10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended: August 31, 2007
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from [     ] to [     ]

Commission file number: 0-25232

APOLLO GROUP, INC.
(Exact name of Registrant as specified in its charter)

ARIZONA	86-0419443
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4615 EAST ELWOOD STREET, PHOENIX, ARIZONA 85040
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (480) 966-5394

Securities registered pursuant to Section 12(b) of the Act:

Apollo Group, Inc.
Class A common stock, no par value
(Title of each class)
The NASDAQ Stock Market LLC
(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  YES o     NO þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  YES o     NO þ

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES þ     NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer o Non-accelerated filer o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act).  YES o     NO þ

No shares of Apollo Group, Inc. Class B common stock, its voting stock, are held by non-affiliates. The holders of Apollo Group, Inc. Class A common stock are not entitled to any voting rights. The aggregate market value of Apollo Group Class A common stock held by non-affiliates as of February 28, 2007 (last day of the Registrant’s most recently completed second fiscal quarter), was approximately $6.6 billion.

The number of shares outstanding for each of the Registrant’s classes of common stock as of October 10, 2007 is as follows:

Apollo Group, Inc. Class A common stock, no par value	166,312,000 Shares
Apollo Group, Inc. Class B common stock, no par value	475,000 Shares

Documents Incorporated by Reference: None

APOLLO GROUP, INC. AND SUBSIDIARIES

FORM 10-K

INDEX

			Page
PART I
Special Note Regarding Forward-Looking Statements				3
	Item 1.	Business		4
	Item 1A.	Risk Factors		24
	Item 1B.	Unresolved Staff Comments		34
	Item 2.	Properties		34
	Item 3.	Legal Proceedings		34
	Item 4.	Submission of Matters to a Vote of Security Holders		39
PART II
	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		40
	Item 6.	Selected Consolidated Financial Data		43
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		45
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		58
	Item 8.	Financial Statements and Supplementary Data		60
	Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		104
	Item 9A.	Controls and Procedures		104
	Item 9B.	Other Information		106
PART III
	Item 10.	Directors and Executive Officers of the Registrant		106
	Item 11.	Executive Compensation		106
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		106
	Item 13.	Certain Relationships and Related Transactions		106
	Item 14.	Principal Independent Registered Public Accounting Firm Fees and Services		106
PART IV
	Item 15.	Exhibits and Financial Statement Schedules		106
SIGNATURES				110
EX-10.26
EX-10.27
EX-10.28
EX-10.29
EX-23.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

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Special Note Regarding Forward-Looking Statements

This Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”), contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact may be forward-looking statements. Such forward-looking statements include, among others, those statements regarding future events and future results of Apollo Group, Inc. (“the Company,” “Apollo Group,” “Apollo,” “APOL,” “we,” “us” or “our”) that are based on current expectations, estimates, forecasts, and the beliefs and assumptions of us and our management, and speak only as of the date made and are not guarantees of future performance. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “believes,” “expects,” “anticipates,” “estimates,” “plans,” “predicts,” “targets,” “potential,” “continue,” “objectives,” or the negative of these terms or other comparable terminology. Such forward-looking statements are necessarily estimates based upon current information and involve a number of risks and uncertainties. Such statements should be viewed with caution. Actual events or results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include but are not limited to:

•  changes in the regulations of the education industry, including those items set forth in Item 1 under the sections titled “Regulatory Environment,” “Accreditation,” “Federal Financial Aid Programs,” and “State Authorization;”

•  each of the factors discussed in Item 1A, Risk Factors;

•  those factors set forth in Item 7; and

•  changes in the requirements surrounding the reports that we file with the Securities and Exchange Commission (“SEC”).

The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We undertake no obligation to publicly update or revise any forward-looking statements, or any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements.

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PART I

Item 1 — Business

Overview

Apollo Group, Inc. has been an education provider for more than 30 years, operating University of Phoenix, Inc. (“UPX”), Institute for Professional Development, Inc. (“IPD”), The College for Financial Planning Institutes Corporation (“CFP”), Western International University, Inc. (“WIU”) and Insight Schools, Inc. (“Insight”), all of which are our wholly-owned subsidiaries. We offer innovative and distinctive educational programs and services at high school, college and graduate levels, at 102 campuses and 157 learning centers in 40 states and the District of Columbia; Puerto Rico; Alberta and British Columbia; Canada; Mexico; and The Netherlands; as well as online throughout the world. Our combined Degreed Enrollment for UPX, including Axia College, as of August 31, 2007, was approximately 313,700. In addition, students are enrolled in WIU, CFP and IPD Client Institutions (as defined below), and additional non-degreed students are enrolled in UPX. See Customers/Students in Item 1 of this Report. Degreed Enrollments represent individual students enrolled in our degree programs who attended a course during the quarter and did not graduate as of the end of the quarter (including Axia students enrolled in UPX and WIU). Degreed Enrollments include any student who graduated from one degree program and started a new degree program (for example, a graduate of the associate’s degree program returns for a bachelor’s degree or a graduate of a bachelor’s degree program returns for a master’s degree), as well as students who have been out of attendance for greater than 12 months and return to a program.

UPX has been accredited by The Higher Learning Commission (“HLC”) of the North Central Association of Colleges and Schools (“NCA”) since 1978. UPX has successfully replicated its teaching/learning model while maintaining educational quality at 79 local campuses and 117 learning centers in 38 states and the District of Columbia; Puerto Rico; Alberta and British Columbia, Canada; Mexico; and The Netherlands. In Canada, UPX operates through Canadian subsidiary corporations. In Mexico, UPX operates through two subsidiary corporations. UPX also offers its educational programs worldwide through its online educational delivery system. UPX has customized computer programs for student tracking, marketing, faculty recruitment and training and academic quality management. These computer programs are intended to provide uniformity among UPX’s campuses and learning centers, which enhances UPX’s ability to expand into new markets while maintaining academic quality. UPX’s tuition revenues represented approximately 93% of our consolidated revenues for the year ended August 31, 2007. Axia College, which has been a part of UPX since March 2006 (Axia was a part of WIU from September 2004 through February 2006), offers associate’s degrees in business, criminal justice, general studies, health administration and information technology worldwide through its computerized educational delivery system. Axia College is designed for students with little or no college experience and offers small classes of fewer than 20 students and dedicated faculty who are specially trained in facilitating the online learning experience.

WIU is accredited by HLC and currently offers undergraduate and graduate degree programs at one campus and four learning centers in Arizona, and, through various joint educational agreements, in China and India.

IPD provides program development and management consulting services to regionally accredited private colleges and universities (“Client Institutions”) that are interested in expanding or developing their programs for working students. These services typically include degree program design, curriculum development, market research, student recruitment, accounting and administrative services. IPD provides these services at 21 campuses and 36 learning centers in 23 states in exchange for a contractual share of the tuition revenues generated from these programs. IPD’s contracts with its Client Institutions generally range in length from five to ten years with provisions for renewal. IPD typically works with institutions that:

•  are interested in developing or expanding degree programs for working students;

•  recognize that working students require a different teaching/learning model than the typical 18- to 24-year-old student;

•  desire to increase enrollments with a limited investment in institutional capital; and

•  recognize the unmet educational needs of the working students in their market.

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CFP provides financial planning education programs, including the Certified Financial Planner Professional Education Program^tm Certification; graduate degree programs in financial planning, financial analysis, and finance; and certification programs in retirement, asset management, and other financial planning areas. CFP offers these programs through its campus in Colorado and also offers some of its non-degree programs at UPX campuses. CFP is accredited by HLC and is a member of the NCA.

On October 20, 2006, we completed the acquisition of Insight. Insight operates an online high school and engages in the business of servicing cyber high schools and providing other online education. We acquired all of the outstanding common stock of Insight for $15.5 million. This acquisition allows us to expand into the online charter high school market, some of whose graduates are expected to enroll in UPX.

On August 8, 2007, we announced our intention to acquire online advertising network Aptimus, Inc. (Nasdaq: APTM) for $6.25 per share in an all-cash transaction valued at approximately $47.6 million. This acquisition will help us increase the effectiveness and efficiency of our online advertising directed at increasing awareness of and access to quality education services. The closing of the acquisition is subject to customary closing conditions, including Aptimus shareholder approval. The acquisition is expected to close in early fiscal 2008, after Aptimus’ shareholder meeting scheduled for October 29, 2007.

On October 22, 2007, we formed a joint venture with The Carlyle Group (“Carlyle”), called Apollo Global, Inc. (“Apollo Global”) to pursue investments in the international education services sector. Carlyle, based in Washington D.C., is one of the world’s largest and most prestigious private equity firms, managing over $76 billion in assets for over 1,000 institutional investors, including several of the largest pension funds in the U.S. Through Apollo Global, we intend to capitalize on the high global demand for education services. Apollo Global will provide education services through two primary strategies. First, Apollo Global will continue to provide our wide range of U.S. accredited degrees to foreign students outside the U.S. Second, Apollo Global will provide local education services, including post-secondary degrees, in the countries it seeks to enter. These capabilities will be achieved through both a disciplined acquisition process and organic growth.

Apollo Global will utilize the portfolio of our core competencies while leveraging Carlyle’s education industry and political relationships, and strategic assets across the global education sector. Combining Carlyle’s global footprint with our educational expertise and Apollo Global’s local, “in-country” expertise will assist in sourcing acquisitions, facilitate due diligence for new investment opportunities and enhance the opportunity for organic growth. Investments by Apollo Global will likely include a range of structures, including minority investments, 50/50 partnerships, and controlling acquisitions.

The decision to create Apollo Global was driven by the following factors:

•  Attractive demographics and economic growth in the targeted international markets, primarily Latin America and Asia. According to World Bank estimates, there will be over 175 million post-secondary students outside the U.S. by the year 2035;

•  Strong foreign demand for and high value placed on the U.S. educational system;

•  The ability to leverage our 30+ years of experience in providing education services, and transfer this expertise to companies that are acquired or developed in foreign markets;

•  Increasing U.S. barriers to foreign students seeking entry visas to study in the U.S.;

•  The opportunity to benefit from our leading technology platform by offering our online products and services in new markets, and by making this technology and online delivery platform available to companies that we acquire;

•  The opportunity to diversify through the acquisition and development of new businesses and brands; and

•  A desire to mitigate economic and geographic risk associated with a primarily domestic business.

We have agreed that, within approximately 18 months, all of our education-related activities directed toward students who live outside the U.S. and who are not citizens of the U.S. or members of the U.S. military will be conducted through Apollo Global. We have agreed to commit up to $801 million in cash or contributed assets and

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own 80.1% of Apollo Global. Carlyle has agreed to commit up to $199 million in cash or contributed assets and own the remaining 19.9%. Additionally, conservative amounts of debt will be employed, as appropriate. The Board of Apollo Global will consist of seven directors, four of whom will be designated by us and two of whom will be designated by Carlyle. The seventh director will be the President of Apollo Global. Additionally, 10 to 15% of the value of the equity will be available to provide incentives for management of Apollo Global. Apollo Global will be consolidated in our financial statements.

Our operating segments are currently aggregated into three reportable segments for financial reporting purposes: UPX, Other Schools, and Corporate. The Other Schools segment includes IPD, WIU, CFP, and Insight. The following table presents the revenue for the years ended August 31, 2007, 2006 and 2005 for each of our segments:

	Year Ended August 31,
($ in millions)	2007		2006		2005
UPX	$	2,537.8	$	2,074.4	$	2,014.1
Other Schools		184.6		402.1		235.2
Corporate		1.4		1.0		1.8
Tuition and other revenue, net	$	2,723.8	$	2,477.5	$	2,251.1

Our operations are generally subject to seasonal trends. We experience, and expect to continue to experience, seasonal fluctuations in our results of operations as a result of changes in the level of student enrollments. While we enroll students throughout the year, second quarter (December through February) enrollments and related revenues generally are lower than other quarters due to holiday breaks in December and January. We experience a seasonal increase in new enrollments in August of each year when most other colleges and universities begin their fall semesters.

We incorporated in Arizona in 1981 and maintain our principal executive offices at 4615 East Elwood Street, Phoenix, Arizona 85040. Our telephone number is (480) 966-5394. Our website addresses are as follows:

• Apollo Group	www.apollogrp.edu
• UPX	www.phoenix.edu
• IPD	www.ipd.org
• WIU	www.wintu.edu
• Axia College	www.axia.phoenix.edu
• CFP	www.cffp.edu
• Insight	www.insightschools.net

Our fiscal year is from September 1 to August 31. Unless otherwise stated, references to the years 2007, 2006, 2005, 2004 and 2003 relate to the fiscal years ended August 31, 2007, 2006, 2005, 2004 and 2003, respectively.

Industry Background

The non-traditional education market is a significant and growing component of the post-secondary education market, which is estimated by the U.S. Department of Education to be a more than $373.0 billion industry. According to the U.S. Department of Education, National Center for Education Statistics, over 6.8 million, or 39%, of all students enrolled in higher education programs are over the age of 24. A large percentage of these students would not be classified as traditional (i.e., living on campus, supported by parents and not working). The non-traditional students typically are looking to improve their skills and enhance their earnings potential within the context of their careers. Between 2002 and 2014, the percentage of 18- to 24-year-old students in the U.S. is expected to increase 16%. The market for non-traditional education should continue to increase, reflecting the rapidly expanding knowledge-based economy.

Many working students seek accredited degree programs that provide flexibility to accommodate the fixed schedules and time commitments associated with their professional and personal obligations. The education formats offered by our institutions enable working students to attend classes and complete coursework on a more convenient schedule than traditional universities offer. Many universities and institutions offering technology-based

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education do not effectively address the unique requirements of working students due to the following specific constraints:

•  Traditional universities and colleges were designed to fulfill the educational needs of conventional, full-time students ages 18 to 24, and that market segment remains the primary focus of these universities and institutions. This focus has resulted in a capital-intensive teaching/learning model that may be characterized by:

•  a high percentage of full-time, tenured faculty;

•  physically configured library facilities and related full-time staff;

•  dormitories, student unions and other significant plant assets to support the needs of younger students; and

•  an emphasis on research and related laboratories, staff and other facilities.

•  The majority of accredited colleges and universities continue to provide the bulk of their educational programming on an agrarian calendar with time off for traditional breaks. The academic year generally runs from September to mid-December and from mid-January to May. As a result, most full-time faculty members only teach during that limited period of time. While this structure may serve the needs of the full-time resident, 18- to 24-year-old student, it limits the educational opportunity for working students who must delay their education for up to four months during these spring, summer and winter breaks.

•  Traditional universities and colleges may also be limited in their ability to market to, or provide the necessary customer service for, working students because they require the development of additional administrative and enrollment infrastructure.

•  Diminishing financial support for public colleges and universities has required them to focus more tightly on their existing student populations and missions, which has made access to public education more restrictive than ever.

We believe that our track record for enrollment and revenue growth is attributable to our offering comprehensive services combining quality educational content, teaching resources and customer service with formats that are accessible and easy to use for students as well as corporate clients. We maintain a primary focus on providing quality education to serve the needs of working students.

Our Offerings

Our over 30-year history as a provider of higher education for working students enables us to provide students with quality education and responsive customer service. Our institutions have gained expertise in designing curriculum, recruiting and training faculty, monitoring academic quality and providing a high level of support services to students that allows our institutions to offer the following:

•  Accredited Degree Programs.  UPX, WIU, and CFP are accredited by HLC of the North Central Association of Colleges and Schools. While IPD itself is not accredited, one of the regional accrediting associations accredits the Client Institutions of IPD at their respective levels.

•  Experienced Faculty Resources.  All of our faculty possess either a master’s or doctoral degree. On average, UPX faculty have more than 10 years of experience in the field in which they instruct. Our institutions have well-developed methods for hiring and training faculty, which include peer reviews of newly hired instructors by other members of the faculty, training in grading and instructing students, and a teaching mentorship with a more experienced faculty member. Classes are designed to be small and engaging. Faculty members at Axia are also required to be accessible to students by maintaining online office hours.

•  Current and Relevant Standardized Programs.  Faculty content experts design curriculum for the majority of programs at our institutions. This enables us to offer current and relevant standardized programs to our students. We also utilize institution-wide systems to assess the educational outcomes of our students and improve the quality of our curriculum and instructional model. These systems evaluate the cognitive (subject

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matter) and affective (educational, personal and professional values) skills of our students upon registration and upon conclusion of the program, and also survey students two years after graduation in order to assess the quality of the education they received.

•  Benefits to Employers.  The employers of students enrolled at our institutions often provide input to faculty members in designing curriculum, and class projects are typically based on issues relevant to the companies that employ our students. Classes are taught by faculty members who emphasize the skills desired by employers. In addition, the class time flexibility further benefits employers since it avoids conflict with their employees’ work schedules.

Strategy

Our primary mission is to strengthen our position as a leading provider of high quality, accessible education for individuals around the world by affording strong returns for all of our stakeholders: students, employees, and investors. Our primary focus is providing the highest quality educational product and services for our students in order for them to maximize the benefits of their educational experience. A superior educational experience, combined with engaged and energized faculty and employees, should, in turn, enable our shareholders to achieve strong returns on their capital over time.

In light of the changes in our senior management team in 2007, we have committed to a strategic plan to best ensure the effective deployment of our resources and our capital. An outline of the plan is presented below which, we believe, is consistent with our stated mission of providing strong returns for all of our stakeholders.

•  Maximize the value of our core existing operations.  This is our number one strategic goal over the next several years. This includes enhancing and expanding our current product offerings, improving student success rates, and maximizing the leverage of our existing infrastructure. We believe that we can increase our leading market position and produce solid top- and bottom-line organic growth through formalizing and sharing best practices in instruction, curriculum, and student support across our existing learning platforms. In addition, we will continue to explore new degree offerings and complementary programs.

•  Explore opportunities to expand our footprint into attractive and rapidly growing international markets.  We believe that there is a growing need for high quality post-secondary education in several key geographies around the world, including Latin America, Asia and India, and that we have capabilities and expertise that can be useful in providing these services beyond our current reach. We intend to explore quality opportunities to partner with and/or acquire existing institutions of higher learning where we can best position ourselves for longer-term attractive growth and value creation by leveraging our more than 30 years of domestic experience to enhance the quality, delivery, and student outcomes associated with the respective curricula.

•  Leverage our existing infrastructure to expand our virtual high school platform as we seek public school charter recognition in those 21 states currently allowing virtual charter schools.  We intend to further expand the platform into the remaining states through a private school model over time.

•  Employ a disciplined approach to our capital structure and redeployment of our excess cash flow.  We will continue to invest capital in our high-return core domestic business, explore strategic and value-creating global acquisition opportunities, and enhance our shareholder value.

•  Improve our image and recognition in the communities we serve by performing as a responsible corporate citizen, contributing to our many local communities, and supporting environmentally sound business practices.

Our goal over time is to generate mid-to-high single-digit domestic revenue growth and low double-digit domestic operating income and free cash flow growth.

Teaching/Learning Model

The teaching/learning models used by UPX, IPD Client Institutions and WIU were designed specifically to meet the educational needs of working students. The models are structured to enable students who are employed

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full-time to earn their degrees and still meet their personal and professional responsibilities. Students attend weekly classes. In addition at UPX (excluding Axia College), students also meet weekly as part of a three- to five-person learning team. Learning team sessions are an integral part of each UPX course. They facilitate in-depth review of and reflection on course materials. Members work together to complete assigned group projects and develop communication and teamwork skills. Courses are designed to facilitate the application of knowledge and skills to the workplace and are taught by faculty members who possess advanced degrees and have professional experience in business, industry, government, or other professions. In this way, faculty members are able to share their professional knowledge and skills with the students.

Components of our teaching/learning models include:

Curriculum	Curriculum is designed by teams of academicians and practitioners to integrate academic theory and professional practice and their application to the workplace. The curriculum provides for the achievement of specified educational outcomes that are based on input from faculty, students and students’ employers. The standardized curriculum for each degree program is also designed to provide students with specified levels of knowledge and skills.
Faculty	In order to teach at UPX, faculty applicants must have earned a master’s or doctoral degree from a regionally accredited institution or international equivalents and have recent professional experience in a field related to the subject matter they seek to instruct. All faculty applicants participate in a rigorous selection and training process.
Active Learning Environment	Courses are designed to encourage and facilitate collaboration among students and interaction with the instructor. The curriculum requires a high level of student participation for purposes of enhancing learning and increasing the student’s ability to work as part of a team.
Library and Other Learning Resource Services	Students and faculty members are provided with electronic and other learning resources for their information and research needs. Students access these services directly through the Internet or with the help of a Learning Resource Services research librarian, and use them at a high rate.
Sequential Enrollment	UPX students are enrolled in five- to eight-week courses year round and complete classes sequentially, rather than concurrently. This permits students to focus their attentions and resources on one subject at a time and creates a better balance between learning and ongoing personal and professional responsibilities. Axia College students are enrolled in nine-week courses that are offered in pairs to complement each other. In Axia College, courses rotate their emphasis; one week they will emphasize reading and discussion, while the following week they will emphasize a work project.
Academic Quality	The Academic Quality Management System at UPX was designed to maintain and improve the quality of programs and academic and student services. This system includes the Adult Learning Outcomes Assessment, which measures student growth in both cognitive and affective skills.

Structural Components of Teaching/Learning Model

While students over the age of 24 comprise approximately 39% of all higher education enrollments in the United States, the mission of most accredited four-year colleges and universities is to serve 18- to 24-year-old students and conduct research. UPX, WIU, CFP and IPD Client Institutions acknowledge the differences in

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educational needs between working students and traditional students and provide programs and services that allow students to earn their degrees without major disruption to their personal and professional lives.

The educational literature suggests that working students require a different teaching/learning model than that designed for traditional students. Working students seek accessibility, curriculum consistency, time- and cost-effectiveness and learning that has immediate application to the workplace.

The facilitating elements of our teaching/learning models include:

Accessibility	Academic programs that may be accessed through a variety of delivery modes (campus-based, electronically delivered, or a blend of both) that make the educational programs accessible and even portable, regardless of where the students work and live.
Instructional Costs	While the majority of the faculty members at most accredited colleges and universities are employed full-time in the winter and fall semesters, our faculty comprises both full-time and part-time practitioner faculty. Practitioner faculty members frequently work full-time in the fields in which they teach.
Facility Costs	We lease our campus and learning center facilities and rent additional classroom space on a short-term basis to accommodate growth in enrollments.
Employed Students	A majority of UPX’s students are employed full-time. Our focus on working, non-residential students minimizes the need for capital-intensive facilities and services like dormitories, student unions, food services, personal and employment counseling, health care, sports and entertainment.
Employer Support	Relationships are fostered with key employers for purposes of recruiting students and responding to specific employer needs. This relationship facilitates sensitivity to the needs and perceptions of employers and helps to generate and sustain diverse sources of revenues.

Degree Programs and Services

UPX Programs.  The following is a list of the degree programs and related areas of specialization that UPX offers:

Associate of Arts

•  Behavioral Sciences

•  Criminal Justice

•  Human Services Management

•  Business

•  Accounting

•  Business

•  Financial Services

•  Hospitality, Travel and Tourism

•  Credit Recognition (Military personnel only)

•  Education

•  Elementary Education

•  Paraprofessional Education

•  General Studies

•  General Studies

•  Health Care

•  Health Care Administration

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•  Liberal Arts

•  Communications

•  Psychology

•  Technology

•  Information Technology

•  Information Technology/Networking

•  Information Technology/Visual Communication

Undergraduate Bachelor of Science

•  Business

•  Accounting

•  Administration

•  Communications

•  e-Business

•  Finance

•  Global Business Management

•  Hospitality Management

•  Information Systems

•  Integrated Supply Chain & Operations Management

•  Management

•  Marketing

•  Organizational Innovation

•  Public Administration

•  Retail Management

•  Education

•  Education/Elementary Teacher Education

•  Health Care

•  Health Administration

•  Health Administration/Health Information Systems

•  Health Administration/Long-Term Care

•  Nursing

•  Licensed Practical Nurse to Bachelor of Science in Nursing

•  RN to Bachelor of Science in Nursing

•  Social & Behavioral Science

•  Criminal Justice Administration

•  Human Services

•  Human Services/Management

•  Organizational Security & Management

•  Psychology

•  Technology

•  Information Technology

•  Information Technology/Information System Security

•  Information Technology/Multimedia and Visual Communication

•  Information Technology/Software Engineering

Graduate

•  Business

•  Master of Business Administration

•  Accounting

•  Global Management

•  Global Management (Spanish)

•  Human Resources Management

•  Health Care Management

•  Marketing

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•  Public Administration

•  Technology Management

•  Master of Business Administration (Spanish)

•  Master of Management — International

•  Master of Management

•  Human Resources Management

•  Public Administration

•  Master of Science in Accountancy

•  Master of Arts in Education

•  Curriculum and Instruction

•  Specialization in Computer Education

•  Specialization in English as a Second Language

•  Specialization in Language Arts

•  Specialization in Mathematics

•  Teacher Education / Early Childhood

•  Teacher Education / Elementary

•  Teacher Education / Secondary

•  Administration and Supervision

•  Adult Education and Training

•  Special Education

•  Alternative Certification (Arizona)

•  Health Care

•  Master of Business Administration/Health Care Management

•  Master of Health Administration

•  Gerontology

•  Health Care Education

•  Health Care Informatics

•  Master of Science in Nursing

•  Master of Nursing

•  HC Informatics

•  Nursing/Health Care Education

•  Family Nurse Practitioner

•  Master of Science in Nursing/Master of Health Administration

•  Family Nurse Practitioner — Post Masters Certificate

•  MSN / Nurse Practitioner Fast Track

•  Social & Behavioral Science

•  Master of Science in Counseling

•  Community Counseling

•  Marriage and Family Counseling

•  Marriage and Family Therapy

•  Marriage, Family and Child Therapy

•  Mental Health Counseling

•  School Counseling

•  Master of Science in Psychology

•  Psychology

•  Master of Science in Criminal Justice

•  Administration of Justice and Security

•  Technology

•  Master of Business Administration/Technology Management

•  Master of Information Systems

•  Master of Information Systems/Management

Doctorate

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•  Business

•  Business Administration

•  Management in Organizational Leadership

•  Education

•  Education in Educational Leadership

•  Education in Educational Leadership with a Specialization in Curriculum and Instruction

•  Education in Educational Leadership/Educational Technology

•  Health Care

•  Health Administration

•  Technology

•  Management in Organizational Leadership with a Specialization in Information Systems and Technology

Undergraduate students may demonstrate and document college-level learning gained from experience through an assessment by faculty members, according to the guidelines of the Council for Adult and Experiential Learning (“CAEL”), for the potential award of credit. The average number of credits awarded to the approximately 2,500 UPX undergraduate students who utilized the process in 2007 was 5 credits of the 120 required to graduate with a bachelor’s degree. CAEL reports that over 300 colleges and universities are members of CAEL and currently accept credits awarded for college-level learning gained through experience.

Distance Education

UPX Online.  UPX Online uses a proprietary Online Learning System for class delivery. Online classes are small and have mandatory participation requirements for both the faculty and the students. Each class is instructionally designed so that students have an experience that is consistent with their ground campus counterparts. Convenience is enhanced by asynchronous and mobile communication. All class materials are delivered electronically.

The teaching/learning model is based upon a philosophy that balances cognitive and affective strategies. The cognitive strategy includes content that is relevant and supports outcomes-driven objectives. An assessment plan is used to determine student learning and provide information to make improvements to the curriculum. The affective strategy includes facilitation by trained instructors, collaboration through learning team assignments in upper division courses, online student services, proactive academic counseling, tutoring in selected courses, and class discussion that creates a peer social context. The learning outcomes balance theoretical knowledge and practical application of those concepts. Practitioner faculty facilitate learning by providing explanation and work experience examples as they relate to the course topics and objectives.

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Customers/Students

The following is a breakdown of our Degreed Enrollment information for UPX, including Axia College, (rounded to the nearest hundred):

	Number and Percentage of Students per Degree Program
Quarter Ended:	Associate’s			Bachelor’s			Master’s			Doctoral			Total
November 30, 2003		3,200	1.6%		139,200	67.9%		61,300	29.9%		1,400	0.7%		205,100	100.0%
February 29, 2004		3,700	1.7%		146,700	67.9%		63,800	29.6%		1,700	0.8%		215,900	100.0%
May 31, 2004		4,300	1.9%		154,300	68.5%		64,700	28.7%		2,100	0.9%		225,400	100.0%
August 31, 2004		4,000	1.7%		164,500	69.0%		67,600	28.4%		2,300	1.0%		238,400	100.0%
November 30, 2004		13,500	5.4%		162,500	65.5%		69,700	28.1%		2,500	1.0%		248,200	100.0%
February 28, 2005		23,400	9.1%		160,000	62.4%		70,400	27.5%		2,600	1.0%		256,400	100.0%
May 31, 2005		34,800	13.0%		161,600	60.2%		69,200	25.8%		2,800	1.0%		268,400	100.0%
August 31, 2005		41,700	15.4%		157,800	58.1%		68,900	25.4%		3,000	1.1%		271,400	100.0%
November 30, 2005		49,000	18.2%		149,200	55.4%		68,000	25.2%		3,200	1.2%		269,400	100.0%
February 28, 2006		54,900	20.3%		145,500	53.7%		66,700	24.6%		3,700	1.4%		270,800	100.0%
May 31, 2006		63,600	22.9%		145,200	52.4%		64,500	23.3%		3,900	1.4%		277,200	100.0%
August 31, 2006		74,000	26.2%		140,700	49.8%		63,400	22.5%		4,200	1.5%		282,300	100.0%
November 30, 2006		83,000	28.4%		139,900	47.9%		64,400	22.1%		4,500	1.6%		291,800	100.0%
February 28, 2007		88,300	29.6%		139,300	46.7%		66,100	22.2%		4,700	1.5%		298,400	100.0%
May 31, 2007		98,600	31.7%		141,400	45.5%		66,200	21.3%		4,900	1.5%		311,100	100.0%
August 31, 2007		104,500	33.3%		138,700	44.2%		65,300	20.8%		5,200	1.7%		313,700	100.0%

Degreed Enrollments represent individual students enrolled in our degree programs at UPX, including Axia College, that attended a course during the quarter and did not graduate as of the end of the quarter (including Axia students enrolled in UPX and WIU). Degreed Enrollments include any student who graduated from one degree program and started a new degree program (for example, a graduate of the associate’s degree program returns for a bachelor’s degree or a graduate of a bachelor’s degree program returns for a master’s degree), as well as students who have been out of attendance for greater than 12 months and return to a program.

In recent years, we have experienced our greatest growth in our associate’s degree programs with a corresponding decrease in our bachelor’s degree programs. This is due to the fact that UPX has expanded its degree program offerings such that students who were previously enrolled in bachelor’s degree programs are now frequently enrolled in associate’s degree programs.

Based on surveys of incoming students during 2007, the average age of UPX’s students is in the early thirties, and approximately 65% are women. We have a diverse student population and have experienced growth in the number and percentage of African-American students. As of August 31, 2007, our student population is composed of the following racial/ethnic groups:

Race/Ethnicity	% of Students
African-American		26.3	%
Asian/Pacific Islander		4.0	%
Caucasian		52.9	%
Hispanic		11.5	%
Native American/Alaskan		1.5	%
Other/Unknown		3.8	%
		100.0	%

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The approximate age percentage distribution of incoming UPX students is as follows:

Age	% of Students
22 and under		9.7	%
23 to 29		32.8	%
30 to 39		33.8	%
40 to 49		17.2	%
50 and over		6.5	%
		100.0	%

We also work closely with businesses and governmental agencies to meet their specific needs either by modifying existing programs or, in some cases, by developing customized programs. These programs are often held at the employers’ offices or on-site at select military bases. UPX has also formed educational partnerships with various corporations to provide programs specifically designed for their employees.

We consider the employers that provide tuition assistance to their employees through tuition reimbursement plans or direct bill arrangements our secondary customers.

Marketing

To generate interest among potential students, we engage in a broad range of activities to inform the public about our teaching/learning model and the programs offered. These activities include:

Internet Marketing.  We advertise extensively on the Internet using search placements, banners and other advertisements on targeted sites, such as education portals. We also benefit from an increasing number of non-paid Internet referrals, including leads directed to our domain names as a result of Web searches using Internet search engines. We believe these prospective students are more likely to enroll because these prospects are actively seeking information about our programs.

On August 8, 2007, we announced our intention to acquire online advertising network Aptimus, Inc. (Nasdaq: APTM) for $6.25 per share in an all-cash transaction valued at approximately $47.6 million. This acquisition will help us increase the effectiveness and efficiency of our online advertising directed at increasing awareness of and access to quality education services. The closing of the acquisition is subject to customary closing conditions, including Aptimus shareholder approval. The acquisition is expected to close in early fiscal 2008, after Aptimus’ shareholder meeting scheduled for October 29, 2007.

Direct Mail.  Direct mail is effective at reaching working individuals that express an interest in training, education and self-improvement. Direct mail also enables us to target specific career fields, such as Accounting, Business, Education, Information Technology, Criminal Justice and Nursing. We can also reach specific metro areas for local marketing efforts using direct mail. We currently purchase education-related mailing lists from numerous suppliers that specialize in this area. In addition, we track leads for every direct mail campaign by allowing potential students the opportunity to respond using the following methods:

•  mailing a postage-paid reply card or envelope;

•  calling us at a specific toll-free number; or

•  directing the potential student to one of our specific URL addresses on the Internet that are used to track individual marketing campaigns for reach and effectiveness.

Print and Broadcast.  We rely on print and broadcast advertising to target new prospects and to assist with building brand recognition.

TV Campaign.  We employ various schedules on network cable and local and national TV for a brand awareness campaign to supplement our other advertising activities.

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Stadium Naming Rights.  We obtained the naming rights on the University of Phoenix Stadium in Glendale, Arizona, which is home to the Arizona Cardinals National Football League football club. The naming rights include signage, advertising, and other promotional benefits to enhance our brand awareness locally and nationally.

Re-Marketing.  Re-marketing efforts include direct mail, telephone and e-mail sent to existing leads in our database. Re-marketing is an important part of our marketing campaign because of our growing database of qualified prospects and their changing needs for education programs.

Referrals.  Referrals continue to be an important source of new students, including those from employers, co-workers, current students, alumni, family members and friends.

Competition

The higher education market is highly fragmented and competitive with no private or public institution enjoying a significant market share. We compete primarily with four-year and two-year degree-granting public and private regionally accredited colleges and universities. Many of these colleges and universities enroll working students in addition to the traditional 18- to 24-year-old students. We expect that these colleges and universities will continue to modify their existing programs to serve working students more effectively. In addition, many colleges and universities have announced various distance education initiatives.

We believe that the competitive factors in the higher education market include the following:

•  reliable and high-quality products and services;

•  qualified and experienced faculty;

•  the ability to provide easy and convenient access to programs and classes;

•  cost of the program;

•  reputation of programs, classes and services; and

•  the time necessary to earn a degree.

In our offerings of non-degree programs, we compete with a variety of business and information technology providers, primarily those in the for-profit training sector. Many of these competitors have significantly more market share in given geographical regions and longer-term relationships with key customers.

Employees

As of August 31, 2007, we had the following numbers of employees:

	Non-Faculty
	Full-Time		Part-Time		Faculty(1)			Total
Apollo Group Corporate(2)		1,406		17		—			1,423
UPX		12,447		89		21,302	(3)		33,838
Other Schools		740		20		397	(3)		1,157
Total		14,593		126		21,699			36,418

(1)	Includes both full-time and part-time faculty.
(2)	Consists primarily of employees in executive management, information systems, corporate accounting, financial aid, and human resources.
(3)	Consists of faculty contracted on a course-by-course or subject-matter basis who have instructed a course during fiscal year 2007.

We consider our relations with our employees to be good.

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Regulatory Environment

The Higher Education Act of 1965, as reauthorized (the “Higher Education Act”), and the related regulations govern all higher education institutions participating in Title IV programs. The Higher Education Act mandates specific additional regulatory responsibilities for each of the following:

•  the accrediting agencies recognized by the U.S. Department of Education;

•  the federal government through the U.S. Department of Education; and

•  state higher education regulatory bodies.

All higher education institutions participating in Title IV programs must be accredited by an association recognized by the U.S. Department of Education. The U.S. Department of Education reviews all participating institutions for compliance with all applicable standards and regulations under the Higher Education Act.

New or revised interpretations of regulatory requirements could have a material adverse effect on us. In addition, changes in or new interpretations of 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 UPX and WIU. The failure to maintain or renew any required regulatory approvals, accreditation, or state authorizations by UPX or WIU could have a material adverse effect on us. See Item 1A — “Risk Factors — Risks Related to the Highly Regulated Industry in Which We Operate.”

Accreditation

UPX, WIU and CFP are covered by regional accreditation, which provides the following:

•  recognition and acceptance by employers, other higher education institutions and governmental entities of the degrees and credits earned by students;

•  qualification to participate in Title IV programs; and

•  qualification for authorization in certain states.

Regional accreditation is accepted nationally as the basis for the recognition of earned credit and degrees for academic purposes, employment, professional licensure and, in some states, authorization to operate as a degree-granting institution. Under the terms of a reciprocity agreement among the six senior regional accrediting associations, representatives of each region in which a regionally accredited institution operates may participate in the evaluations for reaffirmation of accreditation of which the North Central Association of Colleges and Schools is a member.

UPX was granted accreditation by HLC in 1978. UPX’s accreditation was reaffirmed in 1982, 1987, 1992, 1997 and 2002. The next comprehensive evaluation visit by HLC is scheduled to be conducted in 2012. This 10-year period is the maximum period of reaffirmation granted by HLC and we believe reflects their confidence in UPX.

CFP received initial accreditation from HLC of the North Central Association of Colleges and Schools in November 1994, three years prior to its acquisition by us. Such accreditation was based upon CFP’s offering the Master of Science degree in Personal Financial Planning. In 2003, HLC extended approval to CFP to offer Master of Science degrees in Financial Analysis and Finance. All Master of Science programs are offered through online, instructor-led distance learning technology. CFP’s accreditation was reaffirmed in 1998 and 2004. The next reaffirmation visit is scheduled in 2011.

WIU was accredited by HLC prior to the acquisition by us, and the accreditation was reaffirmed in 1998 and 2005. WIU’s next reaffirmation visit will occur in 2012.

Programs offered by IPD Client Institutions are evaluated by the Client Institutions’ respective regional accrediting associations either as part of a reaffirmation visit or a focused evaluation visit.

