THIRD MODIFICATION AGREEMENT
BY THIS THIRD MODIFICATION AGREEMENT (the "Agreement"), made
and entered into as of the 30th day of April, 1999, XXXXX FARGO
BANK, NATIONAL ASSOCIATION, a national banking association, whose
address is 000 Xxxx Xxxxxxxxxx, Post Office Xxx 00000, XXX #0000-
000, 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 previously modified by that
Modification Agreement dated as of February 5, 1998 and that
Second Modification Agreement dated as of August 13, 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 (a) two (2) standby letters of credit in the amount of
$17,860.00 and $2,742,476.00, originally issued on November 13,
1997 and subsequently amended from time to time and (b) a standby
letter of credit in the amount of $1,243,632.94 originally issued
on September 14, 1998.
1.3 Company and Lender desire to modify the Loan Agreement
as set forth herein.
SECTION 2. LOAN AGREEMENT.
The modifications provided in this Section 2 shall be
effective as of February 28, 1999 as though entered into as of
such date.
2.1 The following definitions in Section 2.1 of the Loan
Agreement are hereby amended to read as follows:
"Adjusted LIBOR Rate" means, for each LIBOR
Advance, the rate per annum determined by Lender to be
equal to (i) LIBOR plus (ii) 75 basis points.
"Maturity Date" means February 1, 2001.
"Maximum Letter of Credit Balance" means
$6,000,000.00.
2.2 Section 4.1(a) of the Loan Agreement is hereby amended
to read as follows:
(a) Provided that Borrower has satisfied the
conditions precedent contained in Section 4.2 hereof,
Lender agrees, from time to time, to issue and/or renew
Letters of Credit on behalf of Borrower or, at the
written request of Borrower, on behalf of any
Subsidiary so long as upon such issuance or renewal (i)
upon the issuance of each Letter of Credit, a fee is
paid by Borrower to Lender in an amount equal to the
greater of $500.00 or three-quarters of one percent
(0.75%) per annum of the face amount of such Letter of
Credit, based on a 360-day year, actual days elapsed,
(ii) fees upon the payment or negotiation by Lender of
each draft under any Letter of Credit and upon the
occurrence of any other activity with respect to any
Letter of Credit (including without limitation, the
transfer, amendment or cancellation of any Letter of
Credit) determined in accordance with Lender's standard
fees and charges then in effect for such activity,
(iii) in accordance with the terms and conditions of
Section 3.1 hereof, the Outstanding RLC Balance would
not exceed the RLC Commitment Amount, and (iv) the
aggregate amount of the face amount of Letters of
Credit outstanding at such time would not exceed the
Maximum Letter of Credit Balance.
2.3 Section 8.1 of the Loan Agreement is hereby amended to
read as follows:
Section 8.1 No Mergers, Acquisitions and
Consolidations. Dissolve or liquidate, or become a
party to any merger or consolidation, or sell,
transfer, lease or otherwise dispose of all or
substantially all of its property or assets, or
purchase or acquire the assets or capital stock of an
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unrelated Person, or allow any Subsidiary to do so,
except that (i) any Subsidiary of Borrower may merge
into or transfer assets to Borrower or any other
Subsidiary, and (ii) Borrower and any of its
Subsidiaries may undertake mergers and acquisitions so
long as (a) the aggregate consideration paid by
Borrower and all its Subsidiaries with respect to all
merger and acquisitions is not more than $25,000,000.00
per fiscal year and (b) Borrower or any of its
Subsidiaries is the surviving entity of any such merger
or acquisition.
2.4 Section 8.5 of the Loan Agreement is hereby amended to
read as follows:
Section 8.5 Indebtedness. Incur or permit any
Subsidiary to incur, Indebtedness from any Person,
except (i) trade payables incurred in the ordinary
course of business; (ii) Indebtedness with the Lender;
(iii) Indebtedness resulting from its guaranty
associated with the Union Bank Campus Card Program; and
(iv) Permitted Non-Bank Indebtedness not to exceed
$10,000,000.00 in the aggregate in any fiscal year.
2.5 Section 8.6 of the Loan Agreement is hereby amended to
read as follows:
Section 8.6 Payment of Dividends. Declare or
pay any cash dividends or distribution either in cash,
stock or any other property on Borrower's stock now or
hereafter outstanding; nor redeem, retire, repurchase
or otherwise acquire any shares of any class of
Borrower's stock now or hereafter outstanding.
Notwithstanding the foregoing, Borrower shall be
permitted (i) to pay intercompany dividends, provided
said dividend(s) has (have) no effect whatsoever on
Borrower's consolidated stockholder's equity, (ii) to
pay non-cash dividends including but not limited to
intercompany non-cash dividends and non-cash dividends
to facilitate stock splits, and (iii) to repurchase
shares of its Class A common stock up to an aggregate
amount of $40,000,000.00, which amount shall include
the approximately $14,500,000.00 repurchased through
February 28, 1999.
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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.
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.
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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.
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 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.
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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.
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
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Name: Xxxxx Xxxxx
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Its: Vice President
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LENDER
APOLLO GROUP, INC., an Arizona
corporation
By: /s/ Xxxxx Xxxxxxxx
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Name: Xxxxx Xxxxxxxx
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Its: Chief Financial Officer
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COMPANY
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