisions of the RLC Note
and the Loan Agreement are continued in full force and effect and
shall remain unaffected and unchanged except as specifically
amended hereby. The RLC Note and the Loan Agreement, as amended
hereby, are hereby ratified and reaffirmed by Company, and
Company specifically acknowledges the validity and enforceability
thereof.
SECTION 4. GENERAL.
4.1 This Agreement in no way acts as a release or
relinquishment of those rights securing payment of the RLC. Such
rights are hereby ratified, confirmed, renewed and extended by
Company in all respects.
4.2 The modifications contained herein shall not be binding
upon Lender until Lender shall have received all of the
following:
(a) An original of this Agreement fully executed
by the Company.
(b) Such resolutions or authorizations and such
other documents as Lender may reasonably require
relating to the existence and good standing of the
Company and the authority of any person executing this
Agreement or other documents on behalf of the Company.
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4.3 Company shall execute and deliver such additional
documents and do such other acts as Lender may reasonably require
to fully implement the intent of this Agreement.
4.4 Company shall pay all costs and expenses, including,
but not limited to, reasonable attorneys' fees incurred by Lender
in connection herewith, whether or not all of the conditions
described in Paragraph 4.2 above are satisfied. Lender, at its
option, but without any obligation to do so, may advance funds to
pay any such costs and expenses that are the obligation of the
Company, and all such funds advanced shall bear interest at the
highest rate provided in the RLC Note and shall be due and
payable upon demand.
4.5 Notwithstanding anything to the contrary contained
herein or in any other instrument executed by Company or Lender,
or in any other action or conduct undertaken by Company or Lender
on or before the date hereof, the agreements, covenants and
provisions contained herein shall constitute the only evidence of
Lender's consent to modify the terms and provisions of the Loan
Agreement. Accordingly, no express or implied consent to any
further modifications involving any of the matters set forth in
this Agreement or otherwise shall be inferred or implied by
Lender's execution of this Agreement. Further, Lender's
execution of this Agreement shall not constitute a waiver (either
express or implied) of the requirement that any further
modification of the RLC or of the RLC Note or the Loan Agreement,
shall require the express written approval of Lender; no such
approval (either express or implied) has been given as of the
date hereof.
4.6 Time is hereby declared to be of the essence hereof of
the RLC, of the RLC Note and of the Loan Agreement, and Lender
requires, and Company agrees to, strict performance of each and
every covenant, condition, provision and agreement hereof, of the
RLC Note and the Loan Agreement.
4.7 This Agreement shall be binding upon, and shall inure
to the benefit of, the parties hereto and their heirs, personal
representatives, successors and assigns.
4.8 This Agreement is made for the sole protection and
benefit of the parties hereto, and no other person or entity
shall have any right of action hereon.
4.9 This Agreement shall be governed by and construed
according to the laws of the State of Arizona.
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IN WITNESS WHEREOF, these presents are executed as of the
date indicated above.
XXXXX FARGO BANK, NATIONAL
ASSOCIATION, a national banking
association
By: /s/Xxxxx Xxxxx
--------------------------------
Name: Xxxxx Xxxxx
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Its: Vice President
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LENDER
APOLLO GROUP, INC., an Arizona
corporation
By: /s/Xxxx X. Xxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxx
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Its: Chief Executive Officer
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COMPANY
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