UPX’s Bachelor of Science in Nursing program received program accreditation from the National League for Nursing Accrediting Commission in 1989. The Master of Science in Nursing program earned the National League for Nursing Accrediting Commission accreditation in 1996. In 2000, both the Bachelor of Science in Nursing and

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the Master of Science in Nursing programs received reaccreditation status from the National League for Nursing Accreditation Commission. In September 2005, both nursing degree programs received the full five-year initial accreditation status from the Commission on Collegiate Nursing Education. At the time that the two degree programs were accredited by the Commission on Collegiate Nursing Education, UPX elected not to renew its accreditation with the National League for Nursing Accrediting Commission.

UPX’s Master of Counseling in Community Counseling degree received initial accreditation for its Phoenix and Tucson campuses from the Council for Accreditation of Counseling and Related Educational Programs (“CACREP”) in 1995, and the accreditation was reaffirmed in 2002. The next reaffirmation visit is expected in 2010. UPX’s Master of Counseling in Mental Health Counseling received initial accreditation from CACREP for its Utah campus in 2001, and the next reaffirmation visit is expected in 2008.

UPX’s business programs have been reviewed and accredited by the Association of Collegiate Business Schools and Programs (“ACBSP”). The next reaffirmation visit will occur in 2017, with an interim focus report submitted in 2011.

UPX received approval from HLC to offer its first doctoral-level program in 1998. The first students were enrolled in the Doctor of Management in Organizational Leadership program beginning in 1999. Additionally, in 2002, UPX received approval from HLC to offer three new doctoral programs: Doctor of Business Administration, Doctor of Education in Educational Leadership and Doctor of Health Administration. All of the doctoral programs are offered via distance learning technology with annual residencies in Phoenix and other domestic or select international locations.

In September 2007, the first two Ph.D. programs were approved by HLC: a Ph.D. in Higher Education Administration, and a Ph.D. in Industrial/Organizational Psychology; these programs are now awaiting various state authorizations prior to initial enrollments.

The address and phone number for the accrediting bodies are as follows:

The Higher Learning Commission

30 North LaSalle Street, Suite 2400

Chicago, IL 60602-2504

(312) 263-0456

Commission on Collegiate Nursing Education

One Dupont Circle, NW, Suite 530

Washington, D.C. 20036

(202) 887-6791

CACREP

5999 Stevenson Avenue

Alexandria, VA 22304

(703) 823-9800 ext. 301

ACBSP

7007 College Boulevard, Suite 420

Overland Park, KS 66211

(913) 339-9356

Jurisdictional Authorizations

UPX is authorized to operate in the 38 states and the District of Columbia in which it has a physical presence. UPX has held these authorizations for periods ranging from less than one year to over 25 years. UPX has also been approved to operate in Alaska, Delaware, Montana and South Dakota, but does not yet have a physical presence in these states. Applications for approval to operate in Mississippi and New York have been submitted and are awaiting approval.

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All regionally accredited institutions, including UPX, are required to be evaluated separately for authorization to operate in Puerto Rico. UPX obtained authorization from the Puerto Rico Commission on Higher Education, and that authorization remains in effect.

UPX provides specific programs in British Columbia under the written consent of the Minister of Advanced Education. UPX operates in Alberta pursuant to approval granted by Alberta Advanced Education.

In Rotterdam, The Netherlands, UPX operates based upon its accreditation from HLC.

In Mexico, the UPX subsidiary operates as the Instituto de Estudios Superiores de Phoenix and, in addition to the Instituto’s degrees, UPX grants degrees to Instituto graduates pursuant to an articulation agreement between UPX and the Instituto. The Instituto de Estudios Superiores de Phoenix has received accreditation from the Ministry of Education and Culture for the State of Chihuahua, Mexico and operates a campus in Juarez, Mexico pursuant to that authority.

CFP is currently authorized to operate in Colorado.

WIU is currently authorized to operate in Arizona.

IPD Client Institutions possess authorization to operate in those states in which they maintain a physical presence, which are subject to renewal.

Some states assert authority to regulate all degree-granting institutions if their educational programs are available to their residents, whether or not the institutions maintain a physical presence within those states. UPX has obtained licensure in these states.

Admissions Standards

To gain admission to undergraduate programs at UPX, students must have a high school diploma or General Equivalency Diploma (“GED”) and satisfy employment requirements, if applicable for their field of study. Applicants whose native language is not English must take and pass the Test of English as a Foreign Language (“TOEFL”) or Test of English for International Communication (“TOEIC”). Non-U.S. citizens attending a campus located in the United States are required to hold an approved visa or to have been granted permanent residency. Additional requirements may apply to individual programs or to students who are attending a specific campus. Students already in undergraduate programs at other schools may petition to be admitted to UPX on a provisional status if they do not meet certain criteria requirements. Some programs have work requirements (e.g., nursing) that state that students must have a certain amount of experience in given areas in order to be admitted. These vary by program, and not all programs have them.

To gain admission to undergraduate programs at WIU, students generally must have a high school diploma or GED and satisfy certain minimum grade point average requirements. Additional requirements may apply to individual programs. Students already in undergraduate programs at other schools may petition to be admitted to WIU on provisional status if they do not meet certain admission requirements.

To gain admission to graduate programs at UPX, students must have an undergraduate degree from a regionally or nationally accredited college or university, satisfy the minimum grade point average requirement, have relevant work and employment experience, if applicable for their field of study, have taken and passed the TOEFL/TOEIC requirements, if the applicant’s native language is not English, and, for applicants who are not U.S. citizens and are attending a campus located in the United States, hold an approved visa or have been granted permanent residency. Additional requirements may apply to individual programs or to students who are attending a specific campus. Students in graduate programs at other schools may be admitted to UPX on provisional status if they do not meet grade point average admission requirements.

To gain admission to graduate programs at WIU, students generally must have an undergraduate degree from a regionally accredited college or university and satisfy minimum grade point average requirements. Additional requirements may apply to individual programs. Students in graduate programs at other schools may petition to be admitted to WIU on provisional status if they do not meet certain admission requirements.

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To gain admission to doctoral programs at UPX, students generally must have a master’s degree from a regionally accredited college or university, be currently employed in a professional position with three years of professional experience, have three letters of recommendation from professional associates who are able to assess the candidate’s leadership skills and potential for success and have a laptop and a membership in a research library. Applicants whose native language is not English also must achieve a minimum TOEFL/TOEIC or Berlitz score.

Federal Financial Aid Programs

Programs

Aid under the Title IV programs is awarded every academic year on the basis of financial need, generally defined under the Higher Education Act as the difference between the cost of attending an educational institution and the amount the family can reasonably expect to contribute to that cost. The amount of financial aid awarded per academic year is based on many factors, including, but not limited to, student program of study, student grade level, federal annual loan limits and expected family contribution. All recipients of Title IV program funds must maintain satisfactory academic progress within the guidelines published by the U.S. Department of Education.

We collected approximately 65% of our 2007 revenues from receipt of Title IV funds.

Students at UPX and WIU may receive grants and loans to fund their education under the following Title IV programs:

•  Federal Pell Grant (“Pell Grant”) program;

•  Academic Competitiveness Grant (“ACG”) program;

•  National Science and Mathematics Access to Retain Talent Grant (“National SMART Grant”) program;

•  Federal Supplemental Educational Opportunity Grant (“FSEOG”) program;

•  Federal Stafford Loan (“Stafford Loan”) program;

•  Federal Parent Loan for Undergraduate Students Loan (“PLUS Loan”) program; and

•  Federal Perkins Loan (“Perkins Loan”) program.

Pell Grants are generally awarded based on need only to undergraduate students who have not earned a bachelor’s or professional degree. Unlike loans, Pell Grants do not have to be repaid. During fiscal 2007, Pell Grants represented 10% of our Title IV funding.

ACG awards became available for the first time for the 2006-07 academic year for first-year students who graduated from high school after January 1, 2006, and for second-year students who graduated from high school after January 1, 2005. An ACG award will provide up to $750 for the first year of undergraduate study and up to $1,300 for the second year of undergraduate study to students who are U.S. citizens and eligible for a Pell Grant, and who have successfully completed a rigorous high school program, as determined by the state or local education agency and recognized by the Secretary of Education. Second-year students must also have maintained a cumulative grade point average (“GPA”) of at least 3.0 (on a 4.0 scale). Unlike loans, ACG awards do not have to be repaid. ACG awards represent a small portion of our Title IV funding.

A National SMART Grant award provides up to $4,000 for each of the third and fourth years of undergraduate study to students who are U.S. citizens, eligible for a Pell Grant, and majoring in physical, life or computer sciences, mathematics, technology or engineering or a foreign language deemed critical to national security. The U.S. Department of Education publishes a list of eligible majors using the Classification of Instruction Program codes developed by the National Center for Education Statistics. The student must also have maintained a cumulative GPA of at least 3.0 in coursework required for the major. Unlike loans, National SMART Grants do not have to be repaid. National SMART Grants represent a small portion of our Title IV funding.

FSEOG awards are designed to supplement Pell Grants for the neediest students. The availability of FSEOG awards is limited by the amount of those funds allocated to the institution under a federal formula. UPX and WIU are required to contribute 25% of all FSEOG awards, with such funds to come from institutional grants, scholarships

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and other eligible funds and, in certain states, portions of state-funded student assistance programs. Unlike loans, FSEOG awards do not have to be repaid. FSEOG awards represent a small portion of our Title IV funding.

Stafford Loans are the most significant source of federal student aid and are low interest, federally guaranteed loans made by a private lender. Annual and aggregate loan limits apply based on the student’s grade level. There are two types of Stafford Loans: (a) subsidized Stafford Loans, which are based on the federal statutory calculation of student need, and (b) unsubsidized Stafford Loans, which are not need-based. Neither Stafford Loan is based on creditworthiness. The Federal Government pays the interest on subsidized Stafford Loans while the student is enrolled in school; the borrower is responsible for the interest on unsubsidized Stafford Loans regardless of school attendance. The student has the option to defer payment on the principal and interest while enrolled in school. A dependent student may be eligible to borrow up to the annual limit of unsubsidized loan if the parent is unable to obtain a PLUS Loan. Repayment on Stafford Loans begins six months after the date the student ceases enrollment. The loan may be paid back to the lender over the course of up to 10 years or longer. Both graduate and undergraduate students may apply for Stafford Loans. For graduate student borrowers, UPX is one of the lenders that can be selected by the student; UPX offers this service as part of the federal “school-as-lender” program. After allowable administrative expenses, income generated from the school-as-lender program is awarded to UPX students as need-based grants. Stafford Loans represent 89% of our Title IV funding.

The PLUS Loan is a low interest non-need-based federal loan made by a private lender that is based on creditworthiness. The borrower on this loan is one or both parents of a dependent student, or a graduate student. Borrowers under the PLUS Loan program are eligible to borrow up to the cost of attendance less estimated financial assistance from other federal loan programs. PLUS Loans represent a small portion of our Title IV funding.

A Perkins Loan is a low-interest loan for both undergraduate and graduate students showing exceptional financial need. UPX is the lender for the loan, and the loan must be repaid to UPX. The loan is made with government funds with a share contributed by the school. Perkins Loans represent a small portion of our Title IV funding.

Regulatory Requirements

All federal financial aid programs are established by the Higher Education Act and regulations promulgated thereunder. The Higher Education Act has an expiration date; in the past, if Congress did not reauthorize the Higher Education Act before its expiration date, Congress extended the authorization of the Higher Education Act. The Higher Education Act is set to expire on October 31, 2007.

To be eligible to participate in Title IV programs, an educational institution must meet three minimal requirements:

•  Maintain accreditation by an accrediting agency recognized by the U.S. Department of Education;

•  Maintain applicable state authorization to operate; and

•  Maintain certification with the U.S. Department of Education to participate in Title IV programs.

UPX and WIU currently meet all three requirements. In addition, as eligible institutions, UPX and WIU must maintain compliance with Title IV regulatory requirements. The most significant requirements are summarized below:

Eligibility and Certification Procedures.  The Higher Education Act specifies the manner in which the U.S. Department of Education reviews institutions for eligibility and certification to participate in Title IV programs. Every educational institution involved in Title IV programs must be certified to participate and is required to periodically renew this certification. UPX was recertified in June 2003 and its current certification for the Title IV programs expired in June 2007. However, in March 2007, UPX submitted its Title IV program participation recertification application to the U.S. Department of Education. We have been collaborating with the U.S. Department of Education regarding the UPX recertification application. Although we have submitted our application for renewal, we are continuing to supply additional follow-up information based on requests from the U.S. Department of Education. Our eligibility continues on a month-to-month basis until the U.S. Department of Education issues its decision on the application. A month-to-month status is not unusual considering the process is

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multi-faceted and iterative. We have no reason to believe that the application will not be renewed and expect that the renewal process will be completed satisfactorily. WIU was recertified in October 2003 and its current certification for the Title IV programs expires in June 2009.

Student Loan Defaults.  To remain eligible to participate in Title IV programs, educational institutions must maintain a student loan cohort default rate below 25% for three consecutive years and below 40% for any given year. In addition, if its student loan default rate equals or exceeds 10%, the educational institution must delay for 30 days the release of federal student loan proceeds for first time borrowers and permanently loses the ability to participate in the “school-as-lender” program as part of the Stafford Loan program, among other penalties. In 2005, the most recent U.S. Department of Education cohort default rate reporting period, the national cohort default rate average for all proprietary higher education institutions was 8.2%. UPX and WIU students’ cohort default rates for the federal student loan programs for 2005 as reported by the U.S. Department of Education were 7.3% and 11.4%, respectively. With the expansion of the Axia College program, we anticipate an upward trend in student loan defaults based on the greater risk of student loan default presented by the Axia College demographic. Since WIU’s Title IV program disbursements are not material, we do not expect the 11.4% default rate to be significant enough to have a material adverse effect on our business. Moreover, we have implemented initiatives to mitigate the greater risk of student loan defaults.

Administrative Capability.  The Higher Education Act directs the U.S. Department of Education to assess the administrative capability of each institution to participate in Title IV programs. The failure of an institution to satisfy any of the criteria used to assess administrative capability may allow the U.S. Department of Education to determine that the institution lacks administrative capability and, therefore, may be subject to additional scrutiny or denied eligibility for Title IV programs.

Standards of Financial Responsibility.  Pursuant to the Title IV regulations, as revised, each eligible higher education institution must satisfy the minimum standard established for three tests which assess the financial condition of the institution at the end of the institution’s fiscal year. The tests provide three individual scores which must then satisfy a composite score standard. The maximum composite score is 3.0. If the institution achieves a composite score of at least 1.5, it is considered financially responsible. A composite score from 1.0 to 1.4 is considered financially responsible, subject to additional monitoring, and the institution may continue to participate as a financially responsible institution for up to three years. An institution that does not achieve a satisfactory composite score will fall under alternative standards. As of August 31, 2007, our composite score was 2.6.

Limits on Title IV Program Funds.  The Title IV 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 Title IV 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 U.S. Department of Education. An academic year must consist of at least 30 weeks of instructional time and a minimum of 24 credit hours. Most of UPX’s and WIU’s degree programs meet the academic year minimum definition of 30 weeks of instructional time and 24 credit hours and, therefore, qualify for Title IV program funds. The programs that do not qualify for Title IV program funds consist primarily of corporate training programs and certain certificate and continuing professional education programs. These programs are paid for directly by the students or their employers.

Restricted Cash.  The U.S. Department of Education places restrictions on excess Title IV program funds collected for unbilled tuition and fees transferred to UPX or WIU. If an institution holds excess Title IV program funds with student authorization, the institution must maintain, at all times, cash in its bank account in an amount at least equal to the amount of funds the institution holds for students.

The “90/10 Rule.” A requirement of the Higher Education Act, commonly referred to as the “90/10 Rule,” applies only to for-profit institutions of higher education, which includes UPX and WIU. Under this rule, for-profit institutions will be ineligible to participate in Title IV programs if the amount of Title IV program funds used by the students or institution to satisfy tuition, fees and other costs incurred by the students exceeds 90% of the institution’s cash-basis revenues from eligible programs. UPX and WIU are required to calculate this percentage at the end of each fiscal year. UPX’s and WIU’s percentages were 69% and 52%, respectively, for the year ended August 31, 2007.

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Compensation of Representatives.  The Higher Education Act prohibits an institution from providing any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid to any person or entity engaged in any student recruitment, admission, or financial aid awarding activity. Title IV regulations provide safe harbors for activities and arrangements that an institution may carry out without violating the Higher Education Act, which include, but are not limited to, the payment of fixed compensation (annual salary), as long as that compensation is not adjusted up or down more than twice during any 12-month period, and any adjustment is not based solely on the number of students recruited, admitted, enrolled, or awarded financial aid. UPX, WIU, and IPD believe that their current methods of compensating enrollment counselors and financial aid staff comply with the Title IV regulations. See Item 3, “Legal Proceedings,” regarding the Incentive Compensation Qui Tam Action case.

Authorizations for New Locations.  UPX, WIU and CFP 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 or for exempting the institution entirely from formal state licensure or approval. Other states 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. UPX, WIU and CFP are currently authorized to operate in all states in which they have physical locations.

Although HLC does not require UPX to obtain their prior approval before it is permitted to expand into new areas in North America and The Netherlands, they do require prior approval before UPX may expand into foreign countries outside of North America and The Netherlands. In addition, HLC requires WIU and CFP to obtain their prior approval before they are permitted to expand into new states or foreign countries.

Branching and Classroom Locations.  The Title IV regulations contain specific requirements governing the establishment of new main campuses, branch campuses and classroom locations at which the eligible institution offers, or could offer, 50% or more of an educational program. In addition to classrooms at campuses and learning centers, locations affected by these requirements include the business facilities of client companies, military bases and conference facilities used by UPX and WIU. The U.S. Department of Education requires that the institution notify the U.S. Department of Education of each location prior to disbursing Title IV program funds to students at that location. UPX and WIU have procedures in place to ensure timely notification and acquisition of all necessary location approvals prior to disbursing Title IV funds to students attending any new location.

Change of Ownership or Control.  A change of ownership or control, depending on the type of change, may have significant regulatory consequences for UPX, WIU and CFP. Such a change of ownership or control could trigger recertification by the U.S. Department of Education, reauthorization by state licensing agencies, or the evaluation of the accreditation by HLC.

The U.S. Department of Education has adopted the change of ownership and control standards used by the federal securities laws for institutions owned by publicly-held corporations. Upon a change of ownership and control sufficient to require us to file a Form 8-K with the SEC, UPX and WIU would cease to be eligible to participate in Title IV programs until recertified by the U.S. Department of Education. Under some circumstances, the U.S. Department of Education may continue the institution’s participation in the Title IV programs on a temporary basis pending completion of the change in ownership approval process. This recertification would not be required, however, if the transfer of ownership and 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 us who had been involved in its management for at least two years preceding the transfer. In addition, some states where UPX or WIU is presently licensed have requirements governing change of ownership or control. See Item 1A, “Our Acting Executive Chairman of the Board and his son control 99.9% of our voting stock and control substantially all actions requiring the vote or consent of our shareholders.” Moreover, UPX and WIU are required to report any material change in stock ownership. In the event of a material change in stock ownership, HLC may seek to evaluate the effect of such a change of stock ownership on UPX’s, CFP’s and WIU’s continuing operations.

U.S. Department of Education Audits.  From time to time as part of the normal course of business, UPX and WIU are subject to periodic program reviews and audits by regulating bodies. The U.S. Department of Education, Office of Inspector General (“OIG”), conducted an audit of UPX for the period September 1, 2002 through

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March 31, 2004. On December 22, 2005, the OIG issued an audit report on their review of UPX’s policies and procedures for the calculation and return of Title IV funds. The OIG concluded that UPX had policies and procedures that provide reasonable assurances that it properly identified withdrawn students, appropriately determined whether a return of Title IV funds was required, returned Title IV funds for withdrawn students in a timely manner and used appropriate methodologies for most aspects of calculating the return of Title IV funds. The OIG did conclude, however, that UPX did not use appropriate methodologies for calculating the percentage of Title IV financial aid earned from March 1, 2004 through December 7, 2004. Since December 8, 2004, UPX has adopted the methodologies deemed appropriate by the U.S. Department of Education. On November 3, 2006, the U.S. Department of Education issued a preliminary audit determination letter (“PADL”) concerning UPX’s administration of the Title IV federal student aid programs regarding this matter. On June 7, 2007, UPX responded to the PADL request with results of the file review. The U.S. Department of Education will ultimately issue a final audit determination letter regarding the return of Title IV funds. UPX has accrued $3.7 million, which is its best estimate of the refund liability. While the outcome of the OIG audit proceedings is pending, management does not expect a material adverse effect on our business, financial position, results of operations, or cash flows to result from these actions.

Other Matters

The information required by Item 101(b) of Regulation S-K is provided under Note 16, “Segment Reporting,” in Notes to Consolidated Financial Statements, regarding segment and related geographic information.

We will make available free of charge on our website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC. Our website address is www.apollogrp.edu.

Item 1A — Risk Factors

You should carefully consider the risks and uncertainties described below and all other information contained in this Annual Report on Form 10-K. In order to help assess the major risks in our business, we have identified many, but not all, of these risks. Due to the scope of our operations, a wide range of factors could materially affect future developments and performance.

If any events occur that give rise to the following risks, our business, financial condition, cash flow or results of operations could be materially and adversely affected, and as a result, the trading price of our Class A common stock could be materially and adversely impacted. These risk factors should be read in conjunction with other information set forth in this Annual Report, including our Consolidated Financial Statements and related Notes.

Risks Related to the Control Over Our Voting Stock

Our Acting Executive Chairman of the Board and his son control 99.9% of our voting stock and control substantially all actions requiring the vote or consent of our shareholders.

Dr. John G. Sperling, our Acting Executive Chairman of the Board and Founder, and his son, Peter V. Sperling, who is also one of our directors as well as our Senior Vice President and Secretary, control the John Sperling Voting Stock Trust and the Peter Sperling Voting Stock Trust, which together collectively own 99.9% of our voting securities, Apollo Group Class B common stock. Through their control of these trusts, Dr. Sperling, or Dr. Sperling and Mr. Sperling together, control the election of all members of our Board of Directors and substantially all other actions requiring a vote of our shareholders, except in certain limited circumstances. Holders of our outstanding Apollo Group Class A common stock do not have the right to vote for the election of directors or for substantially any other action requiring a vote of shareholders, except in certain limited circumstances. In the event of Dr. Sperling’s passing, control of the John Sperling Voting Stock Trust, which holds a majority of the outstanding Apollo Group Class B common stock, will be exercised by a majority of three successor trustees: Mr. Sperling, Terri Bishop and Darby Shupp. See Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters” and Item 1, “Business — Change of Ownership or Control” for more information.

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We are a “Controlled Company” as defined in Rule 4350(c) of the Marketplace Rules of The NASDAQ Stock Market LLC, since more than 50% of the voting power of Apollo Group is held by the John Sperling Voting Stock Trust. As a consequence, we are exempt from certain requirements of Marketplace Rule 4350, including that (a) our Board be composed of a majority of Independent Directors (as defined in Marketplace Rule 4200), (b) the compensation of our officers be determined by a majority of the independent directors or a compensation committee composed solely of independent directors and (c) nominations to the Board of Directors be made by a majority of the independent directors or a nominations committee comprised solely of independent directors. However, Marketplace Rule 4350(c) does require that our independent directors have regularly scheduled meetings at which only independent directors are present (“executive sessions”) and IRC Section 162(m) does require a compensation committee of outside directors (within the meaning of Section 162(m)) to approve stock option grants to executive officers in order for us to be able to claim deductions with respect to the compensation attributable to the expense of such stock options granted. Notwithstanding the foregoing exemptions, we do have a majority of independent directors on our Board of Directors and we do have an Audit Committee, Compensation Committee and a Nominating and Governance Committee composed entirely of independent directors.

The charters for the Compensation, Audit and Nominating and Governance Committees have been adopted by the Board of Directors and are available on our website, www.apollogrp.edu. These charters provide, among other items, that each member must be independent as such term is defined by the applicable rules of The NASDAQ Stock Market LLC and the SEC.

Risks Related to the Highly Regulated Industry in Which We Operate

If we fail to comply with the extensive regulatory requirements for our business, we could face significant monetary liabilities, fines and penalties, including loss of access to federal student loans and grants for our students.

As a provider of higher education, we are subject to extensive regulation on both the federal and state levels. In particular, the Higher Education Act and related regulations subject UPX and WIU, and all other higher education institutions that participate in the various federal student financial aid programs under Title IV of the Higher Education Act (”Title IV programs”) to significant regulatory scrutiny. We collected approximately 65% of our 2007 revenues from receipt of Title IV funds.

These regulatory requirements cover virtually all phases of our schools’ and programs’ operations, including educational program offerings, facilities, instructional and administrative staff, administrative procedures, marketing and recruiting, financial operations, payment of refunds to students who withdraw, acquisitions or openings of new schools or programs, addition of new educational programs and changes in our corporate structure and ownership.

The Higher Education Act mandates specific regulatory responsibilities for each of the following components of the higher education regulatory triad: (1) the federal government through the U.S. Department of Education, (2) the accrediting agencies recognized by the U.S. Secretary of Education (the “Secretary of Education”) and (3) state education regulatory bodies.

The regulations, standards and policies of these regulatory agencies frequently change, and changes in, or new interpretations of, applicable laws, regulations, or standards could have a material adverse effect on our accreditation, authorization to operate in various states, permissible activities, receipt of funds under Title IV programs, or costs of doing business. We cannot predict with certainty how all of the requirements applied by these agencies will be interpreted or whether our schools will be able to comply with these requirements in the future.

If we are found to be in noncompliance with any of these regulations, standards or policies, any one of the regulatory agencies could do one or more of the following:

•  Impose monetary fines or penalties;

•  Limit or terminate our operations or ability to grant degrees and diplomas;

•  Restrict or revoke our accreditation, licensure or other approval to operate;

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•  Limit, suspend or terminate our eligibility to participate in Title IV programs or state financial aid programs;

•  Require repayment of funds received under Title IV programs or state financial aid programs;

•  Require us to post a letter of credit with the U.S. Department of Education;

•  Subject our schools to heightened cash monitoring by the U.S. Department of Education;

•  Transfer us from the U.S. Department of Education’s advance system of receiving Title IV program funds to its reimbursement system, under which a school must disburse its own funds to students and document the students’ eligibility for Title IV program funds before receiving such funds from the U.S. Department of Education;

•  Subject us to other civil or criminal penalties; and

•  Subject us to other forms of censure.

Consequently, any of the penalties, injunctions, restrictions or other forms of censure listed above could have a material adverse effect on our business. See “Business — Federal Financial Aid Programs.”

If we are not recertified to participate in Title IV programs by the U.S. Department of Education, we would lose eligibility to participate in Title IV programs.

UPX and WIU are eligible and certified to participate in Title IV programs. UPX’s current certification for Title IV programs expired in June 2007. In March 2007, UPX submitted its Title IV program participation recertification application to the U.S. Department of Education, and UPX’s eligibility continues on a month-to-month basis until the Department issues its decision on the application. WIU’s current certification for Title IV programs expires in June 2009. WIU will seek recertification before its certification expires. Generally, the recertification process includes a review by the U.S. Department of Education of the institution’s educational programs and locations, administrative capability, financial responsibility, and other oversight categories. The U.S. Department of Education could limit, suspend or terminate an institution for violations of the Higher Education Act or Title IV regulations, as described under “Regulatory Requirements” in the Business description above. If one of our institutions is not recertified, it would have a material adverse effect on our business. See “Business — Federal Financial Aid Programs.”

Action by the U.S. Congress to revise the laws governing the federal student financial aid programs or reduce funding for those programs could reduce our student population and increase our costs of operation.

The U.S. Congress must periodically reauthorize the Higher Education Act and annually determine the funding level for each Title IV program. The Higher Education Act has been extended to October 31, 2007, pending completion of the formal reauthorization process. In September 2007, the President signed the College Cost Reduction and Access Act, which contained a number of provisions affecting Title IV programs, including some provisions that had been in the Higher Education Act reauthorization bills. The U.S. Congress will either complete its reauthorization of the Higher Education Act or further extend additional provisions of the Higher Education Act. Changes to the Higher Education Act are likely to result from any further reauthorization and, possibly, from any extension of the remaining provisions of the Higher Education Act, but at this time we cannot predict all of the changes that the U.S. Congress will ultimately make. Any action by the U.S. Congress that significantly reduces Title IV program funding or the ability of our institutions or students to participate in Title IV programs could have a material adverse effect on our financial condition, results of operations and cash flows. Congressional action may also require us to modify our practices in ways that could increase our administrative costs and reduce our profit margin, which could have a material adverse effect on our financial condition and results of operations.

If the U.S. Congress significantly reduced the amount of available Title IV program funding, we would arrange for alternative sources of financial aid for our students. We cannot assure that one or more private organizations would be willing to provide loans to students attending one of our schools or programs, or that the interest rate and other terms of such loans would be as favorable as for Title IV program loans. In addition, private organizations could require us to guarantee all or part of this assistance and we might incur other additional costs. If we provided

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more direct financial assistance to our students, we would incur additional costs and assume increased credit risks. See “Business — Regulatory Environment.”

Student loan defaults could result in the loss of eligibility to participate in Title IV programs.

In general, under the Higher Education Act, an educational institution may lose its eligibility to participate in some or all Title IV programs if its student loan cohort default rate equals or exceeds 25% for three consecutive years or 40% for any given year. If we lose our eligibility to participate in Title IV programs because of high student loan default rates, it would have a material adverse effect on our business. In addition, if its student loan default rate equals or exceeds 10%, the educational institution is required to delay for 30 days the release of federal student loan proceeds for first time borrowers and permanently loses the ability to participate in the “school-as-lender” program, among other penalties. If UPX’s student loan cohort default rate exceeds 10%, the limitations on our business could have a material adverse impact. With the expansion of the Axia College program, we anticipate an upward trend in student loan defaults based on the greater risk of student loan default presented by the Axia College demographic. See “Business — Federal Financial Aid Programs — Student Loan Defaults.”

If any regulatory audit, investigation or other proceeding finds us not in compliance with the numerous laws and regulations applicable to the post-secondary education industry, we may not be able to successfully challenge such finding and our business could suffer.

Due to the highly regulated nature of the post-secondary education industry, we are subject to audits, compliance reviews, inquiries, complaints, investigations, claims of non-compliance and lawsuits by federal and state governmental agencies, regulatory agencies, present and former students and employees, shareholders and other third parties, any of whom may allege violations of any of the regulatory requirements applicable to us. If the results of any such claims or actions are unfavorable to us, we may be required to pay monetary fines or penalties, be required to repay funds received under Title IV programs or state financial aid programs, have restrictions placed on or terminate our schools’ or programs’ eligibility to participate in Title IV programs or state financial aid programs, have limitations placed on or terminate our schools’ operations or ability to grant degrees and certificates, have our schools’ accreditations restricted or revoked, or be subject to civil or criminal penalties. Any one of these sanctions could adversely affect our financial condition, results of operations and cash flows and result in the imposition of significant restrictions on us and our ability to operate. See “Business — Regulatory Environment.”

If we fail to maintain our institutional accreditation, we would lose our ability to participate in Title IV programs.

UPX and WIU are institutionally accredited by HLC, one of the six regional accrediting agencies recognized by the Secretary of Education. Accreditation by an accrediting agency recognized by the Secretary of Education is required in order for an institution to become and remain eligible to participate in Title IV programs. The loss of accreditation would, among other things, render our schools and programs ineligible to participate in Title IV programs and would have a material adverse effect on our business. For proposed locations outside of North America, we are also required to obtain the approval of HLC. See “Business — Accreditation.”

If we fail to maintain any of our state authorizations, we would lose our ability to operate in that state and to participate in Title IV programs there.

UPX and WIU are authorized to operate and to grant degrees or diplomas by the applicable state agency of each state where such authorization is required and where we maintain a campus. In addition, eight states require UPX to obtain separate authorization for the delivery of distance education to residents of those states. Such state authorization is required for the campus located in the state or, in the case of states that require it, for UPX Online to offer post-secondary education and, in either case, for students at the campus or UPX Online to be eligible to participate in Title IV programs. The loss of such authorization would preclude the campus or UPX Online from offering post-secondary education and render students ineligible to participate in Title IV programs at least at those state campus locations or, in states that require it, at UPX Online and could have a material adverse effect on our business. See “Business — State Authorizations.”

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A failure to demonstrate “administrative capability” or “financial responsibility” may result in the loss of eligibility to participate in Title IV programs.

If we fail to maintain ”administrative capability” as defined by the U.S. Department of Education, we could lose our eligibility to participate in Title IV programs or have that eligibility adversely conditioned, which would have a material adverse effect on our business. Furthermore, if we fail to demonstrate ”financial responsibility” under the U.S. Department of Education’s regulations, we could lose our eligibility to participate in Title IV programs or have that eligibility adversely conditioned, which would have a material adverse effect on our business. See “Business — Federal Financial Aid Programs — Standards of Financial Responsibility and Administrative Capability.”

Our schools and programs would lose their eligibility to participate in federal student financial aid programs if the percentage of our revenues derived from those programs were too high.

A proprietary institution loses its eligibility to participate in the federal student financial aid programs if it derives more than 90% of its revenues, on a cash basis, from federal student financial aid programs in any fiscal year. If we become ineligible to participate in federal student financial aid programs, it would have a material adverse effect on our business. See “Business — Federal Financial Aid Programs — The 90/10 Rule.”

We will be subject to sanctions if we fail to calculate and make timely payment of refunds of Title IV program funds for students who withdraw before completing their educational program.

The Higher Education Act and U.S. Department of Education regulations require us to calculate refunds of unearned Title IV program funds disbursed to students who withdraw from their educational program before completing it. If refunds are not properly calculated or timely paid, we may be sanctioned or subject to other adverse actions by the U.S. Department of Education, which could have a material adverse effect on our business. See “Business — Federal Financial Aid Programs.”

We are subject to sanctions if we pay impermissible commissions, bonuses, or other incentive payments to individuals involved in certain recruiting, admission, or financial aid activities.

A school participating in Title IV programs may not provide any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid to any person or entity engaged in any student recruitment or admission activity or in making decisions regarding the awarding of Title IV program funds. The law and regulations governing this requirement do not establish clear criteria for compliance in all circumstances. If the U.S. Department of Education determined that our compensation practices violated these standards, the U.S. Department of Education could subject us to monetary fines, penalties, or other sanctions. Any substantial fine, penalty, or other sanction could have a material adverse effect on our financial condition, results of operations and cash flows. See “Business — Federal Financial Aid Programs — Compensation of Representatives.”

If we were involved in conflicts of interest with student loan lenders, we could be subject to penalties and otherwise suffer adverse impacts on our business.

In 2007 the New York Attorney-General, several other attorneys-general, the United States Senate and House of Representatives Education Committees, and the United States Department of Education all launched investigations of potential conflicts of interest between university officials and various private lending organizations that provide student loans. These investigations are ongoing, but several universities and lending organizations have been implicated. Certain lenders, colleges and universities that have been implicated by these investigations have agreed to pay several million dollars in the aggregate to settle claims in this regard. In addition, several financial aid officials at other universities have been suspended or placed on leaves of absence. While no allegations have been raised concerning our institutions, we have received general requests for information from several state attorneys-general and state higher education regulatory agencies. We have no reason to believe that any of our employees have engaged in improper conduct in this regard. If any such impropriety were found, we could be subject to penalties and other adverse consequences. See “Business — Federal Financial Aid Programs.”

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If IPD’s Client Institutions were sanctioned due to non-compliance with Title IV requirements, we could suffer adverse impacts on our business.

IPD provides a number of services to clients that are regionally accredited private colleges and universities, defined above as IPD Client Institutions. IPD provides its Client Institutions numerous consulting services in exchange for a contractual share of the Client Institution’s tuition revenues. If one or more IPD Client Institutions were sanctioned for noncompliance with Title IV requirements and such sanction(s) were to have a material adverse effect on enrollments and tuition revenue of such IPD Client Institution, it could have a material adverse effect on our business.

The complexity of regulatory environments in which we operate has increased and may continue to increase our costs.

Our business is subject to increasingly complex corporate governance, public disclosure, accounting and tax requirements and environmental legislation that have increased both our costs and the risk of noncompliance. Because our Class A common stock is publicly traded, we are subject to certain rules and regulations for federal, state and financial market exchange entities (including the SEC and Nasdaq). We have implemented new policies and procedures and continue developing additional policies and procedures in response to recent corporate scandals and laws enacted by Congress. Without limiting the generality of the foregoing, we have made a significant effort to comply with the provisions of the Sarbanes-Oxley Act of 2002 (including, among other things the development of policies and procedures to satisfy the provisions thereof regarding internal control over financial reporting, disclosure controls and procedures and certification of financial statements appearing in periodic reports) and the formation of a compliance department to develop policies and monitor compliance with laws (including, among others, privacy laws, export control laws, rules and regulations of the Office of Foreign Asset Controls and the Foreign Corrupt Practices Act). Our effort to comply with these new regulations have resulted in, and are likely to continue resulting in, increased general and administrative expenses and diversion of management time and attention from revenue generating activities to compliance activities. See “Business — Regulatory Environment.”

Risks Related to Our Business

If we are unable to successfully conclude the litigation, governmental investigations and inquiries pending against us, our business, financial condition, results of operations and growth prospects could be adversely affected.

We, certain of our subsidiaries, and our current and former directors and executive officers have been named as defendants in lawsuits alleging violations of the federal securities laws. In addition, certain government agencies are conducting inquiries regarding us, including the DOJ and Internal Revenue Service. We are also subject to various other lawsuits, investigations and claims, covering a range of matters, including, but not limited to, claims involving shareholders and routine employment matters. Please see Item 3 of this Annual Report on Form 10-K and Note 15 “Commitments and Contingencies” of the notes to our consolidated financial statements of this Annual Report on Form 10-K for a detailed discussion of these matters.

We cannot predict the ultimate outcome of these matters and expect to incur significant defense costs and other expenses in connection with them. Such costs and expenses could have a material adverse effect on our business, financial condition, results of operations and the market price of our common stock. We may be required to pay substantial damages or settlement costs in excess of our insurance coverage related to these matters, which could have a further material adverse effect on our financial condition or results of operations.

While we continue in our efforts to cooperate with the government investigations, we cannot predict the duration or outcome of the investigations, and the investigations may expand, and other regulatory agencies may become involved. The outcome and costs associated with these investigations could have a material adverse effect on our business, financial condition, or results of operations, and the investigations could result in adverse publicity and divert the efforts and attention of our management team from our ordinary business operations. The government investigations and any related legal and administrative proceedings could also include the institution of administrative, civil injunctive, or criminal proceedings against us and/or our current or former officers or employees, the imposition of fines and penalties, suspensions and/or other remedies and sanctions.

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We may not be able to sustain our recent growth rate or profitability, and we may not be able to manage future growth effectively.

Our ability to sustain our current rate of growth or profitability depends on a number of factors, including our ability to obtain and maintain regulatory approvals, our ability to maintain operating margins, our ability to recruit and retain high quality academic and administrative personnel at new campuses and competitive factors. Over the past three years, our growth has been predominately in our associate’s degree programs. If we are not able to sustain our growth rate in the associate’s degree programs, or fail to transition this growth to our bachelor’s degree, advanced degree and other potential new programs, our business could be adversely affected. In addition, growth and expansion of our operations may place a significant strain on our resources and increase demands on our management information and reporting systems, financial management controls and personnel. Although we have made a substantial investment in augmenting our financial and management information systems and other resources to support future growth, we cannot assure you that we will be able to manage further expansion effectively. Failure to do so could adversely affect our business, results of operations and cash flows.

If we cannot maintain student enrollments, our results of operations may be adversely affected.

Our strategy for growth and profitability depends, in part, upon managing attrition rates as well as increasing student enrollments in our schools and programs. Attrition rates are often due to factors outside our control. Many students face financial, personal, or family constraints that require them to withdraw from the school or the program. If we are unable to control the rate of student attrition, the overall enrollment levels are likely to decline. Also, to attract more students, we must develop and implement marketing and student recruitment programs, which may not succeed. If we cannot maintain and increase student enrollments, including retention of students in one or more degree programs, our business, results of operations and cash flows may be adversely affected.

Our strategy involves the effective use of information technology; if we fail in implementing or adapting to new technologies, our results of operations may be adversely affected.

We have invested and continue to invest significant resources in information technology, which is a key element of our business strategy. Our information technology systems and tools could become impaired or obsolete due to our action or failure to act. For instance, we could install new information technology without accurately assessing its costs or benefits, or we could experience delayed or ineffective implementation of new information technology. Similarly, we could fail to respond in a timely or sufficiently competitive way to future technological developments in our industry. Should our action or failure to act impair or otherwise render our information technology less effective, this could have a material adverse effect on our business, results of operations and cash flows.

Our computer systems may be vulnerable to security risks that could disrupt operations and require us to expend significant resources.

We have devoted and will continue to devote significant resources to the security of our computer systems. Nevertheless, our computer systems may be vulnerable to unauthorized access, computer hackers, computer viruses and other security problems and system disruptions. A user who circumvents security measures could misappropriate proprietary information or cause interruptions or malfunctions in operations. As a result, we may be required to expend significant resources to protect against the threat of those security breaches or to alleviate problems caused by those breaches. These factors could result in liability under state and federal privacy statutes and legal actions by state attorneys-general and private litigants, any of which could have a material adverse effect on our business, results of operations and cash flows.

We face intense competition in the post-secondary education market.

Post-secondary education in our existing and new market areas is highly competitive. We compete with traditional public and private two-year and four-year colleges, other for-profit schools and alternatives to higher education, such as employment and military service. Some of our competitors, both public and private, have substantially greater financial and other resources than we have. Our competitors, both public and private, may offer

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programs similar to ours at a lower tuition level as a result of government subsidies, government and foundation grants, tax-deductible contributions and other financial sources not available to for-profit institutions. In addition, many of our competitors have begun to offer distance learning and other online education programs. As the online and distance learning segment of the post-secondary education market matures, the intensity of competition is expected to increase. This intense competition could adversely affect our business, results of operations and cash flows.

Our expansion into new markets outside the United States, if successful, will subject us to risks inherent in international operations.

As part of our growth strategy, we intend to acquire or establish campuses or universities in new markets outside the United States. If we are successful in implementing our strategy, we will face risks that are inherent in international operations, including:

•  Complexity of operations across borders;

•  Currency exchange rate fluctuations;

•  Monetary policy risks, such as inflation, hyperinflation and deflation;

•  Price controls or restrictions on exchange of foreign currencies;

•  Potential political and economic instability in the countries in which we operate, including potential student uprisings;

•  Expropriation of assets by local governments;

•  Multiple and possibly overlapping and conflicting tax laws;

•  Compliance with foreign regulatory environments;

•  Acts of war, epidemics and natural disasters; and

•  Loss of accreditation and enterprise value subsequent to an acquisition.

We may not be able to successfully complete or integrate future acquisitions.

As part of our growth strategy, we expect to consider selective acquisitions of proprietary educational institutions that complement our strategic direction. Any acquisition involves significant risks and uncertainties, including:

•  Inability to successfully integrate the acquired operations into our institutions and maintain uniform standards, controls, policies and procedures;

•  Distraction of management’s attention from normal business operations;

•  Challenges retaining the key employees of the acquired operation;

•  Insufficient revenue generation to offset liabilities assumed;

•  Expenses associated with the acquisition; and

•  Unidentified issues not discovered in our due diligence process, including legal contingencies.

Acquisitions are inherently risky. We cannot be certain that our previous or future acquisitions will be successful and will not materially adversely affect our business, results of operations and cash flows. Future transactions may involve use of our cash resources, issuance of equity or debt securities, incurrence of other forms of debt or a significant increase in our financial leverage, which could adversely affect our financial condition and results of operations, especially if the cash flows associated with any acquisition are not sufficient to cover the additional debt service. If we issue equity securities as consideration in an acquisition, current shareholders’ percentage ownership and earnings per share may be diluted. In addition, if we were to acquire an educational institution, it could be considered a change in ownership and control of the acquired institution under applicable

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regulatory standards. We would need approval from the U.S. Department of Education and most applicable state agencies and accrediting agencies and possibly other regulatory bodies when we were to acquire an institution. If we were unable to obtain such approvals with respect to an institution we acquired, depending on the size of that acquisition, that failure could have a material adverse effect on our business, results of operations and cash flows.

Natural disasters or terrorist acts could have an adverse effect on our operations.

Hurricanes, earthquakes, floods, tornados and other natural disasters or breaches of security at our physical campuses could disrupt our operations. Natural disasters or breaches of security that directly impact our physical facilities or ability to recruit and retain students and employees could adversely affect our ability to deliver our programs to our students and, thereby, adversely affect our results of operations. Furthermore, natural disasters or breaches of security could adversely affect the economy and demographics of the affected region, which could cause significant declines in the number of students who attend our schools in that region and have a material adverse effect on our results of operations.

The trading price of our common stock may fluctuate substantially in the future.

The trading price of our common stock may fluctuate substantially based on any of the foregoing risk factors as well as general economic conditions. Such fluctuation could prevent you from selling shares of our common stock at or above the price at which you purchase such shares. In addition, the stock markets from time to time experience extreme price and volume fluctuations that may be unrelated or disproportionate to our operating performance.

Risks Related to the Use of Incorrect Measurement Dates for Stock Option Grants and the Restatement

The matters relating to the investigation by the Special Committee of the Board of Directors and the restatement of our consolidated financial statements may result in additional litigation and governmental enforcement actions.

A Special Committee of our Board of Directors (the “Special Committee”), with the assistance of independent legal counsel and forensic accountants, conducted an independent review of our historical practices related to stock option grants (the “Independent Review”). Based on the Independent Review and our internal review of every stock option grant since our initial public offering (the “Internal Review”), we determined that incorrect measurement dates had been used for financial accounting purposes for many stock option grants made during the period June 1994 through August 2006. As a result, we recorded additional share-based compensation expense, and related tax effects, with regard to certain past stock option grants, and we restated certain previously issued financial statements as set forth in our Annual Report on From 10-K for the year ended August 31, 2006 and our Quarterly Reports on Form 10-Q for the quarters ended May 31, 2006, November 30, 2006 and February 28, 2007 (the “Restatement”).

The Internal Review, the Independent Review and related activities required that we incur substantial expenses for legal, accounting, tax and other professional services, have diverted management’s attention from our business and could in the future harm our business, financial condition, results of operations and cash flows.

We believe we made appropriate judgments in determining the correct measurement dates for our stock option grants. There is a risk, however, that we may have to further restate our previously issued financial statements, amend prior filings with the SEC, or take other actions not currently contemplated in connection with any of the other restated items.

Our past stock option practices and the resulting Restatement of previously issued financial statements have resulted in greater risks associated with litigation, regulatory proceedings and government enforcement actions. As described in Part I, Item 3, “Legal Proceedings,” litigation is now pending in state and federal courts against certain of our current and former directors and executive officers pertaining to allegations relating to stock option grants. We have fully cooperated with the government inquiries into these matters. We intend to continue full cooperation. No assurance can be given regarding the outcome of litigation, regulatory proceedings or government enforcement actions relating to our past stock option practices. The resolution of these matters may be time consuming and expensive and may distract management from the conduct of our business. Furthermore, if we are subject to adverse findings in litigation, regulatory proceedings or government enforcement actions, we could be required to pay

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damages or penalties or have other remedies imposed, which could harm our business, financial condition, results of operations and cash flows.

We did not historically maintain effective controls over our activities related to accounting for tax liability under IRC Section 162(m). We did not maintain effective controls over the implementation, documentation and the administration of our share-based compensation plans. Specifically, we may have claimed deductions with respect to compensation attributable to the exercise of certain stock options, which may not qualify as performance-based compensation under IRC Section 162(m). As a result of this control deficiency, we may have claimed deductions with respect to those exercised options that were in excess of the limit imposed under IRC Section 162(m). We have accrued our best estimate, representing the high end of our estimated potential exposure, with respect to uncertain tax positions, including interest and penalties for the taxable years 2003 through 2007 (which are currently our only open years subject to adjustment for federal tax purposes) of approximately $44.6 million as of August 31, 2007. The ultimate amount we will be required to pay to settle all of our tax liabilities for prior years may differ from the amount accrued.

We are subject to the oversight of the SEC and other regulatory agencies, and investigations by those agencies could divert management’s focus and have a material adverse impact on our reputation and financial condition.

As a result of this regulation and oversight, we may be subject to legal and administrative proceedings. During fiscal 2007, we were the subject of an SEC inquiry and a DOJ investigation related to our historical stock option grant practices. While the SEC inquiry has been completed, the DOJ investigation has not yet been officially terminated. As a result of these inquiries and investigations, and shareholder actions, we have incurred, and may continue to incur, significant legal costs and a significant amount of time of our senior management has been focused on these matters that otherwise would have been directed toward the growth and development of our business. We have concluded our Internal Review of our stock option grant practices, and the SEC has notified us that it has closed its inquiry without recommending enforcement action. The DOJ has not informed us that its investigation is closed and we are unable to predict the effect, if any, that this investigation and the related shareholder lawsuits could have on our business and financial condition, results of operations and cash flow. We cannot assure that the DOJ or other government agencies will not seek to impose fines or take other actions against us that could have a significant negative impact on our financial condition. In addition, publicity surrounding the DOJ’s investigations, the derivative lawsuits and class action lawsuits, or any enforcement action, even if ultimately resolved favorably for us, could have a material adverse impact on our cash flows, financial condition, results of operations or business.

We had four material weaknesses in internal control over financial reporting as of August 31, 2006 that we identified during the year ended August 31, 2007 and we cannot assure you that additional material weaknesses will not be identified in the future. If our internal control over financial reporting or disclosure controls and procedures are not effective, there may be errors in our financial statements that could require a restatement or our filings may not be timely and investors may lose confidence in our reported financial information, which could lead to a decline in our stock price.

Management identified four material weaknesses in our internal control over financial reporting in connection with the preparation and filing of its fiscal 2006 Annual Report on Form 10-K. Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate the effectiveness of our internal control over financial reporting as of the end of each year and to include a management report assessing the effectiveness of our internal control over financial reporting in each Annual Report on Form 10-K. Section 404 also requires our independent registered public accounting firm to report on our internal control over financial reporting.

Our management, including our President and Chief Financial Officer, does not expect that our internal controls over financial reporting will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Over time, controls may

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become inadequate because changes in conditions or deterioration in the degree of compliance with policies or procedures may occur. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

As a result, it cannot be assured that significant deficiencies or material weaknesses in our internal control over financial reporting will not be identified in the future. Any failure to maintain or implement required new or improved controls, or any difficulties we encounter in their implementation, could result in significant deficiencies or material weaknesses, cause us to fail to timely meet our periodic reporting obligations, or result in material misstatements in our financial statements. Any such failure could also adversely affect the results of periodic management evaluations and annual auditor attestation reports regarding disclosure controls and the effectiveness of our internal control over financial reporting required under Section 404 of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder. The existence of material weaknesses could result in errors in our financial statements that could result in a restatement of financial statements, cause us to fail to timely meet our reporting obligations and cause investors to lose confidence in our reported financial information, leading to a decline in our stock price.

Item 1B — Unresolved Staff Comments

None.

Item 2 — Properties

As of August 31, 2007, we utilized 332 facilities, all of which were leased. As of August 31, 2007, we leased approximately 7 million square feet, as follows:

Segment	Location	Type	Sq. Ft. Leased		# of Properties
UPX	United States	Office		959,230		12
		Dual Purpose		5,014,502		229
				5,973,732		241
	International	Office		3,455		1
		Dual Purpose		109,431		5
				112,886		6
Other Schools	United States	Office		34,056		5
		Dual Purpose		347,144		68
				381,200		73
Corporate	United States	Office		454,390		12
	Total			6,922,208		332

Dual purpose space includes office and classroom facilities. We lease substantially all of our administrative and educational facilities. In some cases, classes are held in the facilities of the students’ employers at no charge to us. Leases generally range from five to ten years with one to two renewal options for extended terms. We also lease space from time to time on a short-term basis in order to provide specific courses or programs.

We evaluate current utilization of the educational facilities and projected enrollment growth to determine facility needs. We anticipate that an additional 890,000 square feet will be leased in 2008.

Item 3 — Legal Proceedings

We are subject to various claims and contingencies in the ordinary course of business, including those related to regulation, litigation, business transactions, employee-related matters and taxes, among others. While the outcomes of these matters are uncertain, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial positions, results of operations or cash flows.

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In accordance with SFAS No. 5, “Accounting for Contingencies” (“SFAS 5”), when we become aware of a claim or potential claim, the likelihood of any loss or exposure is assessed. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, we record a liability for the loss. The liability recorded includes probable and estimable legal costs associated with the claim or potential claim. If the loss is not probable or the amount of the loss cannot be reasonably estimated, we disclose the claim if the likelihood of a potential loss is reasonably possible and the amount is material. For matters where no loss contingency is recorded, our policy is to expense legal fees as incurred.

The following is a description of pending litigation and other proceedings that are outside the scope of ordinary and routine litigation incidental to our business.

Pending Litigation

Incentive Compensation Qui Tam Action

On August 29, 2003, the Company was notified that a qui tam action had been filed against it on March 7, 2003, in the U.S. District Court for the Eastern District of California by two current employees on behalf of themselves and the federal government. When the federal government declines to intervene in a qui tam action, as it has done in this case, the relators may elect to pursue the litigation on behalf of the federal government and, if they are successful, receive a portion of the federal government’s recovery. The qui tam action alleges, among other things, violations of the False Claims Act, 31 U.S.C. § 3729(a)(1) and (2), by UPX for submission of a knowingly false or fraudulent claim for payment or approval, and knowingly false records or statements to get a false or fraudulent claim paid or approved in connection with federal student aid programs, and asserts that UPX improperly compensates its employees. On or about October 20, 2003, a motion to dismiss the action was filed and was subsequently granted with leave to amend the complaint. Subsequently, a second amended complaint was filed on or about March 3, 2004. A motion to dismiss this amended complaint was filed on or about March 22, 2004, and the case was subsequently dismissed with prejudice. On June 11, 2004, an appeal was filed with the U.S. Court of Appeals for the Ninth Circuit. On September 5, 2006, the Ninth Circuit reversed the ruling of the district court and held that the relators had adequately alleged the elements of a False Claims Act cause of action. On January 22, 2007, UPX filed a Petition for Writ of Certiorari with the U.S. Supreme Court. On April 23, 2007, the U.S. Supreme Court denied UPX’s petition. As a result, the case has been remanded to the District Court in accordance with the order of the Ninth Circuit. In addition, on March 23, 2007, UPX filed a motion in the District Court to dismiss the complaint on the grounds that the September 7, 2004, settlement agreement between UPX and the U.S. Department of Education constituted an alternate remedy under the False Claims Act. That motion was denied on August 20, 2007. UPX has filed a motion seeking certification of the Court’s order for purposes of bringing an interlocutory appeal. The District Court has issued a Scheduling Order pursuant to which trial is set for September 2009. Rule 26 disclosures have been made and discovery is proceeding. While the outcome of this legal proceeding is uncertain, management does not expect a material adverse effect on the Company’s business, financial position, results of operations, or cash flows to result from this action. In addition, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.

Axia Qui Tam Action

On August 15, 2005, a relator filed a qui tam complaint under seal in the U.S. District Court for the District of Columbia. On April 12, 2006, the DOJ filed The Government’s Notice of Election to Decline Intervention in this qui tam lawsuit and on June 15, 2006, the court entered an order unsealing the complaint. An amended complaint was served on or about November 1, 2006. On November 15, 2006, the relator filed a Voluntary Notice of Dismissal. On November 17, 2006, the court ordered that the relator comply with the statutory requirements for dismissal of a qui tam False Claims Act action by December 1, 2006. On December 1, 2006, the United States consented to the dismissal of the action with prejudice as to the relator, so long as the dismissal is without prejudice as to the United States. On February 2, 2007, the court ordered the United States to articulate its reasons for consenting to the dismissal of the action. On February 21, 2007, the United States filed a Statement of Reasons for Consenting to Dismissal. While the outcome of this legal proceeding is uncertain, management does not expect a material adverse effect on the Company’s business, financial position, results of operations, or cash flows to result from this action. In

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addition, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.

Securities Class Action

On approximately October 12, 2004, a class action complaint was filed in the U.S. District Court for the District of Arizona, captioned Sekuk Global Enterprises et al v. Apollo Group, Inc. et al, Case No. CV 04-2147 PHX NVW. A second class action complaint making similar allegations was filed on or about October 18, 2004, in the U.S. District Court for the District of Arizona, captioned Christopher Carmona et al v. Apollo Group, Inc. et al, Case No. CV 04-2204 PHX EHC. A third class action complaint making similar allegations was filed on or about October 28, 2004, in the U.S. District Court for the District of Arizona, captioned Jack B. McBride et al v. Apollo Group, Inc. et al, Case No. CV 04-2334 PHX LOA. The court consolidated the three pending class action complaints under the caption In re Apollo Group, Inc. Securities Litigation, Case No. CV04-2147-PHX-JAT and a consolidated class action complaint was filed on May 16, 2005 by the lead plaintiff. Lead plaintiff purports to represent a class of the Company’s shareholders who acquired their shares between February 27, 2004 and September 14, 2004, and seeks monetary damages in unspecified amounts. Lead plaintiff alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated under the Act by the Company for defendants’ issuance of allegedly materially false and misleading statements in connection with their failure to publicly disclose the contents of the U.S. Department of Education’s program review report. A motion to dismiss the consolidated class action complaint was filed on June 15, 2005, on behalf of Apollo Group, Inc. and the individual named defendants. The court denied the motion to dismiss on October 18, 2005 and discovery commenced. The parties conducted discovery from October 2005 until discovery closed on February 16, 2007. On March 9, 2007, both parties filed motions for summary judgment. Opposition briefs were filed on May 11, 2007 and reply briefs were filed on June 8, 2007. The court denied both summary judgment motions on September 12, 2007. The case remains set for trial on November 14, 2007. While the outcome of this legal proceeding is uncertain, management does not expect a material adverse effect on the Company’s business, financial position, results of operations, or cash flows to result from this action. In addition, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.

Alaska Electrical Pension Fund Derivative Action

On September 5, 2006, the Alaska Electrical Pension Fund filed a shareholder derivative suit in the U.S. District Court for the District of Arizona, alleging on behalf of the Company that certain of the Company’s current and former officers and directors engaged in misconduct regarding stock option grants. Similar derivative complaints were filed in the same Court on or about September 19, 2006 and November 11, 2006 by other purported shareholders of the Company, and the three cases were consolidated by the Court under the caption Alaska Electrical Pension Fund v. Sperling, Case No. CV06-02124-PHX-ROS, on January 9, 2007. The defendants in the consolidated case are the Company, J. Jorge Klor de Alva, Daniel E. Bachus, John M. Blair, Dino J. DeConcini, Anthony F. Digiovanni, Kenda B. Gonzales, Hedy F. Govenar, Brian E. Mueller, Todd S. Nelson, Jerry F. Noble, Laura Palmer Noone, John R. Norton III, John G. Sperling, and Peter V. Sperling. An independent committee of the Board of Directors of the Company (“Special Committee”) was appointed and authorized to determine whether it is in the Company’s best interest to itself pursue the allegations made on behalf of the Company. Effective December 8, 2006, in response to an order by the Court on December 4, 2006, K. Sue Redman, who is not a party to the case, replaced Hedy F. Govenar on the Special Committee. As of March 13, 2007, James R. Reis joined the Special Committee in place of Daniel D. Diethelm. On July 2, 2007, all defendants and the Company filed Motions to Dismiss the case, and the Special Committee filed notice of its intent to terminate the action. On August 1, 2007, the court appointed as lead plaintiff Louisiana Municipal Police Employees’ Retirement System, and lead plaintiff filed a Second Amended Complaint on August 15, 2007. On August 17, 2007, the Special Committee filed a Motion to Terminate the action, based in part upon its conclusion that pursuit of the claims is not in the Company’s best interest. Discovery and briefing on the Motion to Terminate is presently expected to be completed by March 2008. While the outcome of this legal proceeding is uncertain, management does not expect a material adverse effect on the Company’s business, financial position, results of operations, or cash flows to result from this action. In addition, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.

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EEOC v. UPX

On September 25, 2006, the Equal Employment Opportunity Commission (“EEOC”) filed a Title VII action against UPX captioned Equal Employment Opportunity Commission v. UPX, No. CV-06-2303-PHX-MHM, in the U.S. District Court for the District of Arizona on behalf of four identified individuals and an asserted class of unidentified individuals who were allegedly discriminated against because they were not members of the Church of Jesus Christ of Latter-day Saints. The Complaint also alleges that the identified individuals were retaliated against after complaining about the alleged discrimination. The EEOC did not serve its Complaint on UPX until November 21, 2006. UPX answered the Complaint on December 8, 2006, denying the material allegations asserted. An initial Scheduling Conference was held on February 15, 2007. The parties are currently engaged in discovery. While the outcome of this legal proceeding is uncertain, management does not expect a material adverse effect on the Company’s business, financial position, results of operations, or cash flows to result from this action. In addition, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.

Barnett Derivative Action

On April 24, 2006, Larry Barnett filed a complaint derivatively on behalf of the Company. The lawsuit was filed in the Superior Court for the State of Arizona, Maricopa County and is entitled Barnett v. John Blair et al, Case Number CV2006-051558. On October 10, 2006, plaintiff filed a First Amended Complaint adding allegations of stock option backdating. The complaint names as defendants the Company, John M. Blair, Dino J. DeConcini, Hedy F. Govenar, Kenda Gonzales, Todd Nelson, Laura Palmer Noone, John Norton, John G. Sperling and Peter V. Sperling. The First Amended Complaint alleges, among other things, that the individual defendants breached their fiduciary duties to the Company and that certain of the individual defendants were unjustly enriched by their receipt of backdated stock option grants. The plaintiff seeks, among other things, an award of unspecified damages and reasonable costs and expenses, including attorneys’ fees. On August 21, 2006, the Company filed a Motion to Stay the case arguing that it is not in the best interests of the Company to prosecute plaintiffs’ purported derivative claims prior to resolution of the parallel federal securities class action pending against the Company in federal district court as described under “Securities Class Action.” The individual defendants joined in the Motion to Stay. On November 10, 2006, after plaintiff filed the First Amended Complaint and added allegations of stock option backdating, the Company filed an Amended Motion to Stay arguing that the action should be stayed pending resolution of the federal securities class action and pending the Special Committee’s investigation into the allegations of stock option backdating. Also on November 10, 2006, the Company filed a motion to sever the claims relating to stock option backdating from the claims made in the original complaint. On January 29, 2007, the Court granted the Amended Motion to Stay for a period of six months. On June 12, 2007 the Court extended the Stay to November 5, 2007 and set a case management conference for November 13, 2007. In light of recent developments in the Securities Class Action, the Company will be moving shortly to extend the Stay until the Securities Class Action has concluded. In addition, the plaintiff filed a motion to lift the stay on August 31, 2007 in order to conduct discovery related to the Special Committee’s report regarding alleged stock option backdating. The Company has opposed this motion. While the outcome of this legal proceeding is uncertain, management does not expect a material adverse effect on the Company’s business, financial position, results of operations, or cash flows to result from this action. In addition, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.

Bamboo Partners Derivative Action

On August 15, 2006, Bamboo Partners filed a complaint derivatively on behalf of the Company and UPX. The lawsuit was filed in the U.S. District Court, District of Arizona and is entitled Bamboo Partners v. Nelson et al., Case Number 2:06-at-10858. The complaint names as defendants Apollo Group, Inc., UPX, Todd Nelson, Kenda Gonzales, Daniel Bachus, John G. Sperling, Peter V. Sperling, Laura Palmer Noone, John M. Blair, Dino J. DeConcini, Hedy F. Govenar and John Norton III. The complaint alleges, among other things, that the defendants violated Sections 10(B) of the Exchange Act and committed numerous breaches of fiduciary duties. The complaint seeks damages sustained by Apollo and UPX as a result of breaches of fiduciary duty, abuse of control and waste of corporate assets. The complaint seeks damages against Laura Palmer Noone for unjust enrichment. The complaint

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also seeks attorneys’ fees, reasonable costs and disbursements. On November 13, 2006, the Company filed a Motion to Stay the case arguing that it is not in the best interests of the Company to prosecute plaintiffs’ purported derivative claims prior to resolution of the parallel federal securities class action pending against the Company in federal district court, as described above under “Securities Class Action.” The individual defendants joined in the Motion to Stay. The court granted the Company’s motion to stay on May 18, 2007. While the outcome of this legal proceeding is uncertain, management does not expect a material adverse effect on the Company’s business, financial position, results of operations, or cash flows to result from this action. In addition, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.

Teamsters Local Union Putative Class Action

On November 2, 2006, the Teamsters Local 617 Pension and Welfare Funds, filed a class action complaint purporting to represent a class of shareholders who purchased the Company’s stock between November 28, 2001 and October 18, 2006. The complaint alleges that the Company and certain of its current and former directors and officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by purportedly making misrepresentations concerning the Company’s stock option granting policies and practices. The defendants are the Company, J. Jorge Klor de Alva, Daniel E. Bachus, John M. Blair, Dino J. DeConcini, Kenda B. Gonzales, Hedy F. Govenar, Todd S. Nelson, John R. Norton III, John G. Sperling, Peter V. Sperling, and Thomas C. Wier. Plaintiff seeks unstated compensatory damages and other relief. On January 3, 2007, other shareholders, through their separate attorneys, filed motions seeking appointment as lead plaintiff and approval of their designated counsel as lead counsel to pursue this action. On September 11, 2007, the court appointed The Pension Trust Fund for Operating Engineers as lead plaintiff and approved lead plaintiff’s selection of lead counsel and liaison counsel. The Company has not yet responded to the complaint in this action but intends to vigorously oppose plaintiffs’ allegations. While the outcome of this legal proceeding is uncertain, management does not expect a material adverse effect on the Company’s business, financial position, results of operations, or cash flows to result from this action. In addition, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.

Regulatory and Other Legal Matters

Student Financial Aid

All federal financial aid programs are established by the Higher Education Act and regulations promulgated thereunder. The Higher Education Act has an expiration date; in the past, if Congress did not reauthorize the Higher Education Act before its expiration date, Congress extended the authorization of the Higher Education Act. The Higher Education Act is set to expire on October 31, 2007.

The Higher Education Act specifies the manner in which the U.S. Department of Education reviews institutions for eligibility and certification to participate in Title IV programs. Every educational institution involved in Title IV programs must be certified to participate and is required to periodically renew this certification. UPX was recertified in June 2003 and its current certification for the Title IV programs expired in June 2007. However, in March 2007, UPX submitted its Title IV program participation recertification application to the U.S. Department of Education. We have been collaborating with the U.S. Department of Education regarding the UPX recertification application. Although we have submitted our application for renewal, we are continuing to supply additional follow-up information based on requests from the U.S. Department of Education. Our eligibility continues on a month-to-month basis until the U.S. Department of Education issues its decision on the application. A month-to-month status is not unusual considering the process is multi-faceted and iterative. We have no reason to believe that the application will not be renewed and expect that the renewal process will be completed satisfactorily. WIU was recertified in October 2003 and its current certification for the Title IV programs expires in June 2009.

U.S. Department of Education Audits

From time to time as part of the normal course of business, UPX and WIU are subject to periodic program reviews and audits by regulating bodies. On December 22, 2005, the U.S. Department of Education, Office of Inspector General (“OIG”), issued an audit report on their review of UPX’s policies and procedures for the

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calculation and return of Title IV funds. The OIG concluded that UPX had policies and procedures that provide reasonable assurances that it properly identified withdrawn students, appropriately determined whether a return of Title IV funds was required, returned Title IV funds for withdrawn students in a timely manner and used appropriate methodologies for most aspects of calculating the return of Title IV funds. The OIG did conclude, however, that UPX did not use appropriate methodologies for calculating the percentage of Title IV financial aid earned from March 1, 2004 through December 7, 2004. Since December 8, 2004, UPX has adopted the methodologies deemed appropriate by the U.S. Department of Education. On November 3, 2006, the U.S. Department of Education issued a preliminary audit determination letter (PADL) concerning UPX’s administration of the Title IV federal student aid programs regarding this matter. On June 7, 2007, UPX responded to the PADL request with results of the file review. The U.S. Department of Education will ultimately issue a final audit determination letter regarding the return of Title IV funds. UPX has accrued $3.7 million, which is its best estimate of the refund liability. While the outcome of the OIG audit proceedings are on-going, management does not expect a material adverse effect on our business, financial position, results of operations, or cash flows to result from these actions.

Department of Justice Investigation

On June 19, 2006, we received a grand jury subpoena from the U.S. Attorney’s Office for the Southern District of New York requesting that we provide documents relating to our stock option grants. We are cooperating fully with this request.

SEC Informal Inquiry

On June 30, 2006, we were notified by letter from the SEC of an informal inquiry and the Commission’s request for the production of documents relating to our stock option grants. On July 3, 2007, the SEC notified us that it had closed its inquiry into our stock option grants, without recommending any enforcement action.

Nasdaq Proceeding

Our Annual Report on Form 10-K for 2006 and our Quarterly Reports on Form 10-Q for the quarters ended May 31, 2006, November 30, 2006, and February 28, 2007, were filed with the SEC on May 22, 2007, and an Amendment to the Quarterly Report on Form 10-Q/A for the quarter ended February 28, 2007, was filed with the SEC on May 25, 2007. On May 24, 2007, the Nasdaq Listing and Hearing Review Council determined that we demonstrated compliance with all Nasdaq Marketplace Rules and informed us that the Nasdaq delisting matter is now closed and our Class A Common Stock will continue to be listed on The Nasdaq Global Select Market.

IRC Section 162(m)

Certain tax deductions in prior years with respect to compensation attributable to the exercise of certain stock options by executive officers may be in question. Under IRC Section 162(m), the amount of such deduction per covered executive officer is limited to $1.0 million per year, except to the extent the compensation qualifies as performance based. Compensation attributable to options with revised measurement dates may not have qualified as performance-based compensation. Accordingly, we may have claimed deductions with respect to those exercised options that were in excess of the limit imposed under IRC Section 162(m). As a result, we have accrued our best estimate, representing the high end of our estimated potential exposure, with respect to uncertain tax positions, including interest and penalties for the taxable years 2003 through 2007 (which are currently our only open years subject to adjustment for federal tax purposes) of approximately $44.6 million as of August 31, 2007. For prior periods where a liability existed and where the statute of limitations has expired, the accrual relating to that period has been reversed in the period in which the statute expired.

Item 4 — Submission of Matters to a Vote of Security Holders

None.

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PART II

Item 5 — Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our Apollo Group Class A common stock trades on the Nasdaq Global Select Market under the symbol “APOL.” The holders of our Apollo Group Class A common stock are not entitled to any voting rights.

There is no established public trading market for our Apollo Group Class B common stock and all shares of our Apollo Group Class B common stock are beneficially owned by affiliates.

The table below sets forth the high and low bid share prices for our Apollo Group Class A common stock as reported by the Nasdaq Global Select Market.

	High		Low
2006
First Quarter	$	78.19	$	58.87
Second Quarter		72.61		49.38
Third Quarter		56.02		47.94
Fourth Quarter		55.47		43.12
2007
First Quarter	$	52.89	$	33.70
Second Quarter		48.56		38.26
Third Quarter		49.22		42.92
Fourth Quarter		64.01		47.23

Holders

As of August 31, 2007, there were approximately 273 registered holders of record of Apollo Group Class A common stock and four registered holders of record of Apollo Group Class B common stock. A substantially greater number of holders of Apollo Group Class A common stock are “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions.

Dividends

Although we are permitted to pay dividends on our Apollo Group Class A and Apollo Group Class B common stock, we have never paid cash dividends on our common stock. Dividends are payable at the discretion of the Board of Directors, and the Articles of Incorporation treat the declaration of dividends on the Apollo Group Class A and Apollo Group Class B common stock in an identical manner as follows: holders of our Apollo Group Class A common stock and Apollo Group Class B common stock are entitled to receive cash dividends, if and to the extent declared by the Board of Directors, payable to the holders of either class or both classes of common stock in equal or unequal per share amounts, at the discretion of the Board of Directors. We have no current plan to pay dividends in the foreseeable future. The decision of our Board of Directors to pay future dividends will depend on general business conditions, the effect of a dividend payment on our financial condition and other factors the Board of Directors may consider relevant.

Recent Sales of Unregistered Securities

None.

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Securities Authorized for Issuance under Equity Compensation Plans

The information required by Item 201(d) of Regulation S-K is provided under Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, “Equity Compensation Plan Information,” which is incorporated herein by reference.

Purchases of Equity Securities

Our Board of Directors has authorized programs to repurchase shares of Apollo Group Class A common stock. The share repurchases under these programs for the three months ended August 31, 2007 have been as follows:

									Maximum Value
						Total Number of			of Shares that
						Shares Purchased			May Yet Be
	Total # of			Average Price		as Part of Publicly			Purchased
(Numbers in thousands,	Shares			Paid per		Announced Plans			Under the Plans or
except per share amounts)	Repurchased			Share		or Programs			Programs
Treasury stock as of May 31, 2007		15,254		$	68.23		15,254		$	136,092
New authorizations		—			—		—			363,908
Shares repurchased		—			—		—			—
Shares reissued		(75	)		68.23		(75	)		—
Treasury stock as of June 30, 2007		15,179		$	68.23		15,179		$	500,000
New authorizations		—			—		—			—
Shares repurchased		7,167			61.08		7,167			(437,735	)
Shares reissued		(143	)		65.94		(143	)		—
Treasury stock as of July 31, 2007		22,203		$	65.94		22,203		$	62,265
New authorizations		—			—		—			—
Shares repurchased		—			—		—			—
Shares reissued		(40	)		65.94		(40	)		—
Treasury stock as of August 31, 2007		22,163		$	65.94		22,163		$	62,265

The following lists the share repurchase program authorization dates and amounts as approved by our Board of Directors:

	Amount
Date of Authorization	Authorized
September 25, 1998	$	40,000
May 13, 1999		20,000
October 25, 1999		40,000
March 24, 2000		50,000
March 28, 2003		150,000
June 25, 2004		500,000
October 1, 2004		500,000
March 25, 2005		250,000
October 7, 2005		300,000
December 9, 2005		300,000
June 22, 2007		363,908
	$	2,513,908

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There is no expiration date on the repurchase authorizations and repurchases occur at our discretion. On October 5, 2007, the Board of Directors increased the authorization to repurchase up to $500 million of Apollo Group Class A common stock.

Company Stock Performance

The following graph compares the cumulative 5-year total return attained by shareholders on Apollo Group Class A common stock relative to the cumulative total returns of the S&P 500 index; a customized peer group of five companies that includes: Career Education Corp., Corinthian Colleges Inc, Devry Inc, ITT Educational Services, and Strayer Education Inc; as well as the University of Phoenix Online. An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock, in the index, and in the peer group on August 31, 2002, and its relative performance is tracked through August 31, 2007. The value shown for University of Phoenix Online common stock is shown through August 27, 2004, the date of its conversion to Apollo Group Class A common stock.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Apollo Group, Inc., University of Phoenix Online,
The S&P 500 Index And A Peer Group

* $100 invested on 8/31/02 in stock or index-including reinvestment of dividends. Fiscal year ending August 31.

Copyright ^© 2007, Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. All rights reserved.

www.researchdatagroup.com/S&P.htm

	8/02		8/03		8/04		8/05		8/06		8/07
Apollo Group, Inc.		100.00		153.17		186.47		188.05		120.03		140.26
University of Phoenix Online		100.00		235.62
S&P 500		100.00		112.07		124.90		140.59		153.08		176.25
Peer Group		100.00		181.44		124.57		148.06		132.86		204.06

The information contained in the performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC nor shall such information be deemed incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

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Item 6 — Selected Consolidated Financial Data

The following selected consolidated financial data and operating statistics are qualified by reference to and should be read in conjunction with the consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The statement of income data for the years ended August 31, 2007, 2006, and 2005, and the balance sheet data as of August 31, 2007 and 2006, were derived from the audited consolidated financial statements, included herein. Diluted income per share and diluted weighted average shares outstanding have been retroactively restated for stock splits. We restated the financial results of prior periods in our Annual Report on Form 10-K for 2006. Our annual report on Form 10-K for 2006 included a restated consolidated balance sheet as of August 31, 2005 and related consolidated statements of income for the years ended August 31, 2005 and 2004. The consolidated balance sheets as of August 31, 2004 and 2003, and the consolidated statement of income for the year ended August 31, 2003 have been restated, but such restated data has not been audited and are derived from the books and records of the Company.

The information set forth below is not necessarily indicative of results of future operations, and should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes thereto included in Item 8 of this Form 10-K to fully understand factors that may affect the comparability of the information presented below.

	August 31,
	2007		2006		2005		2004		2003
Balance Sheet Data:
($ in thousands)
Total cash, cash equivalents, restricted cash, and marketable securities	$	689,150	$	646,995	$	685,748	$	993,875	$	1,045,802
Total assets	$	1,449,863	$	1,283,005	$	1,281,548	$	1,487,750	$	1,417,388
Current liabilities	$	743,835	$	595,756	$	566,745	$	525,239	$	384,520
Long-term liabilities		72,188		82,876		80,583		67,546		48,072
Total shareholders’ equity		633,840		604,373		634,220		894,965		984,796
Total liabilities and shareholders’ equity	$	1,449,863	$	1,283,005	$	1,281,548	$	1,487,750	$	1,417,388
Operating Statistics:
Degreed enrollments at end of year(1)		313,700		282,300		271,400		238,400		189,800
Number of locations at end of year:
Campuses		102		99		90		82		71
Learning centers		157		163		154		137		121
Total number of locations		259		262		244		219		192

(1) Degreed Enrollments includes only UPX and Axia College and represent individual students enrolled in our degree programs that attended a course during the quarter and did not graduate as of the end of the quarter (including Axia students enrolled in UPX and WIU). Degreed Enrollments include any student who graduated from one degree program and started a new degree program (for example, a graduate of the associate’s degree program returns for a bachelor’s degree or a graduate of a bachelor’s degree program returns for a master’s degree), as well as students who have been out of attendance for greater than 12 months and return to a program.

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	Year Ended August 31,
	2007		2006		2005		2004		2003
Statements of Income:
($ in thousands)
Revenues:
Tuition and other, net	$	2,723,793	$	2,477,533	$	2,251,114	$	1,800,047	$	1,338,982
Costs and expenses:
Instructional costs and services		1,237,491		1,109,584		952,474		781,437		630,566
Selling and promotional		659,059		544,706		485,451		383,800		272,348
General and administrative		201,546		153,004		98,642		84,326		61,314
Goodwill impairment		—		20,205		—		—		—
Share-based compensation(1)		—		—		16,895		100,283		—
Total costs and expenses		2,098,096		1,827,499		1,553,462		1,349,846		964,228
Income from operations		625,697		650,034		697,652		450,201		374,754
Interest income and other, net		31,600		18,054		16,787		16,305		14,238
Income before income taxes		657,297		668,088		714,439		466,506		388,992
Provision for income taxes		248,487		253,255		286,506		186,421		153,109
Net income	$	408,810	$	414,833	$	427,933	$	280,085	$	235,883

(1) Share-based compensation in 2005 and 2004 is related to the 2004 conversion of the UPX Online stock options into Apollo Group Class A stock options.

	Year Ended August 31,
	2007		2006		2005		2004			2003
Common Stock and Earnings per Share Data:
($ in thousands, except per share amounts)
Income attributed to Apollo Group common stock:
Net income	$	408,810	$	414,833	$	427,933	$	280,085		$	235,883
Stock dividends paid(1)		—		—		—		(114,155	)		—
Net income attributed to UPX Online common shareholders		—		—		—		(24,195	)		(12,839	)
Net income attributed to Apollo Group common shareholders	$	408,810	$	414,833	$	427,933	$	141,735		$	223,044
Income attributed to UPX Online common stock:
Net income							$	24,195		$	12,839
Stock dividends paid(1)								114,155			—
Net income attributed to UPX Online common shareholders							$	138,350		$	12,839
Earnings per share attributed to Apollo Group common stock:
Diluted income per share	$	2.35	$	2.35	$	2.30	$	0.79		$	1.25
Diluted weighted average shares outstanding		173,603		176,205		186,066		178,914			177,728
Earnings per share attributed to UPX Online common stock:
Diluted income per share							$	8.10		$	0.77
Diluted weighted average shares outstanding								17,074			16,585

(1) Stock dividends paid in 2004 are related to the 2004 conversion of the UPX Online common stock outstanding into Apollo Group Class A common stock outstanding.

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Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help investors understand Apollo Group, Inc. (“the Company,” “Apollo Group,” “Apollo,” “APOL,” “we,” “us,” or “our”), our operations, and our present business environment. The MD&A is provided as a supplement to — and should be read in conjunction with — our consolidated financial statements and the accompanying notes (“Notes”). The following overview provides a summary of the sections included in our MD&A:

•  Forward-Looking Statements — cautionary information about forward-looking statements and a description of certain risks and uncertainties that could cause our actual results to differ materially from our historical results or our current expectations or projections.

•  Executive Summary — a general description of our business and the education industry, as well as key highlights of the current year.

•  Critical Accounting Policies and Estimates — a discussion of accounting policies that require critical judgments and estimates.

•  Results of Operations — an analysis of our results of operations in our consolidated financial statements. We operate in one business sector: education. Except to the extent that differences between our reportable segments are material to an understanding of our business as a whole, we present the discussion in our MD&A on a consolidated basis.

•  Liquidity, Capital Resources, and Financial Position — an analysis of cash flows, sources and uses of cash, commitments and contingencies, seasonality in the results of our operations, the impact of inflation, and quantitative and qualitative disclosures about market risk.

Forward-Looking Statements

This MD&A contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact may be forward-looking statements. Such forward-looking statements include, among others, those statements regarding future events and future results of the Company that are based on current expectations, estimates, forecasts, and the beliefs and assumptions of us and our management, and speak only as of the date made and are not guarantees of future performance. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “believes,” “expects,” “anticipates,” “estimates,” “plans,” “predicts,” “targets,” “potential,” “continue,” “objectives,” or the negative of these terms or other comparable terminology. Such forward-looking statements are necessarily estimates based upon current information and involve a number of risks and uncertainties. Such statements should be viewed with caution. Actual events or results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include but are not limited to:

•  changes in the regulations of the education industry, including those items set forth in Item 1 under the sections titled “Regulatory Environment,” “Accreditation,” “Federal Financial Aid Programs,” and “State Authorization;”

•  each of the factors discussed in Item 1A, Risk Factors;

•  those factors set forth in Item 7; and

•  changes in the requirements surrounding the reports that we file with the Securities and Exchange Commission (“SEC”).

The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We undertake no obligation to publicly update or revise any forward-looking statements, or any facts, events, or

45

circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements.

Executive Summary

We have been an education provider for more than 30 years, operating University of Phoenix, Inc. (“UPX”), Institute for Professional Development, Inc. (“IPD”), The College for Financial Planning Institutes Corporation (“CFP”), Western International University, Inc. (“WIU”) and Insight Schools, Inc. (“Insight”), all of which are our wholly-owned subsidiaries. We offer innovative and distinctive educational programs and services from high school through college-level at 102 campuses and 157 learning centers in 40 states and the District of Columbia; Puerto Rico; Alberta and British Columbia, Canada; Mexico; and The Netherlands; as well as online throughout the world. Our combined Degreed Enrollment for UPX, including Axia College, as of August 31, 2007 was approximately 313,700. In addition, students are enrolled in WIU, CFP and IPD Client Institutions, and additional non-degreed students are enrolled in UPX. See Customers/Students in Item 1 of this Report. Degreed Enrollments represent individual students enrolled in our degree programs who attended a course during the quarter and did not graduate as of the end of the quarter (including Axia students enrolled in UPX and WIU). Degreed Enrollments include any student who graduated from one degree program and started a new degree program (for example, a graduate of the associate’s degree program returns for a bachelor’s degree or a graduate of a bachelor’s degree program returns for a master’s degree), as well as students who have been out of attendance for greater than 12 months and return to a program.

The non-traditional education market is a significant and growing component of the post-secondary education market, which is estimated by the U.S. Department of Education to be a more than $373.0 billion industry. According to the U.S. Department of Education, National Center for Education Statistics, over 6.8 million, or 39%, of all students enrolled in higher education programs are over the age of 24. A large percentage of these students would not be classified as traditional (i.e., living on campus, supported by parents and not working). The non-traditional students typically are looking to improve their skills and enhance their earnings potential within the context of their careers. Between 2002 and 2014, the percentage of 18- to 24-year-old students in the U.S. is expected to increase 16%. The market for non-traditional education should continue to increase, reflecting the rapidly expanding knowledge-based economy.

During fiscal year 2007, we experienced the following significant events:

1. Senior Management Changes — Ms. Kenda B. Gonzales resigned as Chief Financial Officer and Treasurer. Ms. Gonzales was replaced by Mr. Joseph L. D’Amico who was appointed Executive Vice President and Chief Financial Officer. Mr. Daniel E. Bachus resigned as Chief Accounting Officer and Controller and was replaced by Mr. Brian L. Swartz, who was appointed Senior Vice President of Finance and Chief Accounting Officer. Mr. Gregory W. Cappelli was appointed Executive Vice President, Global Strategy and Assistant to the Chairman. Additionally, subsequent to August 31, 2007, P. Robert Moya was appointed Senior Vice President and General Counsel.

2. Enrollment and Revenue Growth While Investing in our Business for the Future — We achieved a 10.5% average quarterly Degreed Enrollment growth for the year ended August 31, 2007, which resulted in a 9.9% increase in revenue for the year ended August 31, 2007. These increases helped fund a significant portion of our investment in product development and marketing and lead generation over the same period to ensure our continued growth and viability in the future.

3. Financial Statement Restatement — On May 22, 2007, we filed our 2006 Form 10-K and three Form 10-Q Reports with the SEC. With these filings, we have completed the process related to our financial statement restatement. On May 24, 2007, the Nasdaq Listing and Hearing Review Council determined that we demonstrated compliance with all Nasdaq Marketplace Rules and informed us that the Nasdaq delisting matter is now closed and our Class A Common Stock will continue to be listed on The Nasdaq Global Select Market. On July 3, 2007, the SEC notified us that it had closed its inquiry into our stock option grants, without recommending any enforcement action.

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4. Naming Rights to Glendale, Arizona Sports Complex — On September 22, 2006, we entered into an agreement with New Cardinals Stadium LLC, B&B Holdings, Inc., an unrelated third party doing business as the Arizona Cardinals, for UPX naming rights on a stadium in Glendale, Arizona, which is home to the Arizona Cardinals National Football League football club. The naming rights include signage, advertising and other promotional benefits. The initial agreement term is 20 years with options to extend. Pursuant to the agreement, we were required to pay a total of $5.8 million for the 2006 contract year, which is increased 3% per year until 2026. Other payments apply if certain events occur, such as the Cardinals playing in the Super Bowl or if there are sold-out home games.

5. Insight Schools Acquisition — On October 20, 2006, we completed the acquisition of Insight. Insight operates an online high school and engages in the business of servicing cyber high schools and other online education. We acquired all of the outstanding common stock of Insight for $15.5 million. The purchase price included the payment of seller transaction fees, the repayment of certain existing indebtedness, payment of employee sale bonuses, and payments to option holders, warrant holders, and convertible note holders. This acquisition allows us to expand into the online charter high school market. As a result of the acquisition, goodwill increased by $12.7 million.

6. Aptimus, Inc. Acquisition — On August 8, 2007, we announced our intention to acquire online advertising network Aptimus, Inc. (Nasdaq: APTM) for $6.25 per share in an all-cash transaction valued at approximately $47.6 million. This acquisition will help us increase the effectiveness and efficiency of our online advertising directed at increasing awareness of and access to quality education services. The closing of the acquisition is subject to customary closing conditions, including Aptimus shareholder approval. The acquisition is expected to close in early fiscal 2008, after Aptimus’ shareholder meeting scheduled for October 29, 2007.

7. Apollo Global, Inc. — On October 22, 2007, we formed a joint venture with The Carlyle Group (“Carlyle”), called Apollo Global, Inc. (“Apollo Global”) to pursue investments in the international education services sector. Carlyle, based in Washington D.C., is one of the world’s largest and most prestigious private equity firms, managing over $76 billion in assets for over 1,000 institutional investors, including several of the largest pension funds in the U.S. Through Apollo Global, we intend to capitalize on the high global demand for education services. Apollo Global will provide education services through two primary strategies. First, Apollo Global will continue to provide our wide range of U.S. accredited degrees to foreign students outside the U.S. Second, Apollo Global will provide local education services, including post-secondary degrees, in the countries it seeks to enter. These capabilities will be achieved through both a disciplined acquisition process and organic growth.

We have agreed that, within approximately 18 months, all of our education-related activities directed toward students who live outside the U.S. and who are not citizens of the U.S. or members of the U.S. military will be conducted through Apollo Global. We have agreed to commit up to $801 million in cash or contributed assets and own 80.1% of Apollo Global. Carlyle has agreed to commit up to $199 million in cash or contributed assets and own the remaining 19.9%. Additionally, conservative amounts of debt will be employed, as appropriate. The Board of Apollo Global will consist of seven directors, four of whom will be designated by us and two of whom will be designated by Carlyle. The seventh director will be the President of Apollo Global. Additionally, 10 to 15% of the value of the equity will be available to provide incentives for management of Apollo Global. Apollo Global will be consolidated in our financial statements.

Critical Accounting Policies and Estimates

Our financial statements are prepared in conformity with accounting principles generally accepted in the United States. The preparation of these financial statements requires the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and

47

the reported amounts of revenues and expenses during the periods presented. We believe that our critical accounting policies, which involve a higher degree of judgments, estimates and complexity, are as follows:

Revenue Recognition

Tuition and other revenue, net consists largely of tuition and fees associated with different educational programs as well as related educational resources such as printed text books and access to online materials, and are shown net of discounts.

The following table presents the most significant components as percentages of total tuition and other revenue, net for the years ended August 31, 2007, 2006 and 2005:

	Year Ended August 31,
	2007					2006					2005
($ in millions)
Tuition revenue	$	2,553.1		94	%	$	2,304.3		93	%	$	2,114.1		94	%
IPD services revenue		73.6		2	%		74.4		3	%		69.5		3	%
Application and related fees		27.6		1	%		33.8		1	%		36.4		2	%
Online course material revenue		161.0		6	%		138.7		6	%		104.5		5	%
Other revenue		20.9		1	%		31.7		1	%		33.8		1	%
Tuition and other revenue, gross		2,836.2		104	%		2,582.9		104	%		2,358.3		105	%
Less: Discounts		(112.4	)	(4	)%		(105.4	)	(4	)%		(107.2	)	(5	)%
Tuition and other revenue, net	$	2,723.8		100	%	$	2,477.5		100	%	$	2,251.1		100	%

Tuition revenue encompasses both online and classroom-based learning. Tuition revenue is recognized pro rata, on a weekly basis, over the period of instruction as services are delivered to students. During certain periods of the year and in certain businesses, we adjust our revenue recognition to account for holiday breaks such as Christmas and Thanksgiving.

IPD services revenue consist of the contractual share of tuition revenues from students enrolled in IPD programs at Client Institutions. IPD contracts with Client Institutions to provide services including, but not limited to, management consulting and training; program development; program administration; instructor and student recruiting; and student accounting, collection and recordkeeping. The contractual share varies by contract and may change over time. Our contractual share ranges between 30% and 50%. Contracts generally have terms of 10 years with provisions for renewal. The portion of service revenue to which we are entitled under the terms of the contracts is recognized on a pro rata basis as services are provided.

Application and related fees consist of the fees students pay when submitting an enrollment application and the application costs related to the expenses associated with processing the applications. Both the fees and the costs are deferred and recognized over the average length of time it takes for a student to complete a program of study.

Online course material revenue relates to online course materials delivered to students over the period of instruction. Revenue associated with these materials is recognized pro rata over the period of the related course to correspond with delivery of the materials to students.

Other revenue is primarily composed of non-tuition generating revenues, such as renting classroom space and other student support services. This revenue is recognized as these services are provided.

Discounts include a variety of promotional programs including military discounts, special promotional incentives designed to generate new student enrollment, early payment discounts and other incentives.

Goodwill

Goodwill is primarily the result of our acquisitions of CFP and Insight. SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”) addresses goodwill and other intangible assets that have indefinite useful lives and

48

prescribes that these assets will not be amortized, but instead tested for impairment at least annually or more frequently if circumstances arise indicating potential impairment. If the carrying amount of the reporting unit containing goodwill exceeds the fair value of that reporting unit, an impairment loss is recognized to the extent the “implied fair value” of the goodwill is less than the carrying amount of the goodwill. This pronouncement provides specific guidance on performing impairment tests for goodwill and indefinite-lived intangibles.

The process of evaluating the potential impairment of goodwill requires judgment. In assessing the fair value of our reporting units, we make estimates about the future cash flows of our reporting units. Our cash flow forecast is based on assumptions that are consistent with the plans and estimates we are using to manage the underlying businesses. Other factors we consider include, but are not limited to, significant underperformance relative to expected historical or projected future operating results, significant changes in the manner or use of the acquired assets or the overall business strategy, and significant negative industry or economic trends. If our estimates or related assumptions change in the future, we may be required to record non-cash impairment charges for these assets. In addition, we make certain judgments about allocating shared assets and liabilities to the balance sheets for our reporting units. We have engaged a third-party valuation expert to assist in evaluating the fair values of our reporting units. We have selected August 31 and May 31 as the dates on which we perform our annual goodwill impairment tests for CFP and Insight, respectively. Based on our goodwill impairment tests, no impairments in goodwill were recorded during 2007.

Share-Based Compensation

Prior to September 1, 2005, we accounted for all employee and non-employee director share-based compensation awards using the intrinsic value method under APB 25, and provided the required disclosures in accordance with SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). On September 1, 2005, we adopted SFAS No. 123(R), “Share-Based Payment” (“SFAS 123(R)”), using the modified prospective transition method. Under both APB 25 and SFAS 123(R), the requisite service period over which share-based compensation is expensed generally equals the vesting periods of the awards.

Under SFAS 123(R), our share-based compensation is based on the fair value of the option at the grant date. The fair value is affected by the stock price, as well as the Black-Scholes-Merton option pricing model (the “BSM”) valuation assumptions, including the volatility of the stock price, expected term of the option, risk-free interest rate and dividend yield. We use the BSM for estimating the fair value on the date of the grant of stock options. We used the following weighted average assumptions in the BSM:

	Year Ended August 31,
	2007			2006			2005
Expected volatility		32.7	%		34.6	%		30.2	%
Expected life (years)		4.2			5.9			3.9
Risk-free interest rate		4.9	%		4.8	%		3.4	%
Dividend yield		0.0	%		0.0	%		0.0	%

The assumptions that have the most significant affect on the fair value of the grants and therefore, share-based compensation expense, are the expected life and expected volatility. The following table illustrates how changes to the BSM assumptions would affect the weighted average per option fair values as of the grant date for grants made during fiscal year 2007:

	Expected Volatility
Expected Life (years)	29.4%		32.7%		35.9%
3.7	$	16.39	$	17.55	$	18.70
4.2		17.64		18.84		20.04
4.7		18.83		20.07		21.30

We granted 5.5 million options during 2007, which excludes 1.6 million options that were canceled and regranted as part of our programs to cure 409A tax consequences for our current and former employees.

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Allowance for Doubtful Accounts

We extend unsecured credit to a portion of the students who are enrolled at our schools and programs, and based upon past experience and current trends, we establish an allowance for doubtful accounts with respect to tuition receivables. Our allowance estimation methodology has been refined and considers a number of factors that, based on collections history, we believe have an impact on our ability to collect student receivables.

We monitor our collections and write-off experience and periodically determine whether adjustments to our allowance percentage estimates are necessary. As a result, we believe that our allowance estimation methodology reflects historical trends as well as our most recent collections experience and reasonably estimates future losses attributable to receivable write-offs. Our standard allowance estimation methodology is periodically evaluated for sufficiency by management and modified as necessary. Changes to the design of our standard allowance estimation methodology, including our allowance percentage estimates, may impact our estimate of our allowance for doubtful accounts and our financial results.

When a student with Title IV loans withdraws from UPX or WIU, we are sometimes required to return a portion of Title IV funds to the lenders. We are generally entitled to collect these funds from the students, but collection of these receivables is significantly lower than our collection of receivables from students who remain in our educational programs. Any change in the amount of “Return to Lender” or collection rates are factored into the determination of an appropriate allowance amount.

A one percentage point change in our allowance for doubtful accounts as a percentage of gross student receivables as of August 31, 2007, would have resulted in a pre-tax change in income of $2.8 million ($1.7 million after-tax). Additionally, if our allowance for doubtful accounts were to change by 1% of tuition and other revenues, net for the fiscal year ended August 31, 2007, we would have recorded a pre-tax change in income of approximately $27.2 million ($16.6 million after-tax).

Accounts receivable are written off when the account is deemed to be uncollectible. This typically occurs once we have exhausted all efforts to collect the account, which includes collection attempts by our employees and outside collection agencies.

Insurance Reserves

We record liabilities for claims and related expenses that are estimable and probable related to our self-insured medical and dental insurance programs in accordance with the contractual terms of the insurance policies. Accounting for insurance liabilities that are self-insured involves uncertainty because estimates and judgments are used to determine the ultimate liability for reported claims as well as claims incurred but not reported. We consider our historical experience in determining the appropriate insurance reserves. We record reserves for claims incurred but not recorded assuming a 45-day lag in the submission of claims. The following table displays the required increase or decrease to the insurance reserve if current claim lag time trends differed from our historical claim lag time experience:

	Pre-Tax
	(Decrease)
Claim Lag Time	Increase
($ in millions)
30 days	$	(3.0	)
45 days		—
60 days		3.0

Loss Contingencies

In accordance with SFAS No. 5, “Accounting for Contingencies” (“SFAS 5”), when we become aware of a claim or potential claim, the likelihood of any loss or exposure is assessed. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, we record a liability for the loss. The liability recorded includes probable and estimable legal costs associated with the claim or potential claim. If the loss is not probable or the amount of the loss cannot be reasonably estimated, we disclose the claim if the likelihood of a potential loss is

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reasonably possible and the amount is material. For matters where no loss contingency is recorded, our policy is to expense legal fees as incurred.

Accounting for Income Taxes

We account for income taxes using the asset and liability method in accordance with SFAS 109, “Accounting for Income Taxes” (“SFAS 109”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted laws and tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities due to a change in tax rates is recognized in income in the period that includes the enactment date. Management judgment is required in determining the provision for income taxes and, in particular, whether or not a valuation allowance should be recorded against our deferred tax assets.

Certain tax deductions in prior years with respect to compensation attributable to the exercise of certain stock options by executive officers may be in question. Under IRC Section 162(m), the amount of such deduction per covered executive officer is limited to $1.0 million per year, except to the extent the compensation qualifies as performance based. Compensation attributable to options with revised measurement dates may not have qualified as performance-based compensation. Accordingly, we may have claimed deductions with respect to those exercised options that were in excess of the limit imposed under IRC Section 162(m). As a result, we have accrued our best estimate, representing the high end of our estimated potential exposure, with respect to uncertain tax positions, including interest and penalties for the taxable years 2003 through 2007 (which are currently our only open years subject to adjustment for federal tax purposes) of approximately $44.6 million as of August 31, 2007. For prior periods where a liability existed and where the statute of limitations has expired, the accrual relating to that period has been reversed in the period in which the statute expired.

Results of Operations

We have included below a discussion of our operating results and significant items that explain the material changes in our operating results during the last three years.

The following table sets forth an analysis of our Consolidated Statements of Income for fiscal years ended 2007, 2006, and 2005:

							% of Revenues									% Change
	Year Ended August 31,						Year Ended August 31,									2007 vs.			2006 vs.
	2007		2006		2005		2007			2006			2005			2006			2005
($ in millions)
Revenues:
Tuition and other, net	$	2,723.8	$	2,477.5	$	2,251.1		100.0	%		100.0	%		100.0	%		9.9	%		10.1	%
Costs and expenses:
Instructional costs and services		1,237.5		1,109.6		952.5		45.4	%		44.8	%		42.3	%		11.5	%		16.5	%
Selling and promotional		659.1		544.7		485.5		24.2	%		22.0	%		21.6	%		21.0	%		12.2	%
General and administrative		201.5		153.0		98.6		7.4	%		6.2	%		4.4	%		31.7	%		55.2	%
Goodwill impairment		—		20.2		—		—			0.8	%		—
Share-based compensation(1)		—		—		16.9		—			—			0.7	%
		2,098.1		1,827.5		1,553.5		77.0	%		73.8	%		69.0	%		14.8	%		17.6	%
Income from operations		625.7		650.0		697.6		23.0	%		26.2	%		31.0	%		(3.7	)%		(6.8	)%
Interest income and other, net		31.6		18.1		16.8		1.1	%		0.7	%		0.7	%		74.6	%		7.7	%
Income before income taxes		657.3		668.1		714.4		24.1	%		26.9	%		31.7	%		(1.6	)%		(6.5	)%
Provision for income taxes		248.5		253.3		286.5		9.1	%		10.2	%		12.7	%		(1.9	)%		(11.6	)%
Net income	$	408.8	$	414.8	$	427.9		15.0	%		16.7	%		19.0	%		(1.4	)%		(3.1	)%

(1) Related to the August 27, 2004, conversion of UPX Online common stock outstanding and stock options to Apollo Group Class A common stock outstanding and stock options.

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We categorize our expenses as instructional costs and services, selling and promotional, and general and administrative.

Instructional costs and services at UPX, WIU, CFP and Insight consist primarily of costs related to the delivery and administration of our educational programs and include faculty compensation, administrative compensation for departments that provide service directly to the students, financial aid processing costs, the costs of educational materials sold, facility leases and other occupancy costs, bad debt expense, technology spending in support of student systems and depreciation and amortization of property and equipment. UPX and WIU faculty members are primarily contracted for one course offering at a time. All classroom facilities are leased or, in some cases, are provided by the students’ employers at no charge to us. Instructional costs and services at IPD consist primarily of program administration, student services, and classroom lease expense. Most of the other instructional costs for IPD-assisted programs, including faculty, financial aid processing, and other administrative salaries, are the responsibility of IPD’s Client Institutions.

Selling and promotional costs consist primarily of compensation for enrollment counselors, management and support staff, corporate marketing, advertising, production of marketing materials, and other costs related to selling and promotional functions. We expense selling and promotional costs as incurred.

General and administrative costs consist primarily of administrative compensation, occupancy costs, depreciation and amortization, and other related costs for departments such as executive management, information systems, corporate accounting, human resources, and other departments that do not provide direct services to our students. To the extent possible, we centralize these services to avoid duplication of effort.

Tuition and Other Revenue, Net

Information about our tuition and other revenue, net by reportable segment on a percentage basis is as follows:

	Year Ended August 31,
	2007			2006			2005
UPX		93.1	%		83.7	%		89.5	%
Other Schools		6.8	%		16.2	%		10.4	%
Corporate		0.1	%		0.1	%		0.1	%
Tuition and other revenue, net		100.0	%		100.0	%		100.0	%

Our tuition and other revenue, net increased by 9.9% in 2007 primarily due to a 10.5% increase in average quarterly Degreed Enrollments and selective tuition price increases depending on geographic area and program. Our associate’s degree program has a lower price point than our other programs. Accordingly, we continued to experience negative mix shift in 2007 compared to 2006 as our associate’s average quarterly Degreed Enrollments increased 55.0%, and represented 33.3% of our Degreed Enrollments at August 31, 2007 compared to 26.2% at August 31, 2006. The negative mix shift was slightly offset by an approximate 9% average tuition increase in our associate’s degree program in May 2007. We expect this tuition increase to positively impact our associate’s degree tuition rate per Degreed Enrollment prospectively.

Our tuition and other revenues, net increased by 10.1% in 2006 primarily due to a 5.4% increase in average quarterly Degreed Enrollments and selective tuition price increases depending on geographic area and program. These increases include a 113.0% increase in average quarterly Degreed Enrollments in our lower-tuition associate’s degree programs. As of August 31, 2006, 26.2% of our students are Degreed Enrollments in associate’s degree programs compared with 15.4% of our students as of August 31, 2005.

Tuition and other revenue, net at Other Schools increased as a percentage of total revenues in 2006 and 2005 due to enrollment in associate’s degree programs at Axia College of WIU during 2005. Axia College began offering these programs in September 2004. In March 2006 (our third quarter of fiscal 2006), we began offering all Axia College programs within UPX, instead of WIU. As a result of enrolling students in Axia College within UPX, Other Schools revenue as a percentage of total revenues decreased in 2007 versus 2006.

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Instructional Costs and Services

Instructional costs and services increased by 11.5% in 2007 versus 2006, and 16.5% in 2006 versus 2005. The following table sets forth the increases in significant components of instructional costs and services:

									% of Revenues									% Change
	Year Ended August 31,								Year Ended August 31,									2007 vs.			2006 vs.
	2007		2006			2005			2007			2006			2005			2006			2005
($ in millions)
Employee compensation and related expenses	$	424.4	$	378.3	(1)	$	339.4	(1)		15.6	%		15.3	%		15.1	%		12.2	%		11.5	%
Faculty compensation		236.9		212.3			195.1			8.7	%		8.6	%		8.7	%		11.6	%		8.8	%
Classroom lease expenses and depreciation		205.2		194.3	(1)		171.7	(1)		7.5	%		7.8	%		7.6	%		5.6	%		13.2	%
Other instructional costs and services		173.3		158.8	(1)		142.1	(1)		6.4	%		6.4	%		6.3	%		9.1	%		11.8	%
Bad debt expense		120.6		101.0	(1)		57.1	(1)		4.4	%		4.1	%		2.5	%		19.4	%		76.9	%
Financial aid processing costs		63.8		52.5			43.3			2.3	%		2.1	%		1.9	%		21.5	%		21.2	%
Share-based compensation		13.3		12.4			3.8			0.5	%		0.5	%		0.2	%		7.3	%		226.3	%
Instructional costs and services	$	1,237.5	$	1,109.6		$	952.5			45.4	%		44.8	%		42.3	%		11.5	%		16.5	%

(1) Prior year amounts have been reclassified to conform with 2007 presentation.

Instructional costs and services as a percentage of tuition and other revenue, net increased in 2007 versus 2006 due primarily to an increase in bad debt expense and higher employee compensation and related expenses. Bad debt expense increased as a result of higher DSO’s (38 days as of August 31, 2007 compared to 31 days as of August 31, 2006), longer receivable collection periods, and higher write-offs primarily from our associate’s degree program students. Employee compensation and related expenses increased primarily to support the 10.5% increase in average quarterly Degreed Enrollments.

Instructional costs and services as a percentage of tuition and other revenue, net increased in 2006 versus 2005 due primarily to an increase in bad debt expense. The increase is the result of increased aged accounts receivable and write-offs as a result of increased student withdrawals and an increase in “Return to Lender” dollars for students who withdraw from UPX or WIU. When a student withdraws from UPX or WIU, we are sometimes required to return a certain portion of any disbursed student financial aid loans to the lender (“Return to Lender” dollars for Title IV recipients). We are generally entitled to collect these funds from the students, but collection on these receivables is significantly lower than receivables for students who remain in our educational programs. During the second half of our fiscal 2004 and the first quarter of 2005, we were required by regulatory authorities to modify our Return to Lender calculations when a student withdraws from UPX or WIU. These changes forced us to return additional dollars to the lenders than had previously been required. We attempt to collect these funds from our students but as a result of the increased “Return to Lender” dollars, our bad debt expense significantly increased in 2006.

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Selling and Promotional Expenses

Selling and promotional expenses increased by 21.0% in 2007 versus 2006, and 12.2% in 2006 versus 2005. The following table sets forth the increases in significant components of selling and promotional expenses:

							% of Revenues									% Change
	Year Ended August 31,						Year Ended August 31,									2007 vs.			2006 vs.
	2007		2006		2005		2007			2006			2005			2006			2005
($ in millions)
Enrollment counselors’ compensation and related expenses	$	320.3	$	254.3	$	204.6		11.8	%		10.3	%		9.1	%		26.0	%		24.3	%
Advertising		277.7		231.6		224.0		10.2	%		9.3	%		10.0	%		19.9	%		3.4	%
Other selling and promotional expenses		58.0		56.5		56.2		2.1	%		2.3	%		2.5	%		2.7	%		0.5	%
Share-based compensation		3.1		2.3		0.6		0.1	%		0.1	%		0.0	%		34.8	%		283.3	%
Selling and promotional expenses	$	659.1	$	544.7	$	485.4		24.2	%		22.0	%		21.6	%		21.0	%		12.2	%

Selling and promotional expenses increased as a percentage of revenue in 2007 versus 2006 due primarily to an increase in the number of enrollment counselors to support leads for our Internet advertising campaign. During 2007, we experienced a slight increase in our cost per New Degreed Enrollment (or Starts) which is calculated by dividing total selling and promotional expenses by the amount of new Starts for the year. The hiring of an additional 600 enrollment counselors in the fourth quarter of 2006 increased our enrollment counseler compensation and related expenses. The productivity of these counselors improved during 2007, and as a result, we have experienced increased conversion rates. Also, in 2007 selling and promotional expenses increased as a result of our continued investment in Internet-based advertising campaigns and the launch of our nationally televised branding campaign.

Selling and promotional expenses increased as a percentage of revenue in 2006 versus 2005 due primarily to an increase in the number of enrollment advisors to support leads for our Internet advertising campaign and the establishment of a national qualifying center for efficiency and timelines in lead distribution. We also increased the entry-level pay for enrollment advisors in an attempt to bring in more highly qualified staff.

On August 8, 2007, we announced our intention to acquire online advertising network Aptimus, Inc. (Nasdaq: APTM) for $6.25 per share in an all-cash transaction valued at approximately $47.6 million. This acquisition will serve to advance our continuing efforts to enhance the efficacy of our online advertising investments in support of our mission to increase awareness of and access to quality education services. The closing of the acquisition is subject to customary closing conditions, including Aptimus shareholder approval. The acquisition is expected to close in early fiscal 2008, after Aptimus’ shareholder meeting scheduled for October 29, 2007.

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General and Administrative Expenses

General and administrative expenses increased by 31.7% in 2007 versus 2006, and 55.2% in 2006 versus 2005. The following table sets forth the increases in significant components of general and administrative expenses:

									% of Revenues									% Change
	Year Ended August 31,								Year Ended August 31,									2007 vs.				2006 vs.
	2007		2006			2005			2007			2006			2005			2006				2005
($ in millions)
Employee compensation and related expenses	$	71.9	$	77.7	(1)	$	45.5	(1)		2.6	%		3.1	%		2.0	%		(7.5	)	%		70.8	%
Share-based compensation		37.6		13.0			3.4			1.4	%		0.5	%		0.2	%		189.2		%		282.4	%
Legal, audit, and corporate insurance		15.5		13.3			9.4			0.6	%		0.6	%		0.4	%		16.5		%		41.5	%
Administrative space and depreciation		21.1		21.8	(1)		18.3	(1)		0.8	%		0.9	%		0.8	%		(3.2	)	%		19.1	%
Other general and administrative expenses		55.4		27.2			22.0			2.0	%		1.1	%		1.0	%		103.7		%		23.6	%
General and administrative expenses	$	201.5	$	153.0		$	98.6			7.4	%		6.2	%		4.4	%		31.7		%		55.2	%

(1) Prior year amounts have been reclassified to conform with 2007 presentation.

	Year Ended August 31,
	2007		2006		Line item included in above
($ in millions)
Former CEO severance	$	—	$	26.0	Employee compensation and related expenses
Stock option investigation / financial statement restatement		14.7		1.6	Other general and administrative expenses
Stock option modifications		12.1		—	Stock-based compensation
Fair value adjustment for former employee stock options		7.0		—	Other general and administrative expenses
Subtotal	$	33.8	$	27.6

For comparison purposes, the following table presents the significant components of general and administrative expenses excluding the special items listed in the table above:

							% of Revenues									% Change
	Year Ended August 31,						Year Ended August 31,									2007 vs.				2006 vs.
	2007		2006		2005		2007			2006			2005			2006				2005
($ in millions)
Employee compensation and related expenses	$	71.9	$	51.7	$	45.5		2.6	%		2.1	%		2.0	%		39.1		%		13.6	%
Share-based compensation		25.5		13.0		3.4		0.9	%		0.5	%		0.2	%		96.2		%		282.4	%
Legal, audit, and corporate insurance		15.5		13.3		9.4		0.6	%		0.6	%		0.4	%		16.5		%		41.5	%
Administrative space and depreciation		21.1		21.8		18.3		0.8	%		0.9	%		0.8	%		(3.2	)	%		19.1	%
Other general and administrative expenses		33.7		25.6		22.0		1.3	%		1.0	%		1.0	%		31.6		%		16.4	%
General and administrative expenses	$	167.7	$	125.4	$	98.6		6.2	%		5.1	%		4.4	%		33.7		%		27.2	%

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Excluding the items above, general and administrative expense was $167.7 million and $125.4 million in 2007 and 2006, or 6.2% and 5.1% of revenue, respectively. This compares with 4.4% in 2005. The remaining increase in 2007 compared to 2006 is primarily related to higher employee headcount to support our growth and higher share-based compensation expense.

The remaining increase in 2006 compared to 2005 is primarily due to:

•  $3.9 million increase in legal, audit, and corporate insurance expenses primarily due to legal defense costs associated with class action complaints;

•  $9.6 million increase in share-based compensation charges primarily resulting from the adoption of SFAS 123(R);

•  $3.5 million of increased administrative space and depreciation costs due to higher information technology spending primarily as a result of the opening of a new data center in August 2005; and

•  other increases including increased employee headcount to support our growth in 2006.

Goodwill Impairment

As of August 31, 2006, we concluded that the goodwill for our CFP business was impaired in the amount of $20.2 million. This impairment was included in our Other Schools segment. In performing our annual impairment test, we assessed the recoverability of the goodwill by evaluating the future discounted cash flows and the fair value of CFP’s tangible and intangible assets. The total discounted future cash flows was determined to be significantly less than our original expectations due to slower than forecasted revenue growth. There are no other long-lived assets at CFP that we believe are impaired.

Share-Based Compensation — Conversion of UPX Stock Options

The conversion of UPX Online common stock on August 27, 2004, required us to record a share-based compensation charge related to the conversion of UPX Online stock options into Apollo Group Class A stock options. As required by Emerging Issues Task Force (“EITF”) Statement No. 00-23 “Issues Related to the Accounting for Stock Compensation under APB 25 and FASB Interpretation No. 44” (“EITF 00-23”), we recognized pre-tax share-based compensation expense of $16.9 million in 2005 as options vested.

Interest Income and Other, Net

Interest income and other, net increased $13.5 million in 2007 versus 2006, and $1.3 million in 2006 versus 2005. The increase in 2007 was primarily due to increases in average cash and cash equivalents, restricted cash and marketable securities balances and increases in average interest rates. The increase in 2006 was primarily attributable to an increase in interest rates partially offset by a decrease in average cash and cash equivalents, restricted cash and marketable securities.

Provision for Income Taxes

Our effective income tax rate decreased from 37.9% in 2006 to 37.8% in 2007. This slight decrease was the result of an increase in tax exempt interest, partially offset by a reduction in the state income tax rate. The decrease from 40.1% in 2005 to 37.9% in 2006 is primarily a result of a reduction in non-deductible compensation and state taxes, combined with an increase in tax-exempt interest.

Liquidity, Capital Resources, and Financial Position

Based on past performance and current expectations, we believe that our cash and cash equivalents, marketable securities, and cash generated from operations will satisfy our working capital needs, capital expenditures, stock repurchases, commitments, acquisitions and other liquidity requirements associated with our existing operations through at least the next 12 months and the foreseeable future. We believe that the most strategic uses of our cash resources include potential acquisition opportunities including, over time our commitment to Apollo Global, possible repurchase of shares, and start-up costs associated with new campuses.

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Cash Flows

Operating Activities.  Operating activities provided $588.6 million in cash during 2007 compared to $551.0 million in 2006. Included below is a summary of our operating cash flows:

	Year Ended August 31,
	2007			2006			2005
($ in millions)
Net income	$	408.8		$	414.8		$	427.9
Non-cash items		196.0			180.0			174.0
Changes in certain operating assets and liabilities		(16.2	)		(43.8	)		(52.3	)
Net cash from operating activities	$	588.6		$	551.0		$	549.6

The most significant item in these operating cash flow activities is our accounts receivable. We monitor our accounts receivable through a variety of metrics, including days sales outstanding (“DSO”). We calculate our DSO based on determining average daily revenue based on a rolling twelve month analysis and divide it into the gross student accounts receivable balance as of the end of the period. We previously reported that our DSO as of August 31, 2006 was 32 days. This was inaccurately reported due to a miscalculation; the correct DSO was 31 days. DSO has increased to 38 days as of August 31, 2007. The increase in DSO during 2007 is primarily the result of longer receivable collection periods and higher write-offs primarily from our associate’s degree program students.

Investing Activities.  Investing activities used $131.9 million in cash during 2007, compared to providing $95.6 million in 2006. The 2007 amount primarily includes $104.6 million of capital expenditures, which includes $43.4 million related to the build-out of our new corporate headquarters buildings in Phoenix, Arizona. This use of cash is partially offset by net maturities of marketable securities including auction-rate securities of $46.0 million. The 2006 amount primarily includes net maturities of marketable securities including auction-rate securities of $216.2 million, partially offset by $111.2 million of capital expenditures, including $66.6 million for our new corporate headquarters. We expect to spend $60.0 to $80.0 million on capital expenditures in 2008, of which approximately $5.0 to $15.0 million will be utilized for our new corporate headquarters buildings.

On June 20, 2006, we entered into an option agreement (which was amended in November 2006) with Macquarie Riverpoint AZ, LLC (“Macquarie”). The option agreement allows us to execute a sale and simultaneous leaseback of the new corporate headquarters land and buildings located in Phoenix, Arizona. We anticipate beginning to occupy these buildings early in fiscal year 2008 and finishing construction by the end of the second quarter of 2008. In the third quarter of 2008, we anticipate executing the sale-leaseback option. When the sale-leaseback option is exercised, we anticipate receiving approximately $170 million in cash for the buildings and land, and expect to generate a gain on the sale of approximately $20-30 million. The gain will be deferred over the 12-year term of the lease agreement.

Financing Activities.  Financing activities used $426.0 million of cash during 2007 compared to $474.8 million in 2006. These amounts primarily relate to repurchases of our Class A common stock, net of proceeds from stock option exercises.

The Board of Directors has authorized us to repurchase outstanding shares of Apollo Group Class A common stock, from time to time, depending on market conditions and other considerations.

57

Shares of Apollo Group Class A common stock repurchased and reissued, and the related total cost, for the last two years is as follows:

									Maximum
							Average		Value
	Total # of						Price		of Shares
	Shares						Paid per		Available for
	Repurchased			Cost			Share		Repurchase
(Numbers in millions, except per share amounts)
Treasury stock as of August 31, 2005		8.8		$	645.7		$	73.23	$	51.0
New authorizations		—			—			—		600.0
Shares repurchased		8.2			514.9			63.00		(514.9	)
Shares reissued		(1.5	)		(106.6	)		69.15		—
Treasury stock as of August 31, 2006		15.5		$	1,054.0		$	68.23	$	136.1
New authorizations		—			—			—		363.9
Shares repurchased		7.2			437.7			61.08		(437.7	)
Shares reissued		(0.5	)		(30.3	)		67.31		—
Treasury stock as of August 31, 2007		22.2		$	1,461.4		$	65.94	$	62.3

On October 5, 2007, the Board of Directors increased the authorization to repurchase up to $500 million of Apollo Group Class A common stock.

Contractual Obligations and Other Commercial Commitments

The following table lists our contractual cash obligations as of August 31, 2007:

	Payments Due by Fiscal Year
Contractual Obligations	2008		2009-2010		2011-2012		Thereafter		Total
($ in millions)
Operating lease obligations	$	135.1	$	235.6	$	155.5	$	80.0	$	606.2
Stadium naming rights(1)		6.5		12.5		13.2		115.6		147.8
Capital lease obligations		0.6		0.9		0.1		—		1.6
Purchase and other long-term obligations(2)		11.6		—		—		3.0		14.6
Total	$	153.8	$	249.0	$	168.8	$	198.6	$	770.2

(1)	Amounts consist of an agreement for 20-year naming rights to the Glendale, Arizona Sports Complex.
(2)	Amounts primarily consist of purchase obligations for construction of buildings for future expansion and deferred compensation payments due to John G. Sperling, our Founder.

We have no other material commercial commitments not included in the above table.

Recent Accounting Pronouncements

See Note 2 of our financial statements included in Part II, Item 8, which is incorporated by reference in this Part II, Item 7.

Item 7A — Quantitative and Qualitative Disclosures about Market Risk

Impact of Inflation

Inflation has not had a significant impact on our historical operations.

58

Interest Rate Risk

Our portfolio of marketable securities includes numerous issuers, varying types of securities, and varying maturities. We intend to hold all securities, other than auction-rate securities, to maturity. During the fiscal year ended August 31, 2007, interest income earned on our portfolio of marketable securities would have decreased $4.0 to $5.0 million due to a 100 basis point decrease in interest rates. We manage this interest rate risk by monitoring market conditions and the value of these assets. We have no significant short-term or long-term debt; therefore, we do not face any other significant interest rate risk.

Concentration of Credit Risk

A substantial portion of credit extended to students is paid through the students’ participation in various federal financial aid programs authorized by Title IV of the Higher Education Act of 1965, as reauthorized (the “Higher Education Act”), which we refer to as “Title IV programs.” The following table summarizes our total revenues from Title IV programs for the fiscal years ended 2007, 2006, and 2005.

	2007			2006			2005
($ in millions)
Total Title IV funding received	$	1,765.6		$	1,536.6		$	1,345.4
Total tuition and other revenues, net		2,723.8			2,477.5			2,251.1
Total Title IV funding as a percentage of total revenue		64.8	%		62.0	%		59.8	%

We extend unsecured credit to a portion of the students enrolled. Receivables are not collateralized; however, credit risk is reduced as the amounts owed by any individual student is small relative to the total tuition receivable and the customer base is geographically diverse.

59

Item 8 — Financial Statements and Supplementary Data

	Page
Report of Independent Registered Public Accounting Firm		61
Consolidated Balance Sheets		62
Consolidated Statements of Income		63
Consolidated Statements of Comprehensive Income		64
Consolidated Statements of Changes in Shareholders’ Equity		65
Consolidated Statements of Cash Flows		66
Notes to Consolidated Financial Statements		67-103

60

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Apollo Group, Inc. and Subsidiaries

Phoenix, Arizona

We have audited the accompanying consolidated balance sheets of Apollo Group, Inc. and subsidiaries (the “Company”) as of August 31, 2007 and 2006 and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the three years in the period ended August 31, 2007. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Apollo Group, Inc. and subsidiaries as of August 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended August 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment,” on September 1, 2005.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of August 31, 2007, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated October 29, 2007 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/  DELOITTE & TOUCHE LLP

Phoenix, Arizona

October 29, 2007

61

APOLLO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	As of August 31,
	2007			2006
($ in thousands)
Assets:
Current assets
Cash and cash equivalents	$	339,319		$	309,058
Restricted cash		296,469			238,267
Marketable securities, current portion		31,278			45,978
Accounts receivable, net		190,912			160,583
Deferred tax assets, current portion		50,885			32,622
Other current assets		16,515			16,424
Total current assets		925,378			802,932
Property and equipment, net		364,207			328,440
Marketable securities, less current portion		22,084			53,692
Goodwill		29,633			16,891
Deferred tax assets, less current portion		80,077			53,131
Other assets (includes receivable from related party of $16,730 and $15,758 as of 2007 and 2006, respectively)		28,484			27,919
Total assets	$	1,449,863		$	1,283,005
Liabilities and Shareholders’ Equity:
Current liabilities
Accounts payable	$	80,729		$	61,289
Accrued liabilities		103,651			73,513
Current portion of long-term liabilities		21,093			23,101
Income taxes payable		43,351			47,812
Student deposits		328,008			254,130
Current portion of deferred revenue		167,003			135,911
Total current liabilities		743,835			595,756
Deferred revenue, less current portion		295			384
Long-term liabilities, less current portion		71,893			82,492
Total liabilities		816,023			678,632
Commitments and contingencies (Notes 9, 12, 15, and 18)
Shareholders’ equity
Preferred stock, no par value, 1,000,000 shares authorized; none issued		—			—
Apollo Group Class A nonvoting common stock, no par value, 400,000,000 shares authorized; 188,007,000 issued as of August 31, 2007 and 2006 and 165,844,000 and 172,558,000 outstanding as of August 31, 2007 and 2006, respectively		103			103
Apollo Group Class B voting common stock, no par value, 3,000,000 shares authorized; 475,000 issued and outstanding as of August 31, 2007 and 2006		1			1
Additional paid-in capital		—			—
Apollo Group Class A treasury stock, at cost, 22,163,000 and 15,449,000 shares as of August 31, 2007 and 2006, respectively		(1,461,368	)		(1,054,046	)
Retained earnings		2,096,385			1,659,349
Accumulated other comprehensive loss		(1,281	)		(1,034	)
Total shareholders’ equity		633,840			604,373
Total liabilities and shareholders’ equity	$	1,449,863		$	1,283,005

The accompanying notes are an integral part of these consolidated financial statements.

62

APOLLO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	Year Ended August 31,
	2007		2006		2005
($ in thousands, except per share amounts)
Revenues:
Tuition and other, net	$	2,723,793	$	2,477,533	$	2,251,114
Costs and expenses:
Instructional costs and services		1,237,491		1,109,584		952,474
Selling and promotional		659,059		544,706		485,451
General and administrative		201,546		153,004		98,642
Goodwill impairment		—		20,205		—
Share-based compensation(1)		—		—		16,895
Total costs and expenses		2,098,096		1,827,499		1,553,462
Income from operations		625,697		650,034		697,652
Interest income and other, net		31,600		18,054		16,787
Income before income taxes		657,297		668,088		714,439
Provision for income taxes		248,487		253,255		286,506
Net income	$	408,810	$	414,833	$	427,933
Earnings per share:
Basic income per share	$	2.37	$	2.38	$	2.34
Diluted income per share	$	2.35	$	2.35	$	2.30
Basic weighted average shares outstanding		172,309		174,351		182,928
Diluted weighted average shares outstanding		173,603		176,205		186,066

(1) Related to the August 27, 2004, conversion of UPX Online common stock outstanding and stock options to Apollo Group Class A common stock outstanding and stock options.

The accompanying notes are an integral part of these consolidated financial statements.

63

APOLLO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Year Ended August 31,
	2007			2006		2005
($ in thousands)
Net income	$	408,810		$	414,833	$	427,933
Other comprehensive income (net of tax):
Currency translation gain (loss)		(247	)		104		(573	)
Comprehensive income	$	408,563		$	414,937	$	427,360

The accompanying notes are an integral part of these consolidated financial statements.

64

APOLLO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

	Common Stock									Treasury Stock
	Apollo Group									Apollo Group												Accumulated
	Class A Nonvoting				Class B Voting					Class A						Additional						Other			Total
			Stated					Stated					Stated			Paid-in			Retained			Comprehensive			Shareholders’
	Shares		Value		Shares			Value		Shares			Value			Capital			Earnings			Income			Equity
($ in thousands)
Balance as of August 31, 2004		187,570	$	103		477		$	1		—		$	—		$	26,804		$	868,622		$	(565	)	$	894,965
Treasury stock purchases		—		—		—			—		11,051			(808,192	)		—			—			—			(808,192	)
Common and treasury stock issued under stock purchase plans		41		—		—			—		(122	)		8,928			1,317			—			—			10,245
Common and treasury stock issued under stock option plans		394		—		—			—		(2,111	)		153,522			(95,448	)		(15,559	)		—			42,515
Tax benefits of stock options exercised		—		—		—			—		—			—			42,568			—			—			42,568
Share-based compensation		—		—		—			—		—			—			24,759			—			—			24,759
Currency translation adjustment, net of tax		—		—		—			—		—			—			—			—			(573	)		(573	)
Net income		—		—		—			—		—			—			—			427,933			—			427,933
Balance as of August 31, 2005		188,005	$	103		477		$	1		8,818		$	(645,742	)	$	—		$	1,280,996		$	(1,138	)	$	634,220
Treasury stock purchases		—		—		—			—		8,173			(514,931	)		—			—			—			(514,931	)
Treasury stock issued under stock purchase plans		—		—		—			—		(147	)		10,102			(2,389	)		—			—			7,713
Treasury stock issued under stock option plans		—		—		—			—		(1,395	)		96,525			(38,787	)		(36,480	)		—			21,258
Tax benefits of stock options exercised		—		—		—			—		—			—			19,772			—			—			19,772
Share-based compensation		—		—		—			—		—			—			27,735			—			—			27,735
Cash paid for cancellation of vested stock options		—		—		—			—		—			—			(6,331	)		—			—			(6,331	)
Conversion of Apollo Group Class B																	—			—			—			—
common stock		2		—		(2	)		—		—			—			—			—			—			—
Currency translation adjustment, net of tax		—		—		—			—		—			—			—			—			104			104
Net income		—		—		—			—		—			—			—			414,833			—			414,833
Balance as of August 31, 2006		188,007	$	103		475		$	1		15,449		$	(1,054,046	)	$	—		$	1,659,349		$	(1,034	)	$	604,373
Treasury stock purchases		—		—		—			—		7,167			(437,735	)		—			—			—			(437,735	)
Treasury stock issued under stock purchase plans		—		—		—			—		(31	)		2,137			(605	)		—			—			1,532
Treasury stock issued under stock option plans		—		—		—			—		(352	)		23,605			(45,625	)		28,226			—			6,206
Tax benefits of stock options exercised		—		—		—			—		—			—			2,021			—			—			2,021
Settlement of liability-classified awards through the issuance of treasury stock		—		—		—			—		(70	)		4,671			2,340			—			—			7,011
Cash settlement of stock options through tender offer repricing		—		—		—			—		—			—			(358	)		—			—			(358	)
Share-based compensation		—		—		—			—		—			—			54,027			—			—			54,027
Reclassification of equity awards to a liability		—		—		—			—		—			—			(11,800	)		—			—			(11,800	)
Currency translation adjustment, net of tax		—		—		—			—		—			—			—			—			(247	)		(247	)
Net income		—		—		—			—		—			—			—			408,810			—			408,810
Balance as of August 31, 2007		188,007	$	103		475		$	1		22,163		$	(1,461,368	)	$	—		$	2,096,385		$	(1,281	)	$	633,840

The accompanying notes are an integral part of these consolidated financial statements.

65

APOLLO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended August 31,
	2007			2006			2005
($ in thousands)
Cash flows provided by operating activities:
Net income	$	408,810		$	414,833		$	427,933
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation		54,027			27,735			7,864
Share-based compensation — conversion of UPX Online stock options		—			—			16,895
Tax benefits from stock options exercised		—			—			42,568
Excess tax benefits from share-based compensation		(4,022	)		(17,476	)		—
Depreciation and amortization		71,115			67,290			45,592
Amortization of marketable securities discount and premium, net		268			929			3,586
Provision for uncollectible accounts receivable		120,614			101,038			57,113
Goodwill impairment		—			20,205			—
Deferred income taxes		(46,040	)		(19,705	)		333
Changes in assets and liabilities excluding the impact of acquisitions:
Accounts receivable		(150,943	)		(89,019	)		(99,902	)
Other assets		(1,912	)		5,609			(2,872	)
Accounts payable and accrued liabilities		31,174			20,424			(20,078	)
Income taxes payable		(2,440	)		(1,579	)		4,355
Student deposits		73,878			11,455			31,008
Deferred revenue		31,003			1,947			26,288
Other liabilities		3,090			7,322			8,921
Net cash provided by operating activities		588,622			551,008			549,604
Cash flows provided by (used in) investing activities:
Additions to property and equipment		(61,185	)		(44,629	)		(88,802	)
Purchase of land and buildings related to new headquarters		(43,366	)		(66,611	)		(5,680	)
Purchase of Insight Schools, net of cash acquired		(15,079	)		—			—
Purchase of marketable securities including auction-rate securities		(1,575,635	)		(1,420,055	)		(475,009	)
Maturities of marketable securities including auction-rate securities		1,621,636			1,636,283			761,654
(Increase) decrease in restricted cash		(58,163	)		(6,530	)		5,000
Purchase of other assets		(143	)		(2,881	)		(3,657	)
Net cash provided by (used in) investing activities		(131,935	)		95,577			193,506
Cash flows provided by (used in) financing activities:
Repurchase of Apollo Group Class A common stock		(437,735	)		(514,931	)		(808,192	)
Issuance of Apollo Group Class A common stock		7,738			28,971			52,760
Cash paid for cancellation of vested options		—			(6,331	)		—
Excess tax benefits from share-based compensation		4,022			17,476			—
Net cash used in financing activities		(425,975	)		(474,815	)		(755,432	)
Currency translation gain (loss)		(451	)		104			(573	)
Net increase (decrease) in cash and cash equivalents		30,261			171,874			(12,895	)
Cash and cash equivalents, beginning of year		309,058			137,184			150,079
Cash and cash equivalents, end of year	$	339,319		$	309,058		$	137,184
Supplemental disclosure of cash flow information
Cash paid during the year for income taxes	$	293,089		$	273,915		$	239,327
Supplemental disclosure of non-cash investing and financing activities
Credits received for tenant improvements	$	5,378		$	11,709		$	16,429
Purchases of property and equipment included in accounts payable	$	6,169		$	12,934		$	2,352
Settlement of liability-classified awards through the issuance of treasury stock	$	7,011		$	—		$	—
Fair value adjustments for liability-classified awards	$	6,952		$	—		$	—

The accompanying notes are an integral part of these consolidated financial statements.

66

APOLLO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.   Nature of Operations

Apollo Group, Inc. has been an education provider for more than 30 years, operating University of Phoenix, Inc. (“UPX”), Institute for Professional Development, Inc. (“IPD”), The College for Financial Planning Institutes Corporation (“CFP”), Western International University, Inc. (“WIU”) and Insight Schools, Inc. (“Insight”), all of which are our wholly-owned subsidiaries. We offer innovative and distinctive educational programs and services at high school, college and graduate levels, at campuses and learning centers, as well as online throughout the world.

UPX has been accredited by The Higher Learning Commission (“HLC”) of the North Central Association of Colleges and Schools since 1978. UPX offers associate’s, bachelor’s, master’s, and doctoral degree programs at local campuses and learning centers. UPX also offers these educational programs worldwide through its online educational delivery system.

WIU is accredited by HLC, and currently offers undergraduate and graduate degree programs at local campuses in Arizona and through various joint educational agreements, in China and India.

IPD provides program development and management consulting services to regionally accredited private colleges and universities (“Client Institutions”) that are interested in expanding or developing their programs for working students. IPD provides these services at colleges and learning centers in exchange for a contractual share of the tuition revenues generated from these programs.

CFP provides financial planning education programs, including the Certified Financial Planner Professional Education Program Certification; graduate degree programs in financial planning, financial analysis, and finance; and certification programs in retirement, asset management, and other financial planning areas. CFP also offers some of its non-degree programs at UPX campuses. CFP is accredited by the Higher Learning Commission and is a member of the North Central Association of Colleges and Schools.

On October 20, 2006, we completed the acquisition of Insight. Insight operates an online high school and engages in the business of servicing cyber high schools and other online education. We acquired all of the outstanding common stock of Insight for $15.5 million.

Our fiscal year is from September 1 to August 31. Unless otherwise stated, references to the years 2007, 2006 and 2005 relate to the fiscal years ended August 31, 2007, 2006 and 2005, respectively.

Note 2.   Significant Accounting Policies

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”) requires management to make certain estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of Apollo and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Revenue Recognition

Our educational programs range in length from one-day seminars to degree programs lasting up to four years. Students in the degree programs generally enroll in a program of study encompassing a series of five- to nine-week courses taken consecutively over the length of the program. Generally, students are billed on a course-by-course basis when the student first attends a session, resulting in the recording of a receivable from the student and deferred

67

APOLLO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

revenue in the amount of the billing. Students generally fund their education through grants and/or loans under various Title IV programs, tuition assistance from their employers, or personal funds.

Tuition and other revenue, net consists largely of tuition and fees associated with different educational programs as well as related educational resources such as access to online materials. Tuition and other revenues are shown net of discounts. Tuition benefits for our employees and their eligible dependents are included in tuition revenue and as a part of employee benefit expense. Total employee tuition benefits were $63.8 million, $52.9 million and $48.2 million for the years ended 2007, 2006 and 2005, respectively.

The following table presents the most significant components as percentages of total tuition and other, net revenue for the years ended August 31, 2007, 2006 and 2005:

	Year Ended August 31,
	2007					2006					2005
($ in thousands)
Tuition revenue	$	2,553,075		94	%	$	2,304,288		93	%	$	2,114,082		94	%
IPD services revenue		73,577		2	%		74,442		3	%		69,564		3	%
Application and related fees		27,596		1	%		33,795		1	%		36,381		2	%
Online course material revenue		160,973		6	%		138,661		6	%		104,528		5	%
Other revenue		21,018		1	%		31,728		1	%		33,786		1	%
Tuition and other revenue, gross		2,836,239		104	%		2,582,914		104	%		2,358,341		105	%
Less: Discounts		(112,446	)	(4	)%		(105,381	)	(4	)%		(107,227	)	(5	)%
Tuition and other revenue, net	$	2,723,793		100	%	$	2,477,533		100	%	$	2,251,114		100	%

Tuition revenue encompasses both online and classroom-based learning. Tuition revenue is recognized pro rata, on a weekly basis, over the period of instruction as services are delivered to students. During certain periods of the year and in certain businesses, we adjust our revenue recognition to account for holiday breaks such as Christmas and Thanksgiving.

IPD services revenue consist of the contractual share of tuition revenues from students enrolled in IPD programs at Client Institutions. IPD contracts with Client Institutions to provide services including, but not limited to, management consulting and training; program development; program administration; instructor and student recruiting; and student accounting, collection and recordkeeping. The contractual share varies by contract and may change over time. Our contractual share ranges between 30% and 50%. Contracts generally have terms of 10 years with provisions for renewal. The portion of service revenue to which we are entitled under the terms of the contracts is recognized on a pro rata basis over the service period.

Application and related fees consist of the fees students pay when submitting an enrollment application. Both the fees and the application costs related to the expenses associated with processing the applications are deferred and recognized over the average length of time it takes for a student to complete a program of study.

Online course material revenue relates to online course materials delivered to students over the period of instruction. Revenue associated with these materials is recognized pro rata over the period of the related course to correspond with delivery of the materials to students.

Other revenue is primarily composed of non-tuition generating revenues, such as renting classroom space and other student support services. This revenue is recognized as these services are provided.

Discounts include a variety of promotional programs including military discounts, special promotional incentives designed to generate new student enrollment, early payment discounts and other incentives.

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Generally, tuition and other revenue, net vary from period to period based on several factors, including (1) the aggregate number of students attending classes, (2) the number of classes held during the period, and (3) the tuition price per credit hour.

Tuition and other revenue, net exclude any applicable state and city sales taxes. Upon conclusion of a taxable transaction, the amount of tax collected is withheld and subsequently paid to the appropriate taxing jurisdiction.

Concentration of Credit Risk

A substantial portion of credit extended to students is paid through the students’ participation in various federal financial aid programs authorized by Title IV of the Higher Education Act of 1965, as reauthorized (the “Higher Education Act”), which we refer to as “Title IV programs.” The following table summarizes total revenues from Title IV programs for the fiscal years ended 2007, 2006 and 2005.

	2007			2006			2005
($ in thousands)
Total Title IV funding received	$	1,765,642		$	1,536,616		$	1,345,405
Total tuition and other revenues, net		2,723,793			2,477,533			2,251,114
Total Title IV funding as a percentage of total revenue		64.8	%		62.0	%		59.8	%

All federal financial aid programs are established by the Higher Education Act and regulations promulgated thereunder. The Higher Education Act has an expiration date; in the past, if Congress did not reauthorize the Higher Education Act before its expiration date, Congress extended the authorization of the Higher Education Act. The Higher Education Act is set to expire on October 31, 2007.

The Higher Education Act specifies the manner in which the U.S. Department of Education reviews institutions for eligibility and certification to participate in Title IV programs. Every educational institution involved in Title IV programs must be certified to participate and is required to periodically renew this certification. UPX was recertified in June 2003 and its current certification for the Title IV programs expired in June 2007. However, in March 2007, UPX submitted its Title IV program participation recertification application to the U.S. Department of Education. We have been collaborating with the U.S. Department of Education regarding the UPX recertification application. Although we have submitted our application for renewal, we are continuing to supply additional follow-up information based on requests from the Department of Education. Our eligibility continues on a month-to-month basis until the U.S. Department of Education issues its decision on the application. A month-to-month status is not unusual considering the process is multi-faceted and iterative. We have no reason to believe that the application will not be renewed and expect that the renewal process will be completed satisfactorily. WIU was recertified in October 2003 and its current certification for the Title IV programs expires in June 2009.

We are subject to annual compliance audits as well as reviews by the U.S. Department of Education. We believe that we are in compliance with Title IV requirements.

We extend unsecured credit to a portion of the students enrolled. Receivables are not collateralized; however, credit risk is reduced as the amount owed by any individual student is small relative to the total tuition receivable and the customer base is geographically diverse.

Allowance for Doubtful Accounts

We reduce accounts receivable by an allowance for amounts that may become uncollectible in the future. Estimates are used in determining the allowance for doubtful accounts and are based on historical collection experience and current trends. In determining these amounts, we look at the historical write-offs of our receivables. We monitor our collections and write-off experience to assess whether adjustments are necessary. When a student with Title IV loans withdraws from UPX or WIU, we are sometimes required to return a portion of Title IV funds to the lenders. We are generally entitled to collect these funds from the students, but collection of these receivables is

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significantly lower than our collection of receivables for students who remain in our educational programs. An increase in the amount of funds returned to the lenders and a lower collection rate are factored into the determination of an appropriate allowance amount. Management periodically evaluates the standard allowance estimation methodology for propriety and modifies as necessary. In doing so, we believe our allowance for doubtful accounts reflects the most recent collections experience and is responsive to changes in trends. Our accounts receivable are written off once the account is deemed to be uncollectible. This typically occurs once we have exhausted all efforts to collect the account, which include collection attempts by our employees and outside collection agencies.

Cash and Cash Equivalents

We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents include money market funds, bank overnight deposits, and tax-exempt commercial paper, which are all placed with high-credit-quality institutions. We have not experienced any losses on our cash and cash equivalents.

Restricted Cash

A significant portion of our revenue is received from students who participate in government financial aid and assistance programs. Restricted cash primarily represents amounts received from the federal and state governments under various student aid grant and loan programs, such as Title IV program funds. These funds are received subsequent to the completion of the authorization and disbursement process for the benefit of the student. The U.S. Department of Education requires Title IV program funds collected in advance of student billings to be kept in separate cash or cash equivalent accounts until the students are billed for that portion of their program. We record these amounts as restricted cash. On average, the majority of these funds remains as restricted cash for a period between 60 and 90 days from date of receipt. Restricted cash is excluded from cash and cash equivalents in the Consolidated Balance Sheets and Statements of Cash Flows until the cash is no longer restricted. Our restricted cash is primarily invested in municipal bonds and U.S. government-sponsored enterprises with maturities of 90 days or less.

Marketable Securities

Marketable securities consist of auction-rate securities, municipal bonds, U.S. government-sponsored enterprises, and corporate obligations. We account for marketable securities in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (“SFAS 115”). Marketable securities with a maturity date greater than one year are considered noncurrent, while all other marketable securities are considered current. We have the ability and intention to hold our marketable securities, other than auction-rate securities, until maturity and therefore classify these investments as held-to-maturity, reported at amortized cost. Auction-rate securities with auction or reset dates prior to the maturity date of the underlying security are classified as current and available-for-sale and are reported at amortized cost, which approximates the estimated market value. Interest and dividend income, including the amortizations of the premium and discount, are included in interest income and other, net in our Consolidated Statements of Income.

Property and Equipment, net

Property and equipment is recorded at cost less accumulated depreciation. Furniture, equipment, and software is depreciated using the straight-line method over the estimated useful lives of the related assets, which range from three to five years. Leasehold improvements and tenant improvement allowances are amortized using the straight-line method over the shorter of the lease term or the estimated useful lives of the related assets. Construction in progress is recorded at cost until the corresponding asset is placed into service and depreciation begins. Maintenance and repairs are expensed as incurred.

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We capitalize certain internal software development costs in accordance with Statement of Position (“SOP”) 98-1, “Accounting for Costs of Computer Software Developed or Obtained for Internal Use.” Such costs consist primarily of the direct labor associated with building the internally developed software. Capitalized costs are amortized using the straight-line method over the estimated lives of the software, not to exceed five years. SOP 98-1 describes three stages of software development projects: the preliminary project stage (all costs expensed as incurred), the application development stage (certain costs capitalized, certain costs expensed as incurred), and the post-implementation/operation stage (all costs expensed as incurred). The costs capitalized in the application development stage include the costs of designing the chosen path, coding, installation of hardware, and testing. We capitalize costs incurred during the development phase of the project as permitted.

Goodwill

Goodwill is primarily the result of our acquisitions of CFP and Insight. SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”), addresses goodwill and other intangible assets that have indefinite useful lives and prescribes that these assets will not be amortized, but instead tested for impairment at least annually or more frequently if circumstances arise indicating potential impairment. If the carrying amount of the reporting unit containing goodwill exceeds the fair value of that reporting unit, an impairment loss is recognized to the extent the “implied fair value” of the goodwill is less than the carrying amount of the goodwill. This pronouncement provides specific guidance on performing impairment tests for goodwill and indefinite-lived intangibles.

The process of evaluating the potential impairment of goodwill requires judgment. In assessing the fair value of our reporting units, we make estimates about the future cash flows of our reporting units. Our cash flow forecast is based on assumptions that are consistent with the plans and estimates we are using to manage the underlying businesses. Other factors we consider include, but are not limited to, significant underperformance relative to expected historical or projected future operating results, significant changes in the manner or use of the acquired assets or the overall business strategy, and significant negative industry or economic trends. If our estimates or related assumptions change in the future, we may be required to record non-cash impairment charges for these assets. In addition, we make certain judgments about allocating shared assets and liabilities to the balance sheets for our reporting units. We have engaged a third-party valuation expert to assist in evaluating the fair values of our reporting units. We have selected August 31 and May 31 as the dates on which we perform our annual goodwill impairment tests for CFP and Insight, respectively. Based on our goodwill impairment tests, no impairments in goodwill were recorded during 2007.

Impairment of Long-Lived Assets

In accordance with SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets” (“SFAS 144”), we evaluate the carrying amount of our major long-lived assets whenever changes in circumstances or events indicate that the value of such assets may not be fully recoverable. Our major long-lived asset as of August 31, 2007 is property and equipment. We believe the carrying amounts are fully recoverable and no impairment exists.

Insurance Reserves

We record liabilities for claims and related expenses that are estimable and probable related to our self-insured medical and dental insurance programs in accordance with the contractual terms of the insurance policies. Accounting for insurance liabilities that are self-insured involves uncertainty, because estimates and judgments are used to determine the liability to be recorded for reported claims and claims incurred but not reported. We consider our historical experience in determining the appropriate insurance reserves to record in the Consolidated Balance Sheets. If the current claim trends were to differ significantly from our historic claim experience, a corresponding adjustment would be made to the insurance reserves.

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Share-Based Compensation

On September 1, 2005, we adopted the provisions of SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”). In March 2005, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) No. 107 (“SAB 107”) relating to SFAS 123(R), which we applied in our adoption of SFAS 123(R). SFAS 123(R) requires the measurement and recognition of compensation expense for all share-based awards issued to employees and directors, based on estimated fair values of the share award on the date of grant. We adopted the fair value recognition provisions of SFAS 123(R) using the modified prospective transition method, which requires compensation expense to be recorded for all share-based awards granted after September 1, 2005 and for all unvested stock options outstanding as of September 1, 2005. For all unvested options outstanding as of September 1, 2005, the remaining unrecognized compensation expense, based on the fair value as determined under the provisions of SFAS 123, will be recognized as share-based compensation in the Consolidated Statements of Income over the remaining vesting period. For share-based awards granted subsequent to September 1, 2005, compensation expense is based on the fair value as determined under the provisions of SFAS 123(R) and will be recognized in the Consolidated Statements of Income over the vesting period. Under the modified prospective transition method, prior periods are not restated for the effect of SFAS 123(R).

SFAS 123(R) requires us to calculate the fair value of share-based awards on the date of grant. We use the Black-Scholes-Merton option pricing model (“BSM”) to estimate fair value. The BSM requires us to estimate key assumptions such as expected life, volatility, risk-free interest rates and dividend yield to determine the fair value of share-based awards, based on both historical information and management judgment regarding market factors and trends. We amortize the share-based compensation expense over the period that the awards are expected to vest, net of estimated forfeiture rates. If the actual forfeitures differ from management estimates, additional adjustments to compensation expense are recorded.

Income Taxes

We account for income taxes using the asset and liability method in accordance with SFAS No. 109, “Accounting for Income Taxes” (“SFAS 109”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted laws and tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities due to a change in tax rates is recognized in income in the period that includes the enactment date. Management judgment is required in determining the provision for income taxes and, in particular, whether or not a valuation allowance should be recorded against our deferred tax assets.

Earnings per Share

Earnings per share have been calculated in accordance with SFAS No. 128, “Earnings per Share” (“SFAS 128”). Basic earnings per share is calculated using the weighted average number of Apollo Group Class A and Class B common shares outstanding during the period. Diluted income per share is calculated similarly except that it includes the dilutive effect of the assumed exercise of options and restricted stock units issuable under our stock option plans. The amount of any tax benefit to be credited to additional paid-in capital related to the exercise of options is included when applying the treasury stock method to stock options in the computation of earnings per share.

Leases

We lease substantially all of our administrative and educational facilities under operating lease agreements. Most lease agreements contain renewal options, tenant improvement allowances, rent holidays, and/or rent escalation clauses. In accordance with SFAS No. 13 “Accounting for Leases” (“SFAS 13”), in instances in which

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one or more of these items are included in a lease agreement, we record a deferred rent asset or liability on the Consolidated Balance Sheets and record the rent expense evenly over the term of the lease. All tenant improvement allowances that are spent on leasehold activities are reflected under investing activities as additions to property and equipment on the Consolidated Statements of Cash Flows. Credits received against rent for tenant improvement allowances are reflected as a component of non-cash investing activities on the Consolidated Statements of Cash Flows. Lease terms generally range from five to ten years with one to two renewal options for extended terms. For leases with renewal options, we record rent expense and amortize the leasehold improvements on a straight-line basis over the initial non-cancelable lease term (in instances where the lease term is shorter than the economic life of the asset) when we do not believe that the renewal of the option is reasonably assured. We are also required to make additional payments under operating lease terms for taxes, insurance, and other operating expenses incurred during the operating lease period. We also lease facility space from time to time on a short-term basis in order to provide specific courses or programs.

Rental deposits are provided for lease agreements that specify payments in advance or deposits held in security that are refundable, less any damages at lease end.

Selling and Promotional Costs

Selling and promotional costs consist primarily of compensation and employee benefits for enrollment counselors, management and support staff, corporate marketing, advertising, stadium naming rights, production of marketing materials, and other costs related to selling and promotional functions. We expense selling and promotional costs as incurred.

Start-Up Costs

Costs such as advertising, marketing, temporary services, employee relocation, and supplies related to the start-up of new campuses and learning centers are expensed as incurred.

Foreign Currency Translation

The financial position and results of operations for our foreign operations are measured using the local currency as the functional currency. The assets and liabilities of these operations are translated to U.S. dollars using exchange rates in effect at the balance sheet dates. Income and expense items are translated at monthly average rates of exchange. The resulting translation adjustments are included in the component of Shareholders’ Equity designated as accumulated other comprehensive income.

Fair Value of Financial Instruments

The carrying amount reported in the Consolidated Balance Sheets for cash and cash equivalents, restricted cash, certain marketable securities, accounts receivable and accounts payable approximate fair value because of the short-term nature of these financial instruments.

The related party receivable represents a promissory note due from Dr. John G. Sperling, the founder and Acting Executive Chairman of the Board, as described in Note 13. The note was executed on December 14, 2001 in an arms-length transaction and accrues interest at a fixed annual rate of six percent. The carrying value of the related party receivable reasonably approximates its fair value, as determined by applying historical index adjusted interest rates to the outstanding balance between the execution date and August 31, 2007.

Loss Contingencies

In accordance with SFAS No. 5, “Accounting for Contingencies” (“SFAS 5”), when we become aware of a claim or potential claim, the likelihood of any loss or exposure is assessed. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, we record a liability for the loss. The liability recorded includes

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probable and estimable legal costs associated with the claim or potential claim. If the loss is not probable or the amount of the loss cannot be reasonably estimated, we disclose the claim if the likelihood of a potential loss is reasonably possible and the amount is material. For matters where no loss contingency is recorded, our policy is to expense legal fees as incurred.

Certain Reclassifications

We revised the presentation of certain information technology-related expense items between instructional costs and services and general and administrative expenses. The net effect of the reclassification was an increase in general and administrative expenses in the amount of $3.1 million and $4.1 million for fiscal years ended 2006 and 2005, respectively, and an offsetting decrease in instructional costs and services.

Recent Accounting Pronouncements

In June 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. FIN 48 is effective for fiscal years beginning after December 15, 2006. We are in the process of evaluating the impact FIN 48 will have on our financial condition and results of operations.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 provides a single definition of fair value, along with a framework for measuring it. It also requires additional disclosure about using fair value to measure assets and liabilities. It is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods. We are currently evaluating the impact SFAS 157 will have on our financial condition and results of operations.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115” (SFAS 159). Under SFAS 159, companies have an opportunity to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. We are currently evaluating the impact SFAS 159 will have on our financial condition and results of operations.

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Note 3.   Marketable Securities

Marketable securities are reflected at amortized cost in the accompanying Consolidated Balance Sheets and consist of the following as of August 31:

	2007						2006
					Unrecognized						Unrecognized
	Estimated		Amortized		Holding		Estimated		Amortized		Holding
Type	Market Value		Cost		Losses		Market Value		Cost		Losses
($ in thousands)
Classified as current and available-for-sale:
Auction-rate securities	$	—	$	—	$	—	$	3,300	$	3,300	$	—
Classified as current and held-to-maturity:
Municipal bonds		16,193		16,278		85		21,550		21,679		129
U.S. government-sponsored enterprises		14,825		15,000		175		20,698		20,999		301
Corporate obligations		—		—		—		—		—		—
		31,018		31,278		260		42,248		42,678		430
Total classified as current		31,018		31,278		260		45,548		45,978		430
Classified as noncurrent and held-to-maturity:
Municipal bonds due in 1-3 years		3,060		3,096		36		19,397		19,711		314
U.S. government-sponsored enterprises		11,796		12,000		204		25,630		27,000		1,370
Corporate obligations		6,397		6,988		591		6,145		6,981		836
Total classified as noncurrent		21,253		22,084		831		51,172		53,692		2,520
Total marketable securities	$	52,271	$	53,362	$	1,091	$	96,720	$	99,670	$	2,950

Auction-Rate Securities:  Auction-rate securities have an underlying component of long-term debt or equity. Auction-rate securities trade or mature on a shorter term than the underlying debt or equity based on an auction bid that resets the interest rate of the security. The auction or reset dates occur at intervals that are generally between 7 and 90 days of the purchase. These securities provide a higher interest rate than similar securities and provide high liquidity to otherwise longer-term investments. Our intent is to invest in auction-rate securities throughout the fiscal year to maximize our yield, but to liquidate these securities prior to quarterly or annual reporting dates. As of August 31, 2006, we were unable to liquidate all of our auction-rate securities, as shown above. Auction-rate securities are classified as available-for-sale. As of August 31, 2007, all auction-rate securities have been liquidated.

Municipal Bonds:  Municipal bonds represent debt obligations issued by states, cities, counties, and other governmental entities, which earn federally tax-exempt interest. We have the ability and intention to hold municipal bonds until maturity and therefore classify these investments as held-to-maturity, reported at amortized cost. Based on the nature of the investments and the intent and ability to hold them to maturity, we have not recorded an impairment as of August 31, 2007 because we believe the unrecognized holding loss is temporary.

U.S. Government-Sponsored Enterprises: U.S. government-sponsored enterprises are fixed-income investments that include the Federal Farm Credit Note, Federal Home Loan Banks, and Federal National Mortgage Association (Fannie Mae). We have the ability and intention to hold U.S. government-sponsored enterprises until

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maturity and therefore classify these investments as held-to-maturity, reported at amortized cost. Based on the nature of the investments and the intent and ability to hold them to maturity, we have not recorded an impairment as of August 31, 2007 because we believe the unrecognized holding loss is temporary.

Corporate Obligations:  Corporate obligations include secured commercial paper with the Royal Bank of Canada. We have the ability and intention to hold corporate obligations until maturity and therefore classify these investments as held-to-maturity, reported at amortized cost. Based on the nature of the investments and the intent and ability to hold them to maturity, we have not recorded an impairment as of August 31, 2007 because we believe the unrecognized holding loss is temporary.

Marketable securities are exposed to various risks and rewards, such as interest rate, market and credit risk. Due to these risks and rewards associated with marketable security investments, it is possible that changes in the values of these investments may occur and that such changes could affect the amounts reported on the balance sheet. We hold investments in certain debt securities with the following aggregate maturities as of August 31, 2007 (in thousands):

	Held-to-Maturity
	Estimated		Amortized
Year	Market Value		Cost
($ in thousands)
2008	$	31,018	$	31,278
2009 to 2013		21,253		22,084
	$	52,271	$	53,362

For fiscal years ended August 31, 2007, 2006 and 2005, respectively, proceeds from the liquidation of available-for-sale securities, at par value, were $582.5 million, $463.3 million and $309.5 million, respectively. The cost of liquidated securities is based on the specific identification method.

Note 4.   Accounts Receivable, net

Accounts receivable, net consist of the following as of August 31:

	2007			2006
($ in thousands)
Student accounts receivable	$	281,834		$	214,257
Less allowance for doubtful accounts		(99,818	)		(65,184	)
Net student accounts receivable		182,016			149,073
Other receivables		8,896			11,510
Total accounts receivable, net	$	190,912		$	160,583

Tuition accounts receivable is composed primarily of amounts due from students.

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Bad debt expense is included in Instructional Costs and Services in our Consolidated Statements of Income. The following table summarizes the activity in the related allowance for doubtful accounts:

	August 31,
	2007			2006			2005
($ in thousands)
Beginning allowance for doubtful accounts balance	$	65,184		$	45,785		$	23,909
Charged to bad debt expense		120,614			101,038			57,113
Write-offs, net of recoveries		(85,980	)		(81,639	)		(35,237	)
Ending allowance for doubtful accounts balance	$	99,818		$	65,184		$	45,785

Note 5.  Other Assets

Other assets consist of the following as of August 31:

	2007			2006
($ in thousands)
Prepaid expenses	$	19,943		$	20,683
Related party receivable		16,730			15,758
Other investments		3,333			3,835
Textbook inventories, deposits and other		4,993			4,067
Total other assets		44,999			44,343
Less current portion		(16,515	)		(16,424	)
Total long-term other assets	$	28,484		$	27,919

The related party receivable represents a promissory note due from Dr. John G. Sperling. See Note 13 below.

Other investments represent an investment in a related entity, Apollo International, Inc., recorded at cost (as described in Note 13) and investments in venture capital funds, recorded at cost.

Note 6.   Property and Equipment, net

Property and equipment, net consist of the following as of August 31:

	2007			2006
($ in thousands)
Furniture and equipment	$	310,532		$	304,146
Software		100,693			82,206
Leasehold improvements		89,628			96,097
Tenant improvement allowances		109,547			94,756
Land		21,803			21,619
Less accumulated depreciation and amortization		(401,962	)		(356,092	)
Depreciable property and equipment, net		230,241			242,732
Construction in progress		133,966			85,708
Property and equipment, net	$	364,207		$	328,440

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Construction in progress primarily represents total cumulative costs related to the construction of our new corporate headquarters in Phoenix, Arizona, which is expected to be completed in the second quarter of fiscal year 2008. We have entered into an option agreement to execute a sale-leaseback of this new corporate headquarters building (see Note 15). Depreciation is not recorded on construction in progress assets until they are placed into service.

Depreciation and amortization expense was $71.1 million, $67.3 million and $45.6 million for the fiscal years ended August 31, 2007, 2006 and 2005, respectively.

Note 7.  Accrued Liabilities

Accrued liabilities consist of the following as of August 31:

	2007		2006
($ in thousands)
Salaries, wages, and benefits	$	48,407	$	23,040
Accrued advertising		23,900		22,512
Accrued professional fees		11,826		9,888
Student refunds, grants and scholarships		12,488		11,848
Other accrued liabilities		7,030		6,225
Total accrued liabilities	$	103,651	$	73,513

Salaries, wages, and benefits represent amounts due to employees, faculty and third parties for salaries, bonuses, vacation pay, and health insurance. Also included in this amount is $16.4 million as of August 31, 2007 for modified stock options held by former employees accounted for as liability awards. See Note 12 for a more detailed discussion of this amount. Accrued advertising represents amounts due for Internet marketing, direct mail campaigns, and print and broadcast advertising. Accrued professional fees represent amounts due to third parties for outsourced student financial aid processing and other accrued professional and legal obligations. Student refunds, grants and scholarships represent amounts due to students for tuition refunds, federal and state grants payable, scholarships, and other related items. Other accrued liabilities primarily includes sales and business taxes.

Note 8.  Long-Term Liabilities

Long-term liabilities consist of the following as of August 31:

	2007			2006
($ in thousands)
Deferred rent and other lease incentives	$	77,755		$	86,310
Deferred gains on sale-leasebacks		10,602			12,261
Deferred compensation agreement with Dr. John G. Sperling		2,197			2,090
Other long-term liabilities		2,432			4,932
Total liabilities		92,986			105,593
Less current portion		(21,093	)		(23,101	)
Total long-term liabilities	$	71,893		$	82,492

Deferred rent and other lease incentives represent amounts included in lease agreements and are amortized on a straight-line basis over the term of the lease. Deferred gains on sale-leasebacks are deferred and recognized over the respective lease terms. The deferred compensation agreement relates to an agreement between the Company and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Dr. John G. Sperling. Other long-term liabilities include primarily capital lease obligations and a long-term software maintenance contract.

Note 9.   Income Taxes

Deferred tax assets and liabilities result primarily from temporary differences in book versus tax basis accounting. Deferred tax assets and liabilities consist of the following as of August 31:

	2007			2006
($ in thousands)
Gross deferred tax assets:
Allowance for doubtful accounts	$	39,324		$	24,368
Deferred tuition revenue		607			540
Reserves		6,223			5,658
Share-based compensation		63,049			41,139
Deferred gain on sale-leaseback		3,899			4,226
Deferred tenant improvement allowances		17,289			20,285
Other		15,271			13,278
Valuation allowance		(2,665	)		(2,050	)
Total gross deferred tax assets		142,997			107,444
Gross deferred tax liabilities:
Amortization of intangibles		1,100			—
Depreciation of fixed assets		9,361			20,458
Other		1,574			1,233
Total gross deferred tax liabilities		12,035			21,691
Net deferred tax assets	$	130,962		$	85,753

Net deferred tax assets are reflected in the accompanying Consolidated Balance Sheets as follows, as of August 31:

	2007		2006
($ in thousands)
Current deferred tax assets, net	$	50,885	$	32,622
Noncurrent deferred tax assets (liabilities), net		80,077		53,131
Net deferred tax assets	$	130,962	$	85,753

We have recorded a non-current valuation allowance related to foreign tax credit carryforwards, as it is more likely than not that these credits will expire unutilized. In light of our history of profitable operations, management has concluded that it is more likely than not that we will ultimately realize the full benefit of our deferred tax assets other than the foreign tax credits mentioned above. Accordingly, we believe that a valuation allowance should not be recorded for our remaining net deferred tax assets. The foreign tax credits will begin to expire August 31, 2012 through August 31, 2017.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The related components of the income tax provision (benefit) are as follows for the years ended August 31, 2007, 2006 and 2005:

	2007			2006			2005
($ in thousands)
Current:
Federal	$	253,048		$	226,578		$	237,717
State and other		42,294			46,185			48,071
Foreign		665			—			—
Total current		296,007			272,763			285,788
Deferred:
Federal		(43,236	)		(17,364	)		652
State and other		(4,076	)		(2,144	)		66
Foreign		(208	)		—			—
Total deferred		(47,520	)		(19,508	)		718
Total provision for income taxes	$	248,487		$	253,255		$	286,506

The provision for income taxes differs from the tax computed using the statutory U.S. federal income tax rate as a result of the following items for the years ended August 31, 2007, 2006 and 2005:

	2007			2006			2005
Statutory U.S. federal income tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal benefit		3.6	%		4.3	%		4.6	%
Non-deductible compensation		0.5	%		(0.6	)%		1.0	%
Tax-exempt interest		(1.4	)%		(0.8	)%		(0.6	)%
Other, net		0.1	%		0.0	%		0.1	%
Effective income tax rate		37.8	%		37.9	%		40.1	%

Non-deductible compensation is composed of amounts limited by IRC Section 162(m) and related interest and penalties.

Certain tax deductions in prior years with respect to compensation attributable to the exercise of certain stock options by executive officers may be in question. Under IRC Section 162(m), the amount of such deduction per covered executive officer is limited to $1.0 million per year, except to the extent the compensation qualifies as performance based. Compensation attributable to options with revised measurements dates may not have qualified as performance-based compensation. Accordingly, we may have claimed deductions with respect to those exercised options that were in excess of the limit imposed under IRC Section 162(m). As a result, we have accrued our best estimate, representing the high end of our estimated potential exposure, with respect to uncertain tax positions, including interest and penalties for the taxable years 2003 through 2007 (which are currently our only open years subject to adjustment for federal tax purposes) of approximately $44.6 million as of August 31, 2007. For prior periods where a liability existed and where the statute of limitations has expired, the accrual relating to that period has been reversed in the period in which the statute expired.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 10.   Shareholders’ Equity

Treasury Stock

The Board of Directors has authorized us to repurchase outstanding shares of Apollo Group Class A common stock, from time to time, depending on market conditions and other considerations, in the open market.

Shares of Apollo Group Class A common stock repurchased and reissued, and the related total cost, for the last three years are as follows:

									Maximum Value
	Total # of								of Shares
	Shares						Average Price		Available for
	Repurchased			Cost			Paid per Share		Repurchase
(Numbers in thousands, except per share amounts)
Treasury stock as of August 31, 2004		—		$	—		$	—	$	109,215
New authorizations		—			—			—		750,000
Shares repurchased		11,051			808,192			73.13		(808,192	)
Shares reissued		(2,233	)		(162,450	)		72.75		—
Treasury stock as of August 31, 2005		8,818		$	645,742		$	73.23	$	51,023
New authorizations		—			—			—		600,000
Shares repurchased		8,173			514,931			63.00		(514,931	)
Shares reissued		(1,542	)		(106,627	)		69.15		—
Treasury stock as of August 31, 2006		15,449		$	1,054,046		$	68.23	$	136,092
New authorizations		—			—			—		363,908
Shares repurchased		7,167			437,735			61.08		(437,735	)
Shares reissued		(453	)		(30,413	)		67.31		—
Treasury stock as of August 31, 2007		22,163		$	1,461,368		$	65.94	$	62,265

On October 5, 2007, the Board of Directors increased the authorization to repurchase up to $500 million of Apollo Group Class A common stock.

Cancellation of Executive Officer Stock Options

On January 11, 2006, Todd S. Nelson, the former Chief Executive Officer and President (“Former CEO”), resigned as a director and an officer. As part of his Separation Agreement dated January 11, 2006, we paid the Former CEO $32.3 million on January 26, 2006, which was primarily in exchange for the cancellation of all of his outstanding vested and unvested stock options. The separation agreement resulted in compensation expense of $26.0 million recorded in general and administrative expenses and a reduction of additional paid-in capital of $6.3 million, which represents the fair value of the canceled options.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 11.   Earnings Per Share

Apollo Group Class A Common Stock

A reconciliation of the basic and diluted earnings per share computations for our common stock is as follows:

	Year Ended August 31,
	2007							2006							2005
			Weighted							Weighted							Weighted
			Average		Per Share					Average		Per Share					Average		Per Share
	Income		Shares		Amount			Income		Shares		Amount			Income		Shares		Amount
(Numbers in thousands, except per share amounts)
Basic income per share	$	408,810		172,309	$	2.37		$	414,833		174,351	$	2.38		$	427,933		182,928	$	2.34
Effect of dilutive securities:
Stock options		—		1,293		(0.02	)		—		1,854		(0.03	)		—		3,138		(0.04	)
Restricted stock units		—		1		—			—		—		—			—		—		—
Diluted income per share	$	408,810		173,603	$	2.35		$	414,833		176,205	$	2.35		$	427,933		186,066	$	2.30

Diluted weighted average shares outstanding include the incremental effect of shares that would be issued upon the assumed exercise of stock options. For the years ended August 31, 2007, 2006 and 2005, approximately 6,321,800, 4,322,000 and 97,000, respectively, of our stock options outstanding were excluded from the calculation of diluted earnings per share because the exercise prices of the stock options were greater than or equal to the average share price for the year, and, therefore, their inclusion would have been anti-dilutive. These options could be dilutive in the future if the average share price increases and is greater than the exercise price of these options.

Note 12.  Employee and Director Benefit Plans

401(k) Plan

We sponsor a 401(k) plan for certain qualifying employees which provides for employee contributions. Participant contributions are subject to certain restrictions as set forth in the Internal Revenue Code. Upon completion of one year of service and 1,000 hours worked, we match 30% of the eligible participant’s contributions up to 15% of the participant’s gross compensation per paycheck. Our matching contributions totaled $6.7 million, $5.6 million and $4.6 million for the fiscal years ended August 31, 2007, 2006 and 2005, respectively.

Conversion of UPX Online Stock Options and Common Stock

On March 24, 2000, our Board of Directors authorized the issuance of a new class of stock called UPX Online common stock, to reflect the separate performance of UPX Online, a campus within UPX. On October 3, 2000, an offering of 5,750,000 shares of UPX Online common stock was completed at a price of $14.00 per share.

Our Articles of Incorporation (“Articles”) gave us the right, at any time, to convert shares of UPX Online common stock to shares of Apollo Group Class A common stock. On August 6, 2004, our Board of Directors authorized the conversion of each share of UPX Online common stock to shares of Apollo Group Class A common stock effective August 27, 2004. In accordance with the terms of the Articles, each outstanding share of UPX Online common stock was converted into 1.11527 shares of Apollo Group Class A common stock as of August 27, 2004. The conversion resulted in the issuance of approximately 16.6 million new shares of Apollo Group Class A common stock. In addition, each unexercised option to purchase UPX Online common stock as of August 27, 2004, was converted into 1.0766 options to purchase Apollo Group Class A common stock. The conversion ratio was based upon the relative market value of Apollo Group Class A common stock and UPX Online common stock.

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APOLLO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As required by Emerging Issues Task Force (“EITF”) Statement No. 00-23 “Issues Related to the Accounting for Stock Compensation under APB Opinion No. 25 and FASB Interpretation No. 44” (“EITF 00-23”), we recognized pre-tax share-based compensation expense of $16.9 million in 2005 as the options vested.

Employee Stock Purchase Plan

Our Third Amended and Restated 1994 Employee Stock Purchase Plan allows our employees to purchase shares of Apollo Group Class A common stock at quarterly intervals through periodic payroll deductions at a price per share equal to 95% of the fair market value on the purchase date. Prior to the amendment and restatement of the Purchase Plan on October 1, 2005, the Apollo Group, Inc. Second Amended and Restated 1994 Employee Stock Purchase Plan allowed our employees to purchase shares of Apollo Group Class A common stock and, during the period it was outstanding, UPX Online common stock, at a purchase price per share, in general, that was 85% of the lower of (1) the fair market value (as defined) on the start date of each quarterly offering period or (2) the fair market value on the purchase date for that period.

Share-Based Compensation Plans

We have three share-based compensation plans: the Apollo Group, Inc. Second Amended and Restated Director Stock Plan (“DSP”), the Long Term Incentive Plan (“LTIP”) and the 2000 Incentive Stock Plan (“2SIP”).

The DSP provided for an annual grant to our non-employee directors of options to purchase shares of Apollo Group Class A common stock on September 1 of each year through 2003. No additional options are available for issuance under this plan.

Under the LTIP, we may grant non-qualified stock options, stock appreciation rights, restricted stock units, and other share-based awards in Apollo Group Class A common stock to certain officers, key employees, or directors. Most of the options granted under the LTIP vest 25% per year over four years. The vesting may be accelerated for certain grants if certain operational goals are met.

Under the 2SIP, we may grant non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock units, and other share-based awards in Apollo Group Class A common stock to certain officers, key employees, or directors. Most of the options granted under the 2SIP vest 25% per year over four years and options have contractual terms of 10 years or less. For certain grants, vesting may be tied to the attainment of prescribed performance goals, or the service vesting requirements for those grants may be accelerated if certain performance goals are attained.

Under all of the above Plans, the exercise price for stock options may not be less than 100% of the fair market value of the common stock on the date of grant. Options are granted for terms of up to ten years and can vest over periods from six months up to four years. The requisite service period for all options is equal to the vesting period. Under the Plans currently in effect (the LTIP and 2SIP), we are authorized to grant up to 35.8 million shares of common stock in the aggregate. Shares issued under the Plans are issued from treasury shares or our authorized but unissued capital stock. As of August 31, 2007, approximately 16.4 million authorized and unissued shares of common stock are reserved for issuance under the LTIP and the 2SIP.

Restatement of Share-Based Compensation and Stock Option Modifications

In May 2007, we restated prior period financial results due to errors that occurred in the accounting for share-based compensation (“Restatement”). As a result of the Restatement, we had to take the following actions with respect to certain outstanding options under the Plans.

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APOLLO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

409A Modifications

On June 12, 2007, we commenced a formal Tender Offer (“the Tender Offer”) which allowed our employees to tender certain erroneously priced stock options for amendment in order to avoid adverse tax consequences under IRC Section 409A. More than 900 employees participated in the Tender Offer. Pursuant to the Tender Offer, the exercise price per share in effect for each tendered option was amended to the lower of (i) the fair market value per share of our Class A common stock on the revised measurement date determined for that option for financial accounting purposes or (ii) the closing price per share of such common stock on July 13, 2007, the date on which the option was amended pursuant to the Tender Offer. Each participant who had an option with an exercise price that was amended became entitled to receive a special cash bonus (the “Cash Bonus”) with respect to that option. The Cash Bonus is equal to the number of shares amended times the increase in the exercise price and will be paid the first regularly scheduled payroll date in January 2008. However, if the adjusted exercise price would have been the same or lower than the original exercise price, then that option was canceled and immediately replaced with a new option that was exactly the same as the canceled option, and no Cash Bonus became payable with respect to that option. Such cancellation and re-grant was necessary to satisfy the requirements of Section 409A

Our Section 16 Officers were not included in the Tender Offer above, but were included in another 409A amendment program similar to that of the Tender Offer. The exercise price of their options were amended in accordance with the same formula used for the Tender Offer, except that the closing price of our Class A common stock on July 27, 2007 represented the price on the amendment date.

Per the terms of these programs, which included over 900 employees, the exercise prices on more than 0.4 million option grants were amended and approximately 1.6 million shares were canceled and regranted with the same exercise prices. The other terms of the stock option grants remained the same. We recognized incremental compensation cost of $0.7 million due to the modifications of these awards. The Cash Bonus totaled approximately $1.0 million and will be paid out on the first regularly scheduled payroll date after January 1, 2008.

Extension of Exercise Terms

On January 12, 2007, the Compensation Committee of our Board of Directors approved a resolution to modify the post-termination exercise period for stock option grants held by approximately 50 individuals. These modifications allowed former employees, including officers, terminated on or after November 3, 2006 an additional period of time in which to exercise options that were in-the-money as of the end of the normal 90 day post-termination exercise period in effect for those options. This extension was provided because we were unable, during the financial statement restatement process, to allow option exercises and sales of our Class A common stock to such individuals in compliance with the applicable registration requirements of the Securities Act of 1933, as amended. Absent the extension, the options would have expired prior to those individuals having the opportunity to exercise, since the 90 day post-termination exercise period would have expired prior to us completing our financial statement restatement process.

As a result of these modifications, we recorded a non-cash charge to share based compensation of $12.1 million during the second quarter of 2007, recorded in general and administrative expenses. In addition, the modified awards held by former employees who terminated prior to the January 12, 2007 modification are subject to the provisions of EITF Issue No. 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” (“EITF 00-19”). Of the $12.1 million in expense recognized upon modification of the awards, $11.8 million related to awards subject to the provisions of EITF 00-19, under which, these awards are classified as liabilities and reported in Accrued Liabilities in our condensed Consolidated Balance Sheets. EITF 00-19 also requires that we report the awards classified as liabilities at their fair value as of each balance sheet date. Any increase or decrease in this fair value is recorded in general and administrative expense in our condensed Consolidated Statements of Income. During year ended August 31, 2007, we recorded expense for fair value adjustments of $7.0 million. The exercise prices of the approximately 400,000 options subject to

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APOLLO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

EITF 00-19 as of August 31, 2007 range between $6.50 and $41.92. During the first quarter of 2008, all such options were either exercised or forfeited.

Apollo Group Class A Stock Options

A summary of the activity and changes related to stock options to purchase Apollo Group Class A common stock granted under the DSP, the LTIP, and the 2SIP is as follows:

Summary of Stock Options Outstanding

				Weighted		Weighted
				Average		Average
				Exercise		Remaining		Aggregate
	Total			Price per		Contractual		Intrinsic
	Shares			Share		Term (Years)		Value ($)(1)
(Numbers in thousands, except per share amounts)
Outstanding as of August 31, 2004		10,170		$	28.79
Granted		1,311			71.94
Exercised		(2,505	)		16.87
Forfeited, canceled or expired		(260	)		46.27
Outstanding as of August 31, 2005		8,716			38.30
Granted		3,874			57.37
Exercised		(1,395	)		15.32
Forfeited, canceled or expired		(1,871	)		61.08
Outstanding as of August 31, 2006		9,324			44.96
Granted		7,089	(2)		58.48
Exercised		(409	)		26.80
Forfeited, canceled or expired		(2,635	)(2)		64.83
Outstanding as of August 31, 2007		13,369			48.90		5.51	$	154,554
Vested and expected to vest as of August 31, 2007		12,069			48.15		5.41	$	150,274
Exercisable as of August 31, 2007		6,277			40.79		4.57	$	130,845
Available for issuance as of August 31, 2007		2,995

(1)	Aggregate intrinsic value represents the value of the Company’s closing stock price on August 31, 2007 ($58.67) in excess of the exercise price multiplied by the number of options outstanding or exercisable.
(2)	Includes 1,647 shares that were canceled and regranted per the terms of the Tender Offer and 409A Section 16 Program.

As of August 31, 2007, there was approximately $135.7 million of total unrecognized share-based compensation cost related to unvested share-based awards granted under our share-based compensation plans. These costs are expected to be recognized over a weighted average period of 2.96 years.

Stock Option Grant

On March 31, 2007, we entered into an employment contract with Mr. Gregory W. Cappelli who was appointed Executive Vice President, Global Strategy and Assistant to the Chairman. Under the terms of his employment agreement, Mr. Cappelli was granted 1,000,000 options to purchase shares of Class A common stock on May 25,

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APOLLO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2007 at an exercise price of $48.47 which was the closing price of the stock on that day. These options are subject to a four year graded vesting schedule with one quarter of the awards vesting at each anniversary of Mr. Cappelli’s commencement of employment with Apollo Group on April 2, 2007. The following assumptions were used to derive the fair value of the option grant:

Expected volatility	32.5	%
Expected life (years)	4.5
Risk-free interest rate	4.8	%
Dividend yield	0.0	%

The fair value of the option grant was $16.8 million. This amount will be expensed over the expected vesting period using the accelerated recognition method due to the fact that the award contained a performance condition.

Also pursuant to his employment agreement, on September 4, 2007, Mr. Cappelli received a restricted stock unit award (“RSU”) covering 113,896 shares of Class A common stock, with a value of $5.0 million based on the closing price of our Class A Common Stock on the day preceeding Mr. Cappelli’s commencement of employment. These RSUs are subject to a four year graded vesting schedule with one quarter of the awards vesting at each anniversary of Mr. Cappelli’s commencement of employment with Apollo Group on April 2, 2007. Also on September 4, 2007, Mr. Cappelli received options for 149,711 shares of Class A common stock, with an aggregate fair value of approximately $3.0 million (“Equalization Grant”). An option for an additional 1,058 shares was granted to Mr. Cappelli on October 5, 2007. The terms of the Equalization Grant are the same as those of the option grant discussed above. Because the RSU and Equalization Grant contain a performance condition, and the service inception date of April 2, 2007, precedes the grant date of September 4, 2007, we began recognizing expense for these awards as of the service inception date.

The following table summarizes information related to outstanding and exercisable options as of August 31, 2007:

	Options Outstanding						Options Exercisable
			Weighted Avg.		Weighted Avg.				Weighted Avg.
			Contractual		Exercise				Exercise
Range of	Options		Life		Price		Options		Price
Exercise Prices	Outstanding		Remaining		per Share		Exercisable		per Share
(Options in thousands)
$6.50 to $23.33		2,410		2.60	$	13.46		2,376	$	13.49
$26.25 to $51.33		3,692		6.68		47.12		1,433		42.48
$51.67 to $57.54		42		4.10		51.81		41		51.74
$58.03 to $58.03		4,126		5.61		58.03		35		58.03
$58.43 to $71.23		2,864		6.40		65.36		2,184		65.19
$72.00 to $91.00		235		4.35		78.98		208		79.78
$6.50 to $91.00		13,369		5.51		48.90		6,277		40.79

The following table summarizes information related to stock options exercised for the years ended August 31:

	Year Ended August 31,
	2007		2006		2005
($ in thousands)
Amounts related to options exercised:
Intrinsic value realized by optionee	$	10,824	$	58,962	$	150,466
Actual tax benefit realized by Company for tax deductions	$	2,095	$	19,161	$	47,640

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APOLLO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We issue shares of treasury stock upon exercise of stock options. Cash received from stock option exercises during the year ended August 31, 2007 totaled approximately $10.9 million.

Board of Directors Share Issuance

On May 15, 2007, holders of our Class B common stock increased the number of shares reserved for issuance under the 2000 Stock Incentive Plan (“2SIP”) by 5.0 million shares.

Restricted Stock Unit Awards

During 2007, we granted restricted stock units (“RSUs”) covering shares of our Class A common stock with service vesting conditions to our board of director members and with service and performance vesting conditions to our officers. SFAS 123(R) requires that the grant-date fair value of RSUs be equal to the market price of the share on the date of grant if vesting is based on a service or a performance condition. The grant-date fair value of the RSU awards that are subject to both a service and a performance condition are being expensed over the vesting period since the performance condition is considered probable. The vesting period of the awards granted to the board of director members was approximately three months and the vesting period of the awards granted to officers range from approximately three to four years with a pro rata percentage of the shares vesting on an annual anniversary date.

Restricted Stock Units

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
(Numbers in thousands, except per share amounts)
Nonvested balance at August 31, 2006		—		$	—
Granted		338			58.03
Vested and released		(13	)		58.03
Forfeited		—			—
Nonvested balance at August 31, 2007		325		$	58.03

As of August 31, 2007, there was approximately $21.3 million of total unrecognized share-based compensation cost related to unvested RSUs. These costs are expected to be recognized over a weighted average period of 2.37 years. The total fair value of RSUs vested during 2007 was approximately $0.8 million. We did not issue RSUs prior to 2007; thus, no restricted stock vested during 2006 or 2005.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Adoption of SFAS 123(R) on September 1, 2005

The table below outlines the effects on share-based compensation expense for fiscal years ended August 31, 2007 and 2006 as a result of adopting SFAS 123(R):

	Year Ended			Year Ended
	August 31, 2007			August 31, 2006
(Numbers in thousands)
Instructional costs and services	$	13,346		$	12,418
Selling and promotional		3,069			2,287
General and administrative		37,612			13,030
Share-based compensation expense included in operating expenses		54,027			27,735
Tax effect of share-based compensation		(21,189	)		(10,986	)
Share-based compensation expense, net of tax	$	32,838		$	16,749

SFAS 123(R) Assumptions

Fair Value — We use the BSM to estimate the fair value of our options as of the grant dates using the following weighted average assumptions:

	Year Ended August 31,
	2007			2006			2005
Weighted average fair value	$	18.84		$	26.06		$	20.98
Expected volatility		32.7	%		34.6	%		30.2	%
Expected life (years)		4.2			5.9			3.9
Risk-free interest rate		4.9	%		4.8	%		3.4	%
Dividend yield		0.0	%		0.0	%		0.0	%

Expected Volatility — We use an average of our historical volatility and the implied volatility of long-lived call options to estimate expected volatility consistent with SFAS 123(R) and SAB 107. Prior to the adoption of SFAS 123(R), we had used an estimate based on our historical volatility for purposes of our pro forma disclosure.

Expected Life (years) — Beginning on September 1, 2005, the expected life was determined taking into account both the contractual term of the option and the effects of employees’ expected exercise behavior, including the post-termination expiration provisions of the plans. Where applicable, the expected life has been determined using the simplified method pursuant to SAB 107. Prior to September 1, 2005, the expected life was determined based on an analysis of historical exercise behavior and management judgment.

Risk-Free Interest Rate — We use the U.S. constant maturity treasury rates as the risk-free rate interpolated between the years commensurate with the expected life assumptions.

Dividend Yield — The dividend yield assumption is based on the fact that we have not historically paid dividends and do not expect to pay dividends in the future.

Forfeitures — Forfeitures are estimated at the time of grant based on historical forfeiture activity adjusted for any known nonrecurring activity. If necessary, management estimates are trued up at the end of each vesting period if actual forfeitures differ from those estimates.

Expected Vesting Period — We amortize the share-based compensation expense, net of forfeitures, over the expected vesting period using the accelerated recognition method for pre-September 1, 2005 grants and the straight-

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line method for awards with only service conditions and the graded vesting attribution method for awards with performance conditions for post-September 1, 2005 grants in accordance with SFAS 123(R).

Pro forma Disclosures under SFAS 123 prior to September 1, 2005

Prior to adopting SFAS 123(R), we accounted for stock options under Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), and its related Interpretations, as permitted by SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”).

The following table illustrates the effect on net income and earnings per share if we had applied the fair value recognition provisions of SFAS 123 to options granted under our stock option plans for the fiscal year ended August 31, 2005. For purposes of the pro forma disclosure, under SFAS 123, the fair value of the options is estimated using the BSM and the expense is amortized over the options’ vesting periods, and forfeitures are accounted for as they occur.

	2005
($ in thousands, except per share amounts)
Net income	$	427,933
Add:
Share-based compensation expense — intrinsic value as reported under APB 25: UPX Online converted options, net of tax		10,176
Share-based compensation expense — intrinsic value as reported under APB 25: all other options, net of tax		4,737
Deduct:
Share-based compensation expense — fair value as determined under SFAS 123: all options, net of tax		(29,712	)
Pro forma net income	$	413,134
Earnings per share:
Basic	$	2.34
Basic — pro forma	$	2.26
Diluted	$	2.30
Diluted — pro forma	$	2.22

Note 13.   Related Party Transactions

Dr. John G. Sperling Note Receivable

In August 1998, we, together with Hughes Network Systems and Hermes Onetouch, LLC (“Hermes”), formed Interactive Distance Learning, Inc. (“IDL”), a new corporation, to acquire One Touch Systems, a provider of interactive distance learning solutions. We contributed $10.8 million in October 1999 and $1.2 million in December 1999, in exchange for a 19% interest in IDL. We accounted for our investment in IDL under the cost method. Hermes is owned by Dr. John G. Sperling.

On December 14, 2001, Hermes acquired our investment in IDL in exchange for a promissory note in the principal amount of $11.9 million, which represented the related carrying value. The promissory note accrues interest at a fixed annual rate of six percent and is due at the earlier of December 14, 2021 or nine months after Dr. Sperling’s death. The promissory note is included in other assets as a receivable from a related party in the Consolidated Balance Sheets as of August 31, 2007 and 2006.

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Apollo International, Inc.

As of August 31, 2007, we directly own 3.78% of the preferred stock of Apollo International, Inc. (“Apollo International”), which provides educational products and services in Brazil, India, and The Netherlands. Dr. John G. Sperling was a director of Apollo International until November 2005. In addition, we beneficially own shares of Apollo International stock indirectly through our 4% investment in a venture capital fund (see Note 5) that owns 17% of Apollo International stock. During fiscal 2007 we received shareholder distributions in the amount of $600,000.

India:  Effective September 2002, we, through WIU, entered into an agreement with Apollo International that allows for WIU’s educational offerings to be made available in India through a joint venture between Apollo International and K.K. Modi Investment and Financial Services Private Limited (“Modi”). The joint venture company is named Modi Apollo International Group Private Limited (“MAIGPL”). Apollo International is responsible for the relationship with the entities in India that are offering the WIU programs while WIU maintains the educational content and other academic aspects of the programs pursuant to an agreement with Apollo International. WIU received $207,000, $170,000 and $156,000 during the years ended August 31, 2007, 2006 and 2005, respectively, in connection with its agreement with Apollo International.

The Netherlands:  Effective October 1, 2005, we acquired certain assets of Apollo International’s campus in The Netherlands for a nominal amount.

Governmental Advocates, Inc.

Effective July 1, 1989, we entered into an agreement with Governmental Advocates, Inc. to provide consulting services to us with respect to matters concerning legislation, regulations, public policy, electoral politics, and any other topics of concern to us relating to state government in the state of California. Hedy F. Govenar, a director of UPX and a former director of Apollo, is the founder and Chairwoman of Governmental Advocates, Inc. On June 1, 2007, we renewed this agreement for an additional one year. Pursuant to the agreement, we paid consulting fees to Governmental Advocates, Inc. of $120,000 per year for the years ended August 31, 2007, 2006 and 2005.

Yo Pegasus, LLC

Yo Pegasus, LLC (“Yo Pegasus”), an entity controlled by Dr. John G. Sperling, leases an aircraft to us as well as to other entities. Payments to Yo Pegasus for our business use of the airplane, including airplane usage, fuel, travel expenses and flight attendants, during the years ended August 31, 2007, 2006, and 2005, were $329,000, $378,000, and $421,000, respectively, and are included in general and administrative expenses in the Consolidated Statements of Income. Beginning in 2005, and through May 2007, the pilots were employed by us and the costs of salaries and fringe benefits were paid through our payroll and are included in general and administrative expenses in the Consolidated Statements of Income. The cost to us, including payments made to Yo Pegasus and the cost of pilots’ wages (including fringe benefits) during the years ended August 31, 2007, 2006 and 2005 were $505,000, $565,000, and $595,000, respectively. Although the pilots are no longer our employees, we continue our use of the aircraft under a new arrangement.

The Kronos Group

We have entered into a sublease with The Kronos Group, an entity controlled by Dr. John G. Sperling, to lease 56,410 square feet of office space in Tempe, Arizona, for the period from July 1, 2006, to November 30, 2007. We can extend the sublease for additional 30-day periods until February 29, 2008. Payments to this entity during the years ended August 31, 2007 and 2006, were $933,000 and $152,000.

Deferred Compensation Agreement with Dr. John G. Sperling

See Note 8.

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Note 14.   Business Acquisitions and Goodwill Impairment

During August 2007, we announced our intention to acquire online advertising network Aptimus for $6.25 per share in an all-cash transaction valued at approximately $47.6 million. This acquisition will serve to advance our continuing efforts to enhance the efficacy of our online advertising investments in support of our mission to increase awareness of and access to quality education services. The closing of the acquisition is subject to customary closing conditions, including Aptimus shareholder approval. We anticipate the acquisition closing during our first fiscal quarter of 2008, after Aptimus’ shareholder meeting scheduled for October 29, 2007.

On October 20, 2006, we completed the acquisition of Insight by purchasing all of its outstanding common stock for $15.5 million. The purchase price included the payment of seller transaction fees, the repayment of certain existing indebtedness, payment of employee sale bonuses, and payments to option holders, warrant holders, and convertible note holders. Insight operates an online high school and engages in the business of servicing cyber high schools and providing other online education. This acquisition allows us to expand into the online charter high school market. The acquisition has been accounted for using the purchase method in accordance with Statement of Financial Accounting Standards No. 141, “Business Combinations.” As a result of the acquisition, goodwill increased by $12.7 million. In addition, we recorded $2.7 million in identifiable intangible assets related to a non-compete agreement, trade name, and an existing service contract. The intangible assets are being amortized over a five-year life. Insight is included in our Other Schools reportable segment. The results of Insight’s operations have been included in our consolidated financial statements since October 20, 2006. Pro forma financial data for Insight is not required as it is not material.

As of August 31, 2006, we concluded that the goodwill for CFP was impaired in the amount of $20.2 million. This impairment was included in our Other Schools segment. In performing our annual impairment test, we assessed the recoverability of the goodwill by evaluating the future discounted cash flows and the fair value of CFP’s tangible and intangible assets. The total discounted future cash flows was determined to be significantly less than our original expectations due to slower-than-forecasted revenue growth. After the impairment charge, the remaining goodwill totaled $16.9 million. We conducted an impairment test for CFP’s goodwill during 2007 and concluded that no impairment exists.

Note 15.   Commitments and Contingencies

We are subject to various claims and contingencies in the ordinary course of business, including those related to regulation, litigation, business transactions, employee-related matters, and taxes, among others. While the outcomes of these matters are uncertain, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Guarantees

We have agreed to indemnify our officers and directors for certain events or occurrences. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have director and officer liability insurance policies that limit our exposure and enable us to recover a portion of any future amounts paid. As a result of our insurance policy coverage, management believes the estimated fair value of these indemnification agreements is minimal.

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Lease Commitments

We are obligated under property and equipment leases that have been classified as operating leases. The following is a schedule of future minimum lease commitments as of August 31, 2007:

	Operating Leases
($ in thousands)
2008	$	135,113
2009		125,164
2010		110,479
2011		92,063
2012		63,418
Thereafter		79,997
	$	606,234

Facility and equipment expense under operating leases totaled $150.0 million, $141.2 million and $107.6 million for the years ended August 31, 2007, 2006 and 2005, respectively.

We have entered into five separate sale-leaseback agreements with unrelated third parties. These agreements were related to property located throughout Phoenix, Arizona, which we currently used to support our operations. The property is subject to ten-year lease terms expiring between 2010 and 2014. In total we received approximately $46.2 million in cash for the property, which generated a combined gain of approximately $17.5 million that is being deferred over the respective lease terms. We recognized total gains in our income statement of $1.7 million, $1.5 million and $1.7 million in 2007, 2006 and 2005, respectively. The balance of the total deferred gain was $10.6 million as of August 31, 2007 and $12.3 million as of August 31, 2006 and is included in long-term liabilities on the Consolidated Balance Sheets.

Sale-Leaseback Option

On June 20, 2006, we entered into an option agreement (which was amended in November 2006) with Macquarie Riverpoint AZ, LLC (“Macquarie”). The option agreement allows us to execute a sale and simultaneous leaseback of the new corporate headquarters land and buildings located in Phoenix, Arizona. We anticipate beginning to occupy these buildings early in fiscal year 2008 and finishing construction by the end of the second quarter of 2008. In the third quarter of 2008, we anticipate executing the sale-leaseback option. When the sale-leaseback option is exercised, we anticipate receiving approximately $170 million in cash for the buildings and land, and expect to generate a gain on the sale of approximately $20-30 million. The gain will be deferred over the 12-year term of the lease agreement.

Naming Rights to Glendale, Arizona Sports Complex

On September 22, 2006, we entered into an agreement with New Cardinals Stadium LLC, B&B Holdings, Inc., an unrelated third party doing business as the Arizona Cardinals, for UPX naming rights on a stadium in Glendale, Arizona, which is home to the Arizona Cardinals National Football League football club. The naming rights include signage, advertising and other promotional benefits. The initial agreement term is 20 years with options to extend. Pursuant to the agreement, we were required to pay a total of $5.8 million for the 2006 contract year, which is increased 3% per year until 2026. Other payments apply if certain events occur, such as the Cardinals playing in the Super Bowl or if there are sold-out home games.

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Internal Revenue Service Audit

On September 13, 2006, the Internal Revenue Service (“IRS”) commenced an audit of our U.S. federal income tax returns for the fiscal years ended August 31, 2003 through 2005 for income and deductions previously claimed by us, including deductions potentially limited by IRC Section 162(m). Certain tax deductions in prior years with respect to compensation attributable to the exercise of certain stock options by executive officers may be in question. Under IRC Section 162(m), the amount of such deduction per covered executive officer is limited to $1.0 million per year, except to the extent the compensation qualifies as performance-based. Compensation attributable to options with revised measurement dates may not have qualified as performance-based compensation. Accordingly, we may have claimed deductions with respect to those exercised options that were in excess of the limit imposed under IRC Section 162(m). As a result, we have accrued our best estimate, representing the high end of our estimated potential exposure, with respect to uncertain tax positions, including interest and penalties for the taxable years 2003 through 2007 (which are currently our only open years subject to adjustment for federal tax purposes), of approximately $44.6 million as of August 31, 2007. For prior periods where a liability existed and where the statute of limitations has expired, the accrual relating to that period has been reversed in the period in which the statute expired. In addition, the IRS audit may result in additional tax, penalties and interest, the amount of which may or may not be material, but this will not be known until the IRS audit is complete. We do not anticipate that the IRS audit will be complete prior to the second quarter of fiscal year 2008, and it may extend past such quarter, depending on the issues raised by the IRS with respect to such years.

Contingencies Related to Litigation and Other Proceedings

The following is a description of pending litigation and other proceedings that fall outside the scope of ordinary and routine litigation incidental to our business.

Pending Litigation

Incentive Compensation Qui Tam Action

On August 29, 2003, the Company was notified that a qui tam action had been filed against it on March 7, 2003, in the U.S. District Court for the Eastern District of California by two current employees on behalf of themselves and the federal government. When the federal government declines to intervene in a qui tam action, as it has done in this case, the relators may elect to pursue the litigation on behalf of the federal government and, if they are successful, receive a portion of the federal government’s recovery. The qui tam action alleges, among other things, violations of the False Claims Act, 31 U.S.C. § 3729(a)(1) and (2), by UPX for submission of a knowingly false or fraudulent claim for payment or approval, and knowingly false records or statements to get a false or fraudulent claim paid or approved in connection with federal student aid programs, and asserts that UPX improperly compensates its employees. On or about October 20, 2003, a motion to dismiss the action was filed and was subsequently granted with leave to amend the complaint. Subsequently, a second amended complaint was filed on or about March 3, 2004. A motion to dismiss this amended complaint was filed on or about March 22, 2004, and the case was subsequently dismissed with prejudice. On June 11, 2004, an appeal was filed with the U.S. Court of Appeals for the Ninth Circuit. On September 5, 2006, the Ninth Circuit reversed the ruling of the district court and held that the relators had adequately alleged the elements of a False Claims Act cause of action. On January 22, 2007, UPX filed a Petition for Writ of Certiorari with the U.S. Supreme Court. On April 23, 2007, the U.S. Supreme Court denied UPX’s petition. As a result, the case has been remanded to the District Court in accordance with the order of the Ninth Circuit. In addition, on March 23, 2007, UPX filed a motion in the District Court to dismiss the complaint on the grounds that the September 7, 2004, settlement agreement between UPX and the U.S. Department of Education constituted an alternate remedy under the False Claims Act. That motion was denied on August 20, 2007. UPX has filed a motion seeking certification of the Court’s order for purposes of bringing an interlocutory appeal. The District Court has issued a Scheduling Order pursuant to which trial is set for September 2009. Rule 26 disclosures have been made and discovery is proceeding. While the outcome of this legal proceeding is uncertain,

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management does not expect a material adverse effect on the Company’s business, financial position, results of operations, or cash flows to result from this action. In addition, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.

Axia Qui Tam Action

On August 15, 2005, a relator filed a qui tam complaint under seal in the U.S. District Court for the District of Columbia. On April 12, 2006, the DOJ filed The Government’s Notice of Election to Decline Intervention in this qui tam lawsuit and on June 15, 2006, the court entered an order unsealing the complaint. An amended complaint was served on or about November 1, 2006. On November 15, 2006, the relator filed a Voluntary Notice of Dismissal. On November 17, 2006, the court ordered that the relator comply with the statutory requirements for dismissal of a qui tam False Claims Act action by December 1, 2006. On December 1, 2006, the United States consented to the dismissal of the action with prejudice as to the relator, so long as the dismissal is without prejudice as to the United States. On February 2, 2007, the court ordered the United States to articulate its reasons for consenting to the dismissal of the action. On February 21, 2007, the United States filed a Statement of Reasons for Consenting to Dismissal. While the outcome of this legal proceeding is uncertain, management does not expect a material adverse effect on the Company’s business, financial position, results of operations, or cash flows to result from this action. In addition, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.

Securities Class Action

On approximately October 12, 2004, a class action complaint was filed in the U.S. District Court for the District of Arizona, captioned Sekuk Global Enterprises et al v. Apollo Group, Inc. et al, Case No. CV 04-2147 PHX NVW. A second class action complaint making similar allegations was filed on or about October 18, 2004, in the U.S. District Court for the District of Arizona, captioned Christopher Carmona et al v. Apollo Group, Inc. et al, Case No. CV 04-2204 PHX EHC. A third class action complaint making similar allegations was filed on or about October 28, 2004, in the U.S. District Court for the District of Arizona, captioned Jack B. McBride et al v. Apollo Group, Inc. et al, Case No. CV 04-2334 PHX LOA. The court consolidated the three pending class action complaints under the caption In re Apollo Group, Inc. Securities Litigation, Case No. CV04-2147-PHX-JAT and a consolidated class action complaint was filed on May 16, 2005 by the lead plaintiff. Lead plaintiff purports to represent a class of the Company’s shareholders who acquired their shares between February 27, 2004 and September 14, 2004, and seeks monetary damages in unspecified amounts. Lead plaintiff alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated under the Act by the Company for defendants’ issuance of allegedly materially false and misleading statements in connection with their failure to publicly disclose the contents of the U.S. Department of Education’s program review report. A motion to dismiss the consolidated class action complaint was filed on June 15, 2005, on behalf of Apollo Group, Inc. and the individual named defendants. The court denied the motion to dismiss on October 18, 2005 and discovery commenced. The parties conducted discovery from October 2005 until discovery closed on February 16, 2007. On March 9, 2007, both parties filed motions for summary judgment. Opposition briefs were filed on May 11, 2007 and reply briefs were filed on June 8, 2007. The court denied both summary judgment motions on September 12, 2007. The case remains set for trial on November 14, 2007. While the outcome of this legal proceeding is uncertain, management does not expect a material adverse effect on the Company’s business, financial position, results of operations, or cash flows to result from this action. In addition, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.

Alaska Electrical Pension Fund Derivative Action

On September 5, 2006, the Alaska Electrical Pension Fund filed a shareholder derivative suit in the U.S. District Court for the District of Arizona, alleging on behalf of the Company that certain of the Company’s current and former officers and directors engaged in misconduct regarding stock option grants. Similar derivative

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complaints were filed in the same Court on or about September 19, 2006 and November 11, 2006 by other purported shareholders of the Company, and the three cases were consolidated by the Court under the caption Alaska Electrical Pension Fund v. Sperling, Case No. CV06-02124-PHX-ROS, on January 9, 2007. The defendants in the consolidated case are the Company, J. Jorge Klor de Alva, Daniel E. Bachus, John M. Blair, Dino J. DeConcini, Anthony F. Digiovanni, Kenda B. Gonzales, Hedy F. Govenar, Brian E. Mueller, Todd S. Nelson, Jerry F. Noble, Laura Palmer Noone, John R. Norton III, John G. Sperling, and Peter V. Sperling. An independent committee of the Board of Directors of the Company (“Special Committee”) was appointed and authorized to determine whether it is in the Company’s best interest to itself pursue the allegations made on behalf of the Company. Effective December 8, 2006, in response to an order by the Court on December 4, 2006, K. Sue Redman, who is not a party to the case, replaced Hedy F. Govenar on the Special Committee. As of March 13, 2007, James R. Reis joined the Special Committee in place of Daniel D. Diethelm. On July 2, 2007, all defendants and the Company filed Motions to Dismiss the case, and the Special Committee filed notice of its intent to terminate the action. On August 1, 2007, the court appointed as lead plaintiff Louisiana Municipal Police Employees’ Retirement System, and lead plaintiff filed a Second Amended Complaint on August 15, 2007. On August 17, 2007, the Special Committee filed a Motion to Terminate the action, based in part upon its conclusion that pursuit of the claims is not in the Company’s best interest. Discovery and briefing on the Motion to Terminate is presently expected to be completed by March 2008. While the outcome of this legal proceeding is uncertain, management does not expect a material adverse effect on the Company’s business, financial position, results of operations, or cash flows to result from this action. In addition, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.

EEOC v. UPX

On September 25, 2006, the Equal Employment Opportunity Commission (“EEOC”) filed a Title VII action against UPX captioned Equal Employment Opportunity Commission v. UPX, No. CV-06-2303-PHX-MHM, in the U.S. District Court for the District of Arizona on behalf of four identified individuals and an asserted class of unidentified individuals who were allegedly discriminated against because they were not members of the Church of Jesus Christ of Latter-day Saints. The Complaint also alleges that the identified individuals were retaliated against after complaining about the alleged discrimination. The EEOC did not serve its Complaint on UPX until November 21, 2006. UPX answered the Complaint on December 8, 2006, denying the material allegations asserted. An initial Scheduling Conference was held on February 15, 2007. The parties are currently engaged in discovery. While the outcome of this legal proceeding is uncertain, management does not expect a material adverse effect on the Company’s business, financial position, results of operations, or cash flows to result from this action. In addition, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.

Barnett Derivative Action

On April 24, 2006, Larry Barnett filed a complaint derivatively on behalf of the Company. The lawsuit was filed in the Superior Court for the State of Arizona, Maricopa County and is entitled Barnett v. John Blair et al, Case Number CV2006-051558. On October 10, 2006, plaintiff filed a First Amended Complaint adding allegations of stock option backdating. The complaint names as defendants the Company, John M. Blair, Dino J. DeConcini, Hedy F. Govenar, Kenda Gonzales, Todd Nelson, Laura Palmer Noone, John Norton, John G. Sperling and Peter V. Sperling. The First Amended Complaint alleges, among other things, that the individual defendants breached their fiduciary duties to the Company and that certain of the individual defendants were unjustly enriched by their receipt of backdated stock option grants. The plaintiff seeks, among other things, an award of unspecified damages and reasonable costs and expenses, including attorneys’ fees. On August 21, 2006, the Company filed a Motion to Stay the case arguing that it is not in the best interests of the Company to prosecute plaintiffs’ purported derivative claims prior to resolution of the parallel federal securities class action pending against the Company in federal district court as described under “Securities Class Action.” The individual defendants joined in the Motion to Stay. On

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November 10, 2006, after plaintiff filed the First Amended Complaint and added allegations of stock option backdating, the Company filed an Amended Motion to Stay arguing that the action should be stayed pending resolution of the federal securities class action and pending the Special Committee’s investigation into the allegations of stock option backdating. Also on November 10, 2006, the Company filed a motion to sever the claims relating to stock option backdating from the claims made in the original complaint. On January 29, 2007, the Court granted the Amended Motion to Stay for a period of six months. On June 12, 2007 the Court extended the Stay to November 5, 2007 and set a case management conference for November 13, 2007. In light of recent developments in the Securities Class Action, the Company will be moving shortly to extend the Stay until the Securities Class Action has concluded. In addition, the plaintiff filed a motion to lift the stay on August 31, 2007 in order to conduct discovery related to the Special Committee’s report regarding alleged stock option backdating. The Company has opposed this motion. While the outcome of this legal proceeding is uncertain, management does not expect a material adverse effect on the Company’s business, financial position, results of operations, or cash flows to result from this action. In addition, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.

Bamboo Partners Derivative Action

On August 15, 2006, Bamboo Partners filed a complaint derivatively on behalf of the Company and UPX. The lawsuit was filed in the U.S. District Court, District of Arizona and is entitled Bamboo Partners v. Nelson et al., Case Number 2:06-at-10858. The complaint names as defendants Apollo Group, Inc., UPX, Todd Nelson, Kenda Gonzales, Daniel Bachus, John G. Sperling, Peter V. Sperling, Laura Palmer Noone, John M. Blair, Dino J. DeConcini, Hedy F. Govenar and John Norton III. The complaint alleges, among other things, that the defendants violated Sections 10(B) of the Exchange Act and committed numerous breaches of fiduciary duties. The complaint seeks damages sustained by Apollo and UPX as a result of breaches of fiduciary duty, abuse of control and waste of corporate assets. The complaint seeks damages against Laura Palmer Noone for unjust enrichment. The complaint also seeks attorneys’ fees, reasonable costs and disbursements. On November 13, 2006, the Company filed a Motion to Stay the case arguing that it is not in the best interests of the Company to prosecute plaintiffs’ purported derivative claims prior to resolution of the parallel federal securities class action pending against the Company in federal district court, as described above under “Securities Class Action.” The individual defendants joined in the Motion to Stay. The court granted the Company’s motion to stay on May 18, 2007. While the outcome of this legal proceeding is uncertain, management does not expect a material adverse effect on the Company’s business, financial position, results of operations, or cash flows to result from this action. In addition, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.

Teamsters Local Union Putative Class Action

On November 2, 2006, the Teamsters Local 617 Pension and Welfare Funds, filed a class action complaint purporting to represent a class of shareholders who purchased the Company’s stock between November 28, 2001 and October 18, 2006. The complaint alleges that the Company and certain of its current and former directors and officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by purportedly making misrepresentations concerning the Company’s stock option granting policies and practices. The defendants are the Company, J. Jorge Klor de Alva, Daniel E. Bachus, John M. Blair, Dino J. DeConcini, Kenda B. Gonzales, Hedy F. Govenar, Todd S. Nelson, John R. Norton III, John G. Sperling, Peter V. Sperling, and Thomas C. Wier. Plaintiff seeks unstated compensatory damages and other relief. On January 3, 2007, other shareholders, through their separate attorneys, filed motions seeking appointment as lead plaintiff and approval of their designated counsel as lead counsel to pursue this action. On September 11, 2007, the court appointed The Pension Trust Fund for Operating Engineers as lead plaintiff and approved lead plaintiff’s selection of lead counsel and liaison counsel. The Company has not yet responded to the complaint in this action but intends to vigorously oppose plaintiffs’ allegations. While the outcome of this legal proceeding is uncertain, management does not expect a material adverse effect on the Company’s business, financial position, results of operations, or

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cash flows to result from this action. In addition, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.

Regulatory and Other Legal Matters

Student Financial Aid

All federal financial aid programs are established by the Higher Education Act and regulations promulgated thereunder. The Higher Education Act has an expiration date; in the past, if Congress did not reauthorize the Higher Education Act before its expiration date, Congress extended the authorization of the Higher Education Act. The Higher Education Act is set to expire on October 31, 2007.

The Higher Education Act specifies the manner in which the U.S. Department of Education reviews institutions for eligibility and certification to participate in Title IV programs. Every educational institution involved in Title IV programs must be certified to participate and is required to periodically renew this certification. UPX was recertified in June 2003 and its current certification for the Title IV programs expired in June 2007. However, in March 2007, UPX submitted its Title IV program participation recertification application to the U.S. Department of Education. We have been collaborating with the U.S. Department of Education regarding the UPX recertification application. Although we have submitted our application for renewal, we are continuing to supply additional follow-up information based on requests from the U.S. Department of Education. Our eligibility continues on a month-to-month basis until the U.S. Department of Education issues its decision on the application. A month-to-month status is not unusual considering the process is multi-faceted and iterative. We have no reason to believe that the application will not be renewed and expect that the renewal process will be completed satisfactorily. WIU was recertified in October 2003 and its current certification for the Title IV programs expires in June 2009.

U.S. Department of Education Audits

From time to time as part of the normal course of business, UPX and WIU are subject to periodic program reviews and audits by regulating bodies. On December 22, 2005, the U.S. Department of Education, Office of Inspector General (“OIG”), issued an audit report on their review of UPX’s policies and procedures for the calculation and return of Title IV funds. The OIG concluded that UPX had policies and procedures that provide reasonable assurances that it properly identified withdrawn students, appropriately determined whether a return of Title IV funds was required, returned Title IV funds for withdrawn students in a timely manner and used appropriate methodologies for most aspects of calculating the return of Title IV funds. The OIG did conclude, however, that UPX did not use appropriate methodologies for calculating the percentage of Title IV financial aid earned from March 1, 2004 through December 7, 2004. Since December 8, 2004, UPX has adopted the methodologies deemed appropriate by the U.S. Department of Education. On November 3, 2006, the U.S. Department of Education issued a preliminary audit determination letter (PADL) concerning UPX’s administration of the Title IV federal student aid programs regarding this matter. On June 7, 2007, UPX responded to the PADL request with results of the file review. The U.S. Department of Education will ultimately issue a final audit determination letter regarding the return of Title IV funds. UPX has accrued $3.7 million, which is its best estimate of the refund liability. While the outcome of the OIG audit proceedings are on-going, management does not expect a material adverse effect on our business, financial position, results of operations, or cash flows to result from these actions.

Department of Justice Investigation

On June 19, 2006, we received a grand jury subpoena from the U.S. Attorney’s Office for the Southern District of New York requesting that we provide documents relating to our stock option grants. We are cooperating fully with this request.

97

APOLLO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

SEC Informal Inquiry

On June 30, 2006, we were notified by letter from the SEC of an informal inquiry and the Commission’s request for the production of documents relating to our stock option grants. On July 3, 2007, the SEC notified us that it had closed its inquiry into our stock option grants, without recommending any enforcement action.

Nasdaq Proceeding

Our Annual Report on Form 10-K for 2006 and our Quarterly Reports on Form 10-Q for the quarters ended May 31, 2006, November 30, 2006, and February 28, 2007, were filed with the SEC on May 22, 2007, and an Amendment to the Quarterly Report on Form 10-Q/A for the quarter ended February 28, 2007, was filed with the SEC on May 25, 2007. On May 24, 2007, the Nasdaq Listing and Hearing Review Council determined that we demonstrated compliance with all Nasdaq Marketplace Rules and informed us that the Nasdaq delisting matter is now closed and our Class A Common Stock will continue to be listed on The Nasdaq Global Select Market.

IRC Section 162(m)

Certain tax deductions in prior years with respect to compensation attributable to the exercise of certain stock options by executive officers may be in question. Under IRC Section 162(m), the amount of such deduction per covered executive officer is limited to $1.0 million per year, except to the extent the compensation qualifies as performance based. Compensation attributable to options with revised measurement dates may not have qualified as performance-based compensation. Accordingly, we may have claimed deductions with respect to those exercised options that were in excess of the limit imposed under IRC Section 162(m). As a result, we have accrued our best estimate, representing the high end of our estimated potential exposure, with respect to uncertain tax positions, including interest and penalties for the taxable years 2003 through 2007 (which are currently our only open years subject to adjustment for federal tax purposes) of approximately $44.6 million as of August 31, 2007. For prior periods where a liability existed and where the statute of limitations has expired, the accrual relating to that period has been reversed in the period in which the statute expired.

Note 16.   Segment Reporting

We operate exclusively in the educational industry providing higher education. Our six operating segments are aggregated into three reportable segments for financial reporting purposes: UPX, Other Schools, and Corporate. The Other Schools segment includes IPD, WIU, CFP, and Insight.

Consistent with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information” (“SFAS 131”), our reportable segments have been determined based on the method by which management evaluates performance and allocates resources. Management evaluates performance based on reportable segment profit. This measure of profit includes allocating corporate support costs to each segment as part of a general allocation, but excludes interest income and certain revenue and unallocated corporate charges. At the discretion of management, certain corporate costs are not allocated to the subsidiaries due to their designation as special charges because of their infrequency of occurrence, the non-cash nature of the expense, and/or the determination that the allocation of these costs to the subsidiaries will not result in an appropriate measure of the subsidiaries’ results. These costs include such items as unscheduled or significant management bonuses, unusual severance pay, stock-based compensation expense attributed to corporate management and administrative employees, etc. We changed our allocation methodology during 2007 with regard to the allocation of special charges as defined above. These costs were previously allocated to the subsidiaries. Prior periods have been updated for the affect in those periods of the change in the allocation methodology for comparability purposes. The revenue and corporate charges which are not allocated to UPX or Other Schools segments are included in the Corporate segment.

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APOLLO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The accounting policies of each segment are consistent with those described in the summary of significant accounting policies in Note 2. Transactions between segments, which are not significant, are consummated on a basis intended to reflect the market value of the underlying services and are eliminated in consolidation.

Our principal operations are located in the United States, and the results of operations and long-lived assets in geographic regions outside of the United States are not significant. During the years ended August 31, 2007, 2006 and 2005, no individual customer accounted for more than 10% of our consolidated revenues.

Summary financial information by reportable segment is as follows:

	Year Ended August 31,
	2007			2006			2005
($ in thousands)
Tuition and other revenue, net
UPX	$	2,537,815		$	2,074,443		$	2,014,124
Other Schools		184,619			402,051			235,183
Corporate		1,359			1,039			1,807
Total tuition and other revenue, net	$	2,723,793		$	2,477,533		$	2,251,114
Income from operations:
UPX	$	656,322		$	620,708		$	636,463
Other Schools		36,367			69,475			70,717
Corporate		(66,992	)		(40,149	)		(9,528	)
		625,697			650,034			697,652
Reconciling items:
Interest income and other, net		31,600			18,054			16,787
Income before income taxes	$	657,297		$	668,088		$	714,439
Depreciation and amortization:
UPX	$	38,539		$	40,239		$	26,187
Other Schools		5,579			4,720			4,686
Corporate		26,997			22,331			14,719
Total depreciation and amortization	$	71,115		$	67,290		$	45,592
Capital expenditures:
UPX	$	41,444		$	42,655		$	57,823
Other Schools		1,415			1,497			4,211
Corporate		61,692			67,088			32,448
Total capital expenditures	$	104,551		$	111,240		$	94,482

99

APOLLO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	As of August 31,
	2007			2006
($ in thousands)
Assets:
UPX	$	1,160,001		$	969,500
Other Schools		125,141			161,752
Corporate		693,299			680,134
Eliminations		(528,578	)		(528,381	)
Total assets	$	1,449,863		$	1,283,005

Note 17.   Quarterly Results of Operations (Unaudited)

Seasonality

Our operations are generally subject to seasonal trends. We experience, and expect to continue to experience, seasonal fluctuations in our results of operations as a result of changes in the level of student enrollments. While we enroll students throughout the year, second quarter (December through February) enrollments and related revenues generally are lower than other quarters due to holiday breaks in December and January. We experience a seasonal increase in new enrollments in August of each year when most other colleges and universities begin their fall semesters.

100

APOLLO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Quarterly Results of Operations

The unaudited consolidated interim financial information presented should be read in conjunction with other information included in our consolidated financial statements. The following unaudited consolidated financial information reflects all adjustments necessary for the fair presentation of the results of interim periods. The following tables set forth selected unaudited quarterly financial information for each of our last eight quarters.

	2007
	Q1		Q2		Q3		Q4
	November 30		February 28		May 31		August 31
($ in thousands, except per share amounts)
Consolidated Quarterly Statements of Income:
Revenues:
Tuition and other, net	$	667,786	$	608,693	$	733,392	$	713,922
Costs and expenses:
Instructional costs and services		294,755		294,439		321,050		327,247
Selling and promotional		155,435		166,940		162,901		173,783
General and administrative		37,615		55,514		46,069		62,348
Total costs and expenses		487,805		516,893		530,020		563,378
Income from operations		179,981		91,800		203,372		150,544
Interest income and other, net		6,432		6,978		8,530		9,660
Income before income taxes		186,413		98,778		211,902		160,204
Provision for income taxes		72,539		38,440		80,464		57,044
Net income	$	113,874	$	60,338	$	131,438	$	103,160
Earnings per share attributed to Apollo Group common stock:
Basic income per share(1)	$	0.66	$	0.35	$	0.76	$	0.61
Diluted income per share(1)	$	0.65	$	0.35	$	0.75	$	0.60
Basic weighted average shares outstanding		173,122		173,185		173,188		169,770
Diluted weighted average shares outstanding		174,521		174,624		174,620		171,347

(1) The sum of quarterly income per share may not equal annual income per share due to rounding.

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APOLLO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	2006
	Q1		Q2		Q3		Q4
	November 30		February 28		May 31		August 31
($ in thousands, except per share amounts)
Consolidated Quarterly Statements of Income:
Revenues:
Tuition and other, net	$	628,673	$	570,550	$	653,397	$	624,913
Costs and expenses:
Instructional costs and services		263,805		261,833		283,711		300,235
Selling and promotional		127,972		124,246		138,195		154,293
General and administrative		28,633		59,768		30,415		34,188
Goodwill impairment		—		—		—		20,205
Total costs and expenses		420,410		445,847		452,321		508,921
Income from operations		208,263		124,703		201,076		115,992
Interest income and other, net		4,458		3,526		4,437		5,633
Income before income taxes		212,721		128,229		205,513		121,625
Provision for income taxes		84,142		49,140		74,059		45,914
Net income	$	128,579	$	79,089	$	131,454	$	75,711
Earnings per share attributed to Apollo Group common stock:
Basic income per share(1)	$	0.72	$	0.46	$	0.76	$	0.44
Diluted income per share(1)	$	0.71	$	0.45	$	0.75	$	0.43
Basic weighted average shares outstanding		178,104		173,496		172,817		172,981
Diluted weighted average shares outstanding		180,641		175,435		174,453		174,514

(1) The sum of quarterly income per share may not equal annual income per share due to rounding.

Note 18.   Subsequent Events

Changes in Management

On September 4, 2007, the Apollo Group, Inc. announced the hiring of P. Robert Moya as Senior Vice President and General Counsel, effective September 1, 2007. Mr. Moya joins Apollo Group with more than 35 years of experience in corporate and securities law, with particular expertise in corporate governance. He has substantial mergers & acquisitions transaction experience, including international transactions, as well as experience with public and private offerings of equity and debt.

Apollo Global

On October 22, 2007, we formed a joint venture with The Carlyle Group (“Carlyle”), called Apollo Global, Inc. (“Apollo Global”) to pursue investments in the international education services sector. Carlyle, based in Washington D.C., is one of the world’s largest and most prestigious private equity firms, managing over $76 billion in assets for over 1,000 institutional investors, including several of the largest pension funds in the U.S. Through Apollo Global, we intend to capitalize on the high global demand for education services. Apollo Global will provide

102

APOLLO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

education services through two primary strategies. First, Apollo Global will continue to provide our wide range of U.S. accredited degrees to foreign students outside the U.S. Second, Apollo Global will provide local education services, including post-secondary degrees, in the countries it seeks to enter. These capabilities will be achieved through both a disciplined acquisition process and organic growth.

Apollo Global will utilize the portfolio of our core competencies while leveraging Carlyle’s education industry and political relationships, and strategic assets across the global education sector. Combining Carlyle’s global footprint with our educational expertise and Apollo Global’s local, “in-country” expertise will assist in sourcing acquisitions, facilitate due diligence for new investment opportunities and enhance the opportunity for organic growth. Investments by Apollo Global will likely include a range of structures, including minority investments, 50/50 partnerships, and controlling acquisitions.

We have agreed that, within approximately 18 months, all of our education-related activities directed toward students who live outside the U.S. and who are not citizens of the U.S. or members of the U.S. military will be conducted through Apollo Global. We have agreed to commit up to $801 million in cash or contributed assets and own 80.1% of Apollo Global. Carlyle has agreed to commit up to $199 million in cash or contributed assets and own the remaining 19.9%. Additionally, conservative amounts of debt will be employed, as appropriate. The Board of Apollo Global will consist of seven directors, four of whom will be designated by us and two of whom will be designated by Carlyle. The seventh director will be the President of Apollo Global. Additionally, 10 to 15% of the value of the equity will be available to provide incentives for management of Apollo Global. Apollo Global will be consolidated in our financial statements.

103

Item 9 — Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A — Controls and Procedures

Disclosure Controls and Procedures

We intend to maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 (the “Act”) is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to management, including its President (Principal Executive Officer) and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Management, under the supervision and with the participation of its President (Principal Executive Officer) and CFO, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Act), as of the end of the period covered by this report. Based on that evaluation, management concluded that, as of that date, our disclosure controls and procedures were effective at the reasonable assurance level.

Attached as exhibits to this Annual Report on Form 10-K are certifications of the Company’s President (Principal Executive Officer) and CFO, which are required in accordance with Rule 13a-14 of the Act. This Disclosure Controls and Procedures section includes information concerning management’s evaluation of disclosure control and procedures referred to in those certifications and, as such, should be read in conjunction with the certifications of the Company’s President (Principal Executive Officer) and CFO.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining effective internal control over financial reporting. Management’s intent is to design this system to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP in the United States of America.

Our internal control over financial reporting includes those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statement will not be prevented or detected on a timely basis. Management performed an assessment of the effectiveness of our internal control over financial reporting as of August 31, 2007, utilizing the criteria described in the “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The objective of this assessment was to determine whether our internal control over financial reporting was effective as of August 31, 2007. In its assessment of the effectiveness of internal control over financial reporting as of August 31, 2007, management reviewed, among other things, the internal control deficiencies identified as material weaknesses in its previous Report on Internal Control Over Financial Reporting and determined that the previously identified control deficiencies have been resolved and that our internal control over financial reporting was effective as of August 31, 2007.

Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting during the quarter ended August 31, 2007, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

104

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Apollo Group, Inc. and Subsidiaries

Phoenix, Arizona

We have audited the internal control over financial reporting of Apollo Group, Inc. and subsidiaries (the “Company”) as of August 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 31, 2007, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of August 31, 2007 and 2006, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the three years in the period ended August 31, 2007, of the Company and our report dated October 29, 2007 expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s adoption of Statement of Financial Accounting Standards No. 123(R), Share-Based Payment, on September 1, 2005, as discussed in Note 2 to the consolidated financial statements.

/s/  DELOITTE & TOUCHE LLP

Phoenix, Arizona

October 29, 2007

105

Item 9B — Other Information

On October 22, 2007, we entered into a $1 billion joint venture with The Carlyle Group, a private equity firm, called Apollo Global. Apollo Global intends to make a range of investments in the international education services sector. Apollo Global will target investments and partnerships primarily in countries outside the United States with attractive demographic and economic growth characteristics. We have committed up to $801 million and will own 80.1% of the joint venture. Carlyle has committed up to $199 million and will own 19.9% of Apollo Global. Apollo Global will be a consolidated subsidiary of ours.

PART III

Item 10 — Directors and Executive Officers of the Registrant

Information relating to this item appears in the Information Statement for Apollo Group, Inc., to be filed within 120 days of our fiscal year end (August 31, 2007) and such information is incorporated herein by reference.

Item 11 — Executive Compensation

Information relating to this item appears in the Information Statement for Apollo Group, Inc., to be filed within 120 days of our fiscal year end (August 31, 2007) and such information is incorporated herein by reference.

Item 12 — Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information relating to this item appears in the Information Statement for Apollo Group, Inc., to be filed within 120 days of our fiscal year end (August 31, 2007) and such information is incorporated herein by reference.

Item 13 — Certain Relationships and Related Transactions

See Note 13 of our financial statement included in Part II, Item 8, which is incorporated by reference in this Part III, Item 13.

Other information relating to this item appears in the Information Statement for Apollo Group, Inc., to be filed within 120 days of our fiscal year end (August 31, 2007) and such information is incorporated herein by reference.

Item 14 — Principal Independent Registered Public Accounting Firm Fees and Services

Information relating to this item appears in the Information Statement for Apollo Group, Inc., to be filed within 120 days of our fiscal year end (August 31, 2007) and such information is incorporated herein by reference.

PART IV

Item 15 — Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this Annual Report on Form 10-K:

1. Financial Statements filed as part of this report

106

Index to Consolidated Financial Statements	Page
Report of Independent Registered Public Accounting Firm		61
Consolidated Balance Sheets		62
Consolidated Statements of Income		63
Consolidated Statements of Comprehensive Income		64
Consolidated Statements of Changes in Shareholders’ Equity		65
Consolidated Statements of Cash Flows		66
Notes to Consolidated Financial Statements		67

2. Financial Statement Schedules

All financial statement schedules have been omitted since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the Consolidated Financial Statements and Notes thereto.

3. Exhibits

Index to Exhibits

				Incorporated by Reference
Exhibit						Exhibit
Number			Exhibit Description	Form	File No.	Number	Filing Date
	2	.1	Asset Purchase Agreement between National Endowment for Financial Education, (R) College for Financial Planning, Inc., as assignee of Apollo Online, Inc., as Buyer, and Apollo Group, Inc. dated August 21, 1997	S-3	No. 333-35465	10	September 11, 1997
	2	.2	Assignment and Amendment of Asset Purchase Agreement between National Endowment for Financial Education, Inc., the College for Financial Planning, Inc., Apollo Online, Inc., and Apollo Group, Inc. dated September 23, 1997	S-3/A	No. 333-35465	10.2	September 23, 1997
	3	.1	Amended and Restated Articles of Incorporation of Apollo Group, Inc.	Proxy Statement	No. 000-25232	Annex B	August 1, 2000
	3	.1a	Articles of Amendment to the Articles of Incorporation of Apollo Group, Inc.	8-K	No. 000-25232	99.1	June 27, 2007
	3	.2	Amended and Restated Bylaws of Apollo Group, Inc.	10-Q	No. 000-25232	3.2	April 10, 2006
	10	.1	Long-Term Incentive Plan of Apollo Group, Inc.*	S-1	No. 33-83804	10.3
	10	.2	Plan Amendment to Long-Term Incentive Plan of Apollo Group, Inc.*	10-Q	No. 000-25232	10.5	June 28, 2007
	10	.3	Amended and Restated Savings and Investment Plan of Apollo Group, Inc.*	10-Q	No. 000-25232	10.4	January 14, 2002
	10	.4	Third Amended and Restated 1994 Employee Stock Purchase Plan of Apollo Group, Inc.*	10-K	No. 000-25232	10.5	November 14, 2005
	10	.5	Amended and Restated 2000 Stock Incentive Plan of Apollo Group, Inc.*	10-Q	No. 000-25232	10.3	June 28, 2007
	10	.6	Plan Amendment to 2000 Stock Incentive Plan of Apollo Group, Inc.*	10-Q	No. 000-25232	10.4	June 28, 2007

107

				Incorporated by Reference
Exhibit						Exhibit
Number			Exhibit Description	Form	File No.	Number	Filing Date
	10	.7	Form of Stock Option Agreement for Non-Employee Board Members of Apollo Group, Inc.*	10-Q	No. 000-25232	10.6	June 28, 2007
	10	.8	Form of Restricted Stock Unit Award for Non-Employee Board Members of Apollo Group, Inc.*	10-Q	No. 000-25232	10.7	June 28, 2007
	10	.9	Form of Stock Option Award for Officers and Employees of Apollo Group, Inc.*	10-Q	No. 000-25232	10.8	June 28, 2007
	10	.10	Form of Restricted Stock Unit Award for Officers*	10-Q	No. 000-25232	10.9	June 28, 2007
	10	.11	Employment Agreement between Apollo Group, Inc. and John G. Sperling*	S-1	No. 33-83804	10.6
	10	.12	Deferred Compensation Agreement between Apollo Group, Inc. and John G. Sperling*	S-1	No. 33-83804	10.7
	10	.13	Shareholder Agreement among Apollo Group, Inc. and holders of Apollo Group Class B common stock dated September 7, 1994	S-1	No. 33-83804	10.10
	10	.13b	Amendment to Shareholder Agreement among Apollo Group, Inc. and holders of Apollo Group Class B common stock dated May 25, 2001	10-K	No. 000-25232	10.10b	November 28, 2001
	10	.13c	Amendment to Shareholder Agreement among Apollo Group, Inc. and holders of Apollo Group Class B common stock dated May 8, 2007	10-K	No. 000-25232	10.7c	May 22, 2007
	10	.14	Agreement of Purchase and Sale of Assets of Western International University dated June 30, 1995 (without schedules and exhibits)	10-K	No. 000-25232	10.11	October 27, 1995
	10	.15	Purchase and Sale Agreement dated October 10, 1995	10-K	No. 000-25232	10.12	October 25, 1996
	10	.16	Independent Contractor Agreement between Apollo Group, Inc. and Governmental Advocates, Inc. dated June 1, 2006	10-K	No. 000-25232	10.12	May 22, 2007
	10	.17	Promissory Note from Hermes Onetouch, L.L.C. dated December 14, 2001	10-Q	No. 000-25232	10.14	April 12, 2002
	10	.17a	Corrected Promissory Note from Hermes Onetouch, L.L.C. dated December 14, 2001	10-K	No. 000-25232	10.13a	May 22, 2007
	10	.18	Contract for Construction between Apollo Development Corporation and Sundt Construction, Inc. dated June 18, 2004	10-K	No. 000-25232	10.14	May 22, 2007
	10	.19	Separation Agreement between Apollo Group, Inc. and Todd Nelson dated January 11, 2006	8-K	No. 000-25232	10.1	January 12, 2006
	10	.20	Engagement Letter Agreement between Apollo Group, Inc. and FTI Consulting, Inc. dated November 14, 2006*	10-K	No. 000-25232	10.16	May 22, 2007

108

				Incorporated by Reference
Exhibit						Exhibit
Number			Exhibit Description	Form	File No.	Number	Filing Date
	10	.21	Consulting Agreement between Apollo Group, Inc. and Brian L. Swartz dated February 13, 2007*	10-K	No. 000-25232	10.17	May 22, 2007
	10	.22	Employment Agreement between Apollo Group, Inc. and Gregory W. Cappelli dated March 31, 2007*	10-K	No. 000-25232	10.18	May 22, 2007
	10	.23	Stock Option Agreement between Apollo Group, Inc. and Gregory W. Cappelli dated June 28, 2007*	10-Q	No. 000-25232	10.10	June 28, 2007
	10	.24	Employment Agreement between Apollo Group, Inc. and Joseph L. D’Amico dated June 5, 2007*	10-Q	No. 000-25232	10.1	June 28, 2007
	10	.25	Amendment to Employment Agreement between Apollo Group, Inc. and Joseph L. D’Amico dated June 5, 2007*	10-Q	No. 000-25232	10.2	June 28, 2007
	10	.26	Employment Agreement between Apollo Group, Inc. and P. Robert Moya dated August 31, 2007*
	10	.27	Joint Venture Agreement between Apollo Group, Inc. and Carlyle Ventures Partners III, L.P. dated October 22, 2007
	10	.28	Shareholders’ Agreement among Apollo Group, Inc., Carlyle Ventures Partners III, L.P. and Apollo Global, Inc. dated October 22, 2007
	10	.29	Registration Rights Agreement among Apollo Group, Inc., Carlyle Ventures Partners III, L.P. and Apollo Global, Inc. dated October 22, 2007
	23	.1	Consent of Independent Registered Public Accounting Firm
	31	.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31	.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32	.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted, Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32	.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted, Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*  Indicates a management contract or compensation plan.

109

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Phoenix, State of Arizona, on October 24, 2007.

APOLLO GROUP, INC.

An Arizona Corporation

By:  /s/  Brian E. Mueller

Brian E. Mueller

President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.

Signature	Title	Date
/s/  John G. Sperling John G. Sperling	Founder, Acting Executive Chairman of the Board and Director	October 24, 2007
/s/  Brian E. Mueller Brian E. Mueller	President and Director (Principal Executive Officer)	October 24, 2007
/s/  Gregory W. Cappelli Gregory W. Cappelli	Executive Vice President Global Strategy and Director	October 24, 2007
/s/  Joseph L. D’Amico Joseph L. D’Amico	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	October 24, 2007
/s/  Brian L. Swartz Brian L. Swartz	Senior Vice President of Finance and Chief Accounting Officer (Principal Accounting Officer)	October 24, 2007
/s/  Peter V. Sperling Peter V. Sperling	Senior Vice President, Secretary and Director	October 24, 2007
/s/  Dino J. DeConcini Dino J. DeConcini	Director	October 24, 2007
/s/  K. Sue Redman K. Sue Redman	Director	October 24, 2007
/s/  James R. Reis James R. Reis	Director	October 24, 2007
/s/  George A. Zimmer George A. Zimmer	Director	October 24, 2007
/s/  Roy A. Herberger Roy A. Herberger	Director	October 24, 2007

110

Index to Exhibits

				Incorporated by Reference
Exhibit						Exhibit
Number			Exhibit Description	Form	File No.	Number	Filing Date
	2	.1	Asset Purchase Agreement between National Endowment for Financial Education, (R) College for Financial Planning, Inc., as assignee of Apollo Online, Inc., as Buyer, and Apollo Group, Inc. dated August 21, 1997	S-3	No. 333-35465	10	September 11, 1997
	2	.2	Assignment and Amendment of Asset Purchase Agreement between National Endowment for Financial Education, Inc., the College for Financial Planning, Inc., Apollo Online, Inc., and Apollo Group, Inc. dated September 23, 1997	S-3/A	No. 333-35465	10.2	September 23, 1997
	3	.1	Amended and Restated Articles of Incorporation of Apollo Group, Inc.	Proxy Statement	No. 000-25232	Annex B	August 1, 2000
	3	.1a	Articles of Amendment to the Articles of Incorporation of Apollo Group, Inc.	8-K	No. 000-25232	99.1	June 27, 2007
	3	.2	Amended and Restated Bylaws of Apollo Group, Inc.	10-Q	No. 000-25232	3.2	April 10, 2006
	10	.1	Long-Term Incentive Plan of Apollo Group, Inc.*	S-1	No. 33-83804	10.3
	10	.2	Plan Amendment to Long-Term Incentive Plan of Apollo Group, Inc.*	10-Q	No. 000-25232	10.5	June 28, 2007
	10	.3	Amended and Restated Savings and Investment Plan of Apollo Group, Inc.*	10-Q	No. 000-25232	10.4	January 14, 2002
	10	.4	Third Amended and Restated 1994 Employee Stock Purchase Plan of Apollo Group, Inc.*	10-K	No. 000-25232	10.5	November 14, 2005
	10	.5	Amended and Restated 2000 Stock Incentive Plan of Apollo Group, Inc.*	10-Q	No. 000-25232	10.3	June 28, 2007
	10	.6	Plan Amendment to 2000 Stock Incentive Plan of Apollo Group, Inc.*	10-Q	No. 000-25232	10.4	June 28, 2007
	10	.7	Form of Stock Option Agreement for Non-Employee Board Members of Apollo Group, Inc.*	10-Q	No. 000-25232	10.6	June 28, 2007
	10	.8	Form of Restricted Stock Unit Award for Non-Employee Board Members of Apollo Group, Inc.*	10-Q	No. 000-25232	10.7	June 28, 2007
	10	.9	Form of Stock Option Award for Officers and Employees of Apollo Group, Inc.*	10-Q	No. 000-25232	10.8	June 28, 2007
	10	.10	Form of Restricted Stock Unit Award for Officers*	10-Q	No. 000-25232	10.9	June 28, 2007
	10	.11	Employment Agreement between Apollo Group, Inc. and John G. Sperling*	S-1	No. 33-83804	10.6
	10	.12	Deferred Compensation Agreement between Apollo Group, Inc. and John G. Sperling*	S-1	No. 33-83804	10.7
	10	.13	Shareholder Agreement among Apollo Group, Inc. and holders of Apollo Group Class B common stock dated September 7, 1994	S-1	No. 33-83804	10.10

				Incorporated by Reference
Exhibit						Exhibit
Number			Exhibit Description	Form	File No.	Number	Filing Date
	10	.13b	Amendment to Shareholder Agreement among Apollo Group, Inc. and holders of Apollo Group Class B common stock dated May 25, 2001	10-K	No. 000-25232	10.10b	November 28, 2001
	10	.13c	Amendment to Shareholder Agreement among Apollo Group, Inc. and holders of Apollo Group Class B common stock dated May 8, 2007	10-K	No. 000-25232	10.7c	May 22, 2007
	10	.14	Agreement of Purchase and Sale of Assets of Western International University dated June 30, 1995 (without schedules and exhibits)	10-K	No. 000-25232	10.11	October 27, 1995
	10	.15	Purchase and Sale Agreement dated October 10, 1995	10-K	No. 000-25232	10.12	October 25, 1996
	10	.16	Independent Contractor Agreement between Apollo Group, Inc. and Governmental Advocates, Inc. dated June 1, 2006	10-K	No. 000-25232	10.12	May 22, 2007
	10	.17	Promissory Note from Hermes Onetouch, L.L.C. dated December 14, 2001	10-Q	No. 000-25232	10.14	April 12, 2002
	10	.17a	Corrected Promissory Note from Hermes Onetouch, L.L.C. dated December 14, 2001	10-K	No. 000-25232	10.13a	May 22, 2007
	10	.18	Contract for Construction between Apollo Development Corporation and Sundt Construction, Inc. dated June 18, 2004	10-K	No. 000-25232	10.14	May 22, 2007
	10	.19	Separation Agreement between Apollo Group, Inc. and Todd Nelson dated January 11, 2006	8-K	No. 000-25232	10.1	January 12, 2006
	10	.20	Engagement Letter Agreement between Apollo Group, Inc. and FTI Consulting, Inc. dated November 14, 2006*	10-K	No. 000-25232	10.16	May 22, 2007
	10	.21	Consulting Agreement between Apollo Group, Inc. and Brian L. Swartz dated February 13, 2007*	10-K	No. 000-25232	10.17	May 22, 2007
	10	.22	Employment Agreement between Apollo Group, Inc. and Gregory W. Cappelli dated March 31, 2007*	10-K	No. 000-25232	10.18	May 22, 2007
	10	.23	Stock Option Agreement between Apollo Group, Inc. and Gregory W. Cappelli dated June 28, 2007*	10-Q	No. 000-25232	10.10	June 28, 2007
	10	.24	Employment Agreement between Apollo Group, Inc. and Joseph L. D’Amico dated June 5, 2007*	10-Q	No. 000-25232	10.1	June 28, 2007
	10	.25	Amendment to Employment Agreement between Apollo Group, Inc. and Joseph L. D’Amico dated June 5, 2007*	10-Q	No. 000-25232	10.2	June 28, 2007
	10	.26	Employment Agreement between Apollo Group, Inc. and P. Robert Moya dated August 31, 2007*

				Incorporated by Reference
Exhibit						Exhibit
Number			Exhibit Description	Form	File No.	Number	Filing Date
	10	.27	Joint Venture Agreement between Apollo Group, Inc. and Carlyle Ventures Partners III, L.P. dated October 22, 2007
	10	.28	Shareholders’ Agreement among Apollo Group, Inc., Carlyle Ventures Partners III, L.P. and Apollo Global, Inc. dated October 22, 2007
	10	.29	Registration Rights Agreement among Apollo Group, Inc., Carlyle Ventures Partners III, L.P. and Apollo Global, Inc. dated October 22, 2007
	23	.1	Consent of Independent Registered Public Accounting Firm
	31	.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31	.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32	.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted, Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32	.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted, Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Indicates a management contract or compensation plan.

EX-10.26

Exhibit 10.26

EMPLOYMENT AGREEMENT

          THIS AGREEMENT is entered into, effective this 31^st day of August 2007, by and between Apollo Group, Inc. (the “Company”), and P. Robert Moya (the “Executive”) (hereinafter collectively referred to as “the parties”).

          WHEREAS, the Company has determined that it is in the best interests of the Company and its shareholders to employ the Executive as described herein;

          WHEREAS, the Company desires to employ the Executive and to enter into an agreement embodying the terms of such employment; and

          WHEREAS, the Executive desires to enter into this Agreement and to accept such employment;

          NOW, THEREFORE, in consideration of the foregoing and the respective agreements of the parties contained herein, the parties hereby agree as follows:

     1 . Term. The initial term of employment under this Agreement will be for the period commencing on September 1, 2007 (the “Commencement Date”) and ending on August 31, 2011 (the “Initial Term”); provided, however, that thereafter the term of employment under this Agreement will be automatically renewed from year to year, unless either the Company or the Executive will have given written notice to the other at least sixty (60) calendar days prior thereto that the term of employment under this Agreement will not be so renewed (a “Notice of Non-Renewal”).

     2. Employment.

     (a) Position. The Executive will be employed as, and hold the title of, Senior Vice President and General Counsel of the Company, and will have the duties, powers, and responsibilities as are customary for such position. The Executive will be given the authority needed to perform the duties and undertake the responsibilities assigned to his position. The Executive will report to either the Company’s President or the Company’s Chief Executive Officer or to any other individual with equivalent authority.

     (b) Obligations. The Executive shall devote his full business time and attention to the business and affairs of the Company. During the term of this Agreement, the Executive shall not engage in any other employment, service or consulting activity without the prior written approval of the Company’s Board of Directors. The foregoing, however, shall not preclude the Executive from (i) serving on any corporate, civic or charitable boards or committees on which the Executive is serving on the Commencement Date, provided those positions are listed in attached Schedule I, or on which he commences service following the Commencement Date with the prior written approval of the person to whom the Executive reports, (ii) serving as Of Counsel to Quarles & Brady LLP, or (iii) managing personal investments, so long as such clause (i), (ii), and (iii) activities do not interfere, in the judgment of the person to whom the Executive reports, with the performance of the Executive’s responsibilities or otherwise conflict with Executive’s obligations to the Company herein, including the obligations in Section 10.

     3. Base Salary and Bonus.

     (a) Base Salary. The Company agrees to pay or cause to be paid to the Executive an annual base salary at the rate of $400,000, less applicable withholding. This base salary will be subject

to annual review and may be increased from time to time by the Compensation Committee of the Board of Directors (the “Compensation Committee”) upon consideration of such factors as the Executive’s responsibilities, compensation of similar executives within the Company and in other companies, performance of the Executive, and other pertinent factors. The Executive’s annual rate of base salary, as it may be increased from time to time, will be hereinafter referred to as the “Base Salary”. Such Base Salary will be payable in accordance with the Company’s customary practices applicable to its executives.

     (b) Bonus. For each fiscal year completed during the Term, the Executive will be eligible to receive an annual cash bonus (“Annual Bonus”) based upon individual and Company performance goals that are established in good faith by the Compensation Committee and that are reasonable in comparison to the individual and Company performance goals the Compensation Committee sets for the Company’s other executive officers, provided that the Executive’s target Annual Bonus will be no less than 100% of his Base Salary (the “Target Bonus”). The Annual Bonus for each fiscal year shall be paid in accordance with the Company’s customary practices, but in no event more than 75 days following the end of such fiscal year.

     4. Equity Compensation Awards. In addition to the grants below, the Executive will be eligible during the Term for grants of equity compensation awards in accordance with the Company’s policies, as in effect from time to time. The grants below will be issued pursuant and subject to the terms of the Company’s 2000 Stock Incentive Plan, as amended and restated effective as of August 28, 2004 and as subsequently amended to expressly provide for the grant of restricted stock units (the “Incentive Plan”) and to the award agreements evidencing the grants, except that in the event of any conflict between the terms of the Incentive Plan or the award agreements and this Agreement, the terms of this Agreement will control:

     (a) Initial Stock Option Grant. As soon as practicable on or after the Commencement Date, the Compensation Committee shall grant the Executive stock options for 110,000 shares of Class A common stock with an exercise price equal to the closing selling price per share on the grant date and a maximum term of six (6) years assuming continued employment (the “Initial Option Grant”).

     (b) Initial Restricted Stock Unit Award. As soon as practicable on or after the Commencement Date, the Compensation Committee shall grant the Executive restricted stock units covering 17,000 shares of the Company’s Class A common stock (the “Initial RSU Award’). Each restricted stock unit will represent the right to receive one share of such Class A common stock upon the vesting of that unit, subject to the Company’s collection of all applicable withholding taxes.

     (c) Vesting. The Initial Option Grant will vest and become exercisable either (i) in a series of four successive equal annual installments upon the Executive’s completion of each year of employment with the Company over the four-year period measured from the Commencement Date (regardless of the actual grant date); or (ii) as otherwise provided in Sections 8 and 11 of this Agreement. The shares of the Company’s Class A common stock underlying the Initial RSU Award will vest and become immediately issuable, subject to the Company’s collection of the applicable withholding taxes, either: (i) in a series of four successive equal annual installments upon the Executive’s completion of each year of employment with the Company over the four-year period measured from the Commencement Date (regardless of the actual grant date); or (ii) as otherwise provided in Sections 8 and 11 of this Agreement.

     (d) Shares to Be Registered; Stock Certificates. All shares issued to the Executive pursuant to his exercise of the Initial Option Grant and the vesting of the Initial RSU Award will be registered

2

under an appropriate and effective registration statement under the Securities Act of 1933, as amended (the “1933 Act”).

     (e) The Company represents and warrants that this Agreement, the grants described in subsections (a) and (b) above, and the terms of those grants have been authorized and approved by the Compensation Committee.

     5. Employee Benefits. Provided he otherwise satisfies any applicable eligibility requirements for participation, the Executive will be entitled to participate in the welfare, retirement, perquisite, and fringe benefit plans, practices, and programs maintained by the Company and made available to senior executives generally and as may be in effect from time to time. The Executive’s participation in any such plans, practices and programs for which he satisfies the applicable eligibility requirements will be on the same basis and terms as are applicable to senior executives of the Company generally.

     6. Other Benefits.

     (a) Expenses. Subject to applicable Company policies, including (without limitation) the timely submission of appropriate documentation and expense reports, the Executive will be entitled to receive prompt reimbursement of all expenses reasonably incurred by him in connection with the performance of his duties hereunder or for promoting, pursuing, or otherwise furthering the business or interests of the Company.

     (b) Vacation. During the Term, the Executive will be eligible for paid vacation in accordance with the Company’s policies, as may be in effect from time to time, for its senior executives generally; provided, however, that the Executive will be eligible for no less than four weeks of paid vacation per year.

     7. Termination. Except for a Notice of Non-Renewal, as described in Section 1, the Executive’s employment hereunder may only be terminated in accordance with the following terms and conditions:

     (a) Termination by the Company without Cause. The Company will be entitled to terminate the Executive’s employment at any time by delivering a Notice of Termination to the Executive pursuant to Section 7(e); provided, however, that any termination of the Executive’s employment for Cause shall be governed by the provisions of Section 7(b).

     (b) Termination by the Company for Cause.

          (i) The Company may terminate the Executive’s employment hereunder for “Cause” (as defined below) by delivering to him a Notice of Termination. For purposes of the foregoing, any of the following shall constitute grounds for terminating the Executive’s employment for Cause: (A) the Executive’s pleading “guilty” or “no contest” to, or his conviction of, a felony or any crime involving moral turpitude, (B) his commission of any act of fraud or any act of personal dishonesty involving the property or assets of the Company intended to result in material financial enrichment to the Executive or material injury or harm to the Company, including the Company’s reputation, (C) a material breach by the Executive of one or more of his obligations under Section 9 of this Agreement or his Proprietary Information and Inventions Agreement with the Company, (D) a material breach by the Executive of any of his other obligations under this Agreement or any other agreement with the Company, (E) the Executive’s commission of a material violation of Company policy which would result in an employment termination if committed by any other employee of the

3

Company or his gross misconduct, (F) the Executive’s material dereliction of the major duties, functions and responsibilities of his executive position (other than a failure resulting from the Executive’s incapacity due to physical or mental illness), (G) a material breach by the Executive of any of the Executive’s fiduciary obligations as an officer of the Company, (H) the Executive’s willful and knowing participation in the preparation or release of false or materially misleading financial statements relating to the Company’s operations and financial condition or his willful and knowing submission of any false or erroneous certification required of him under the Sarbanes-Oxley Act of 2002 or any securities exchange on which shares of the Company’s Class A common stock are at the time listed for trading, or (I) the suspension or revocation of the Executive’s license to practice law. However, prior to any termination of the Executive’s employment for Cause based on any of the reasons specified in clauses (C) through (F) and the delivery of a Notice of Termination in connection therewith, the Company shall give written notice to the Executive of the actions or omissions deemed to constitute the grounds for such a termination for Cause, and the Executive shall have a period of not less than sixty (60) calendar days after the receipt of such notice in which to cure the specified default in his performance and thereby avoid a Notice of Termination under this subsection (b)(i).

          (ii) In the event the Executive is provided with a Notice of Termination under subsection (b)(i), the Notice of Termination shall specify a Termination Date that is no earlier than the third business day following the date of the Notice of Termination, and the Executive will have three (3) business days following the date of such Notice of Termination to submit a written request to the Board for a meeting to review the circumstances of his termination. If the Executive timely submits such a written request to the Board, the Board or a committee of the Board shall set a meeting whereby the Executive, together with his counsel, shall be permitted to present any mitigating circumstances or other information as to why he should not be terminated for Cause, and the Executive’s Termination Date shall be delayed until such meeting has occurred. Such meeting will be held, at the Company’s option, either on a mutually agreeable date prior to the Termination Date specified in the Notice of Termination or on a mutually agreeable date within fifteen (15) calendar days after the Executive’s timely written notice to the Company requesting such a meeting. Within five (5) business days after such meeting, the Board or committee of the Board, as applicable, shall deliver written notice to the Executive of its final determination and, if the termination decision is upheld, the final actual Termination Date. During the period following the date of the Notice of Termination until the Termination Date or other resolution of the matter, the Company shall have the option to place the Executive on an unpaid leave of absence. The rights under this subsection will not be deemed to prejudice the Executive’s other rights and remedies in any way or give rise to any waiver, estoppel, or other defense or bar. Without limiting the foregoing sentence and for purposes of clarification, the failure by the Executive to request a meeting under this subsection, to participate in a meeting that has been requested, or to present any evidence or argument will not prevent the Executive from making any claim against the Company, from seeking any legal or equitable remedy, or from putting forward any evidence or argument at any judicial or arbitral hearing.

     (c) Termination by the Executive. The Executive may terminate his employment hereunder for “Good Reason” by delivering to the Company (1) a Preliminary Notice of Good Reason (as defined below) no later than one hundred and twenty (120) calendar days following the act or omission which the Executive sets forth in such notice as grounds for a Good Reason termination, and (2) not earlier than fourteen (14) calendar days after the delivery of such Preliminary Notice or (if later) the third business day following the Company’s failure to take appropriate remedial action within the applicable sixty (60)-day cure period provided below to the Company following the receipt of such the Preliminary Notice, a Notice of Termination. For purposes of this Agreement, “Good Reason” means:

          (i) a material reduction in the scope of the Executive’s duties, responsibilities or authority;

4

          (ii) the repeated assignment to the Executive of duties materially inconsistent with the Executive’s positions, duties, authority or responsibilities, or a materially adverse change in Executive’s reporting requirements as set forth in Section 2(a) hereof or an adverse change to his title set forth in Section 2(a) hereof: provided however, that none of the following shall constitute Good Reason: (A) the occasional assignment of duties that are inconsistent with Section 2(a) hereof, or (B) a change in the Executive’s reporting requirements so that he is required to report to a person with equivalent authority of the Company’s President or Chief Executive Officer but without such title;

          (iii) a relocation of the Executive’s principal place of employment other than in Phoenix, Arizona; provided, however that travel to other locations as reasonably required to carry out the Executive’s duties and responsibilities hereunder shall not be a basis for a termination for Good Reason; or

          (iv) a material breach by the Company of any of its obligations under this Agreement.

     In no event will any acts or omissions of the Company which are not the result of bad faith and which are cured within sixty (60) days after receipt of written notice from the Executive identifying in reasonable detail the acts or omissions constituting “Good Reason” (a “Preliminary Notice of Good Reason”) be deemed to constitute grounds for a Good Reason resignation. A Preliminary Notice of Good Reason will not, by itself, constitute a Notice of Termination.

     A ten percent (10%) or less aggregate reduction in the Executive’s base salary and Target Bonus shall not constitute Good Reason if substantially all of the other executive officers of the Company are subject to the same aggregate reduction to their base salary and target bonuses.

     (d) Termination due to the Executive’s Death or Disability. This Agreement will terminate upon the death of the Executive. The Company may terminate the Executive’s employment hereunder if he is unable to perform, with or without reasonable accommodation, the principal duties and responsibilities of his position with the Company for a period of six (6) consecutive months or more by reason of any physical or mental injury or impairment; provided, however, that in the event the Executive is at the time covered under any long-term disability benefit program in effect for the Company’s executive officers or employees, such termination of the Executive’s employment shall not occur prior to the date he first becomes eligible to receive benefits under such program. The termination of the Executive’s employment under such circumstances shall, for purposes of this Agreement, constitute a termination for “Disability.”

     (e) Notice of Termination. Any purported termination for Cause by the Company or for Good Reason by the Executive will be communicated by a written Notice of Termination to the other at least three (3) business days prior to the Termination Date (as defined below). For purposes of this Agreement, a “Notice of Termination” will mean a notice which indicates the specific termination provision in this Agreement relied upon and will, with respect to a termination for Cause or Good Reason, set forth in reasonable detail the facts and circumstances claimed to provide a basis for such termination of the Executive’s employment under the provision so indicated. Any termination by the Company under this Section 7 other than for Cause or by the Executive without Good Reason will be communicated by a written Notice of Termination to the other party fourteen (14) calendar days prior to the Termination Date. However, the Company may elect to pay the Executive in lieu of fourteen (14) calendar days’ written notice. For purposes of this Agreement, no such purported termination of employment pursuant to this Section 7 will be effective without such Notice of Termination.

5

     (f) Termination Date. “Termination Date” will mean in the case of the Executive’s death, the date of death; in the case of non-renewal of the Agreement pursuant to Section 1, the date the Term of the Agreement expires; and in all other cases, the date specified in the Notice of Termination.

     8. Compensation Upon Termination.

     (a) Except as provided further in this Section 8(a), if the Executive’s employment is terminated: (i) by the Company for Cause; (ii) by reason of the Executive’s death or Disability; (iii) pursuant to a Notice of Non-Renewal delivered by the Executive; or (iv) by the Executive by delivery of a written notice of resignation without Good Reason, the Company’s sole obligations hereunder will be to pay the Executive or his estate on the Termination Date the following amounts earned hereunder but not paid as of the Termination Date: (i) Base Salary, (ii) reimbursement for any and all monies advanced or expenses incurred pursuant to Section 6(a) through the Termination Date, provided the Executive has submitted appropriate documentation for such expenses, and (iii) the amount of the Executive’s accrued but unpaid vacation time (together, these amounts will be referred to as the “Accrued Obligations”). In addition to the Accrued Obligations, in the event the Executive’s employment terminates by reason of the Executive’s death or Disability or pursuant to a Notice of Non-Renewal delivered by the Executive, the Executive or his estate will be paid his Target Bonus, pro-rated for his actual period of service during the fiscal year in which such termination of employment occurs. Furthermore, if the Executive’s employment terminates as a result of his death or Disability, then any unvested stock options, restricted stock, restricted stock units, or other equity granted to the Executive that would have otherwise been vested on the date of such termination of employment had the vesting schedule for each of those grants been in the form of successive equal monthly installments over the applicable vesting period will immediately vest. The Executive’s entitlement to any other benefits will be determined in accordance with the Company’s employee benefit plans then in effect.

     (b) If the Executive’s employment is terminated: (i) by the Company for any reason other than for Cause; (ii) by the Executive for Good Reason; or (iii) pursuant to a Notice of Non-Renewal delivered by the Company, the Executive will, in addition to the Accrued Obligations, be entitled to the following compensation and benefits from the Company, provided and only if he (i) executes and delivers to the Company a general release (substantially in the form of attached Exhibit A) which becomes effective and enforceable in accordance with applicable law and (ii) complies with the restrictive covenants set forth in Section 10:

          (i) an amount equal to the sum of the Executive’s Base Salary and Target Bonus at the time of the Notice of Termination, to be paid in equal increments, in accordance with the Company’s normal payroll practices, over the one-year measured from the Termination Date;

          (ii) accelerated vesting of the Initial RSU Award and the Initial Option Grant to the extent of the portion of such grant which would have vested had the Executive completed an additional twelve (12) months of employment with the Company prior to the Termination Date;

          (iii) provided the Executive and/or his dependents are eligible and timely elect to continue their healthcare coverage under the Company’s group health plan pursuant to their rights under COBRA, continued coverage under such plan at the Company’s expense until the earliest of (A) the end of the twelve (12)-month period measured from the Termination Date, (B) the date that the Executive and/or his eligible dependents are no longer eligible for COBRA coverage, and (C) the date that the Executive becomes eligible for such coverage under the health plan of any new employer (the Executive agrees to provide the Company with written notice of such eligibility within ten calendar days); and

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          (iv) the Executive’s entitlement to any other benefits will be determined in accordance with the Company’s employee benefit plans then in effect.

     (c) The Executive shall have the right to resign, for any reason or no reason, at any time within the thirty (30) day period beginning six (6) months after the closing of a Change in Control (as defined in Section 11) and to receive, in connection with such resignation, the same severance benefits to which he would be entitled under Section 8(b) above had such resignation been for Good Reason; provided, however, that the Executive’s entitlement to severance benefits under this Section 8(c) shall be conditioned upon (i) his execution and delivery to the Company of a general release (substantially in the form of attached Exhibit A) which becomes effective and enforceable in accordance with applicable law and (ii) his compliance with the restrictive covenants set forth in Section 10 of this Agreement.

     (d) The Executive will not be required to mitigate the amount of any payment provided for in this Section 8 by seeking other employment or otherwise, and no such payment or benefit will be eliminated, offset or reduced by the amount of any compensation provided to the Executive in any subsequent employment.

     9. Confidentiality.

     (a) The Executive hereby acknowledges that the Company may, from time to time during the Term, disclose to the Executive confidential information pertaining to the Company’s business, strategic plans, technology or financial affairs. All information, data and know-how, whether or not in writing, of a private or confidential nature concerning the Company’s trade secrets, processes, systems, marketing strategies and future marketing plans, student enrollment lists, prospective course offerings, finances and financial reports, employee and faculty member information and other organizational information (collectively, “Proprietary Information”) is and shall remain the sole and exclusive property of the Company and shall not be used or disclosed by the Executive except to the extent necessary to perform his duties and responsibilities under this Agreement. All tangible manifestations of such Proprietary Information (whether written, printed or otherwise reproduced) shall be returned by the Executive upon the termination of his employment hereunder, and the Executive shall not retain any copies or excerpts of the returned items. The foregoing restrictions on the use, disclosure and disposition of the Company’s Proprietary Information shall also apply to the Executive’s use, disclosure and disposition of any confidential information relating to the business or affairs of the Company’s faculty, students and employees.

     (b) The Executive shall on the Commencement Date execute and deliver to the Company the standard form Proprietary Information and Inventions Agreement, as attached as Exhibit B to this Agreement. The Executive shall, throughout the term of this Agreement and thereafter, remain subject to the terms and conditions of such Proprietary Information and Inventions Agreement.

     (c) The Executive shall not, in connection with his duties and responsibilities hereunder, improperly use or disclose any trade secrets or proprietary and confidential information of any former employer or other person or entity.

     10. Restrictive Covenants. At all times during the Executive’s employment with the Company, and for a period of one (1) year after the termination of his employment with the Company, regardless of the reason or cause for such termination, the Executive shall comply with the following restrictions:

     (a) The Executive shall not directly or indirectly encourage or solicit any employee, faculty member, consultant or independent contractor to leave the employment or service of the Company (or

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any affiliated company) for any reason or interfere in any other manner with any employment or service relationships at the time existing between the Company (or any affiliated company) and its employees, faculty members, consultants and independent contractors.

     (b) The Executive shall not directly or indirectly solicit any vendor, supplier, licensor, licensee or other business affiliate of the Company (or any affiliated company) with respect to products or services competitive with those offered by the Company or directly or indirectly induce any such person to terminate its existing business relationship with the Company (or affiliated company) or interfere in any other manner with any existing business relationship between the Company (or any affiliated company) and any such vendor, supplier, licensor, licensee or other business affiliate.

     (c) The Executive shall not, on his own or as an employee, agent, promoter, consultant, advisor, independent contractor, general partner, officer, director, investor, lender or guarantor or in any other capacity, directly or indirectly:

          (i) conduct, engage in, be connected with, have any interest in, or assist any person or entity engaged in, any business, whether in the United States, any possession of the United States or any foreign country or territory, that competes with any of the businesses or programs conducted by the Company in the education industry during the period of his employment with the Company (hereafter collectively referred to as the “Businesses”); or

          (ii) permit his name to be used in connection with a business which is competitive or substantially similar to the Businesses.

     Notwithstanding the foregoing the Executive may own, directly or indirectly, solely as an investment, up to one percent (1%) of any class of publicly traded securities of any business that is competitive or substantially similar to the Businesses shall not be deemed a breach of his restrictive covenant under this Section 10(c).

     11. Change in Control. For purposes of this Agreement, “Change in Control” shall have the same meaning assigned to such term under the Incentive Plan, and upon the occurrence of such Change in Control, any unvested stock options, restricted stock, restricted stock units, or other equity granted to the Executive and outstanding at that time shall vest on an accelerated basis to the same extent as all other outstanding awards under the Incentive Plan held by individuals who are executive officers of the Company at that time.

     12. Benefit Limitation. In the event it should be determined (in the manner set forth below) that any payment or distribution of any type to or for the benefit of the Executive made by the Company, any of its affiliates, any Person who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company’s assets (within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations thereunder—a “Change in Control Event”) or any affiliate of such Person, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Total Payments”), would otherwise exceed the amount that could be received by the Executive without the imposition of an excise tax under Section 4999 of the Code (the “Safe Harbor Amount”), then the Total Payments shall be reduced to the extent, and only to the extent, necessary to assure that their aggregate present value, as determined in accordance the applicable provisions of Code Section 280G and the regulations thereunder, does not exceed the greater of the following dollar amounts (the “Benefit Limit”):

                    (A) The Safe Harbor Amount, or

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                    (B) the greatest after-tax amount payable to the Executive after taking into account any excise tax imposed under Code Section 4999 on the Total Payments.

All determinations under this Section 12 shall be made by an independent registered public accounting firm selected by the Company from among the largest four accounting firms in the United States (the “Accounting Firm”). However, in determining whether such Benefit Limit is exceeded, the Accounting Firm shall make a reasonable determination of the value to be assigned to the restrictive covenants in effect for the Executive pursuant to Section 10 of the Agreement, and the amount of his potential parachute payment under Code Section 280G shall reduced by the value of those restrictive covenants to the extent consistent with Code Section 280G and the regulations thereunder.

     13. Section 409A. Certain payments contemplated by this Agreement may be “deferred compensation” for purposes of Section 409A of the Code. Accordingly, the following provisions shall be in effect for purposes of avoiding or mitigating any adverse tax consequences to the Executive under Code Section 409A.

     (a) It is the intent of the parties that the provisions of this Agreement comply with all applicable requirements of Code Section 409A. Accordingly, to the extent any provisions of this Agreement would otherwise contravene one or more requirements or limitations of Code Section 409A, then the Company and the Executive shall, within the remedial amendment period provided under the regulations issued under Code Section 409A, effect through mutual agreement the appropriate amendments to those provisions which are necessary in order to bring the provisions of this Agreement into compliance with Section 409A: provided such amendments shall not reduce the dollar amount of any such item of deferred compensation or adversely affect the vesting provisions applicable to such item or otherwise reduce the present value of that item. If any federal legislation is enacted during the term of this Agreement which imposes a dollar limit on deferred compensation, then the Executive will co-operate with the Company in restructuring any items of compensation under this Agreement that are deemed to be deferred compensation subject to such limitation; provided such restructuring shall not reduce the dollar amount of any such item or adversely affect the vesting provisions applicable to such item or otherwise reduce the present value of that item.

     (b) Notwithstanding any provision to the contrary in this Agreement, no payments or benefits to which the Executive becomes entitled under Section 8 of this Agreement shall be made or paid to the Executive prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of his “separation from service” with the Company (as such term is defined in the final regulations under Section 409A) or (ii) the date of his death, if the Executive is deemed at the time of such separation from service a “key employee” within the meaning of that term under Code Section 416(i) and such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2). Upon the expiration of the applicable Code Section 409A(a)(2) deferral period, all payments deferred pursuant to this subsection 13(b) shall be paid in a lump sum to the Executive, and any remaining payments due under this Agreement shall be paid in accordance with the normal payment dates specified for them herein.

     14. Indemnification. The Executive shall be covered by any policy of liability insurance which the Company maintains during the Term for its officers and directors (“D&O Insurance”), to the maximum extent of such coverage provided any other executive officer of the Company. The Company agrees to provide the Executive with information about all D&O Insurance maintained during the Term, including proof that such insurance is in place and the terms of coverage, upon the Executive’s reasonable request. In addition to any rights the Executive may have under such D&O Insurance, applicable law, or the articles of incorporation and bylaws of the Company and except as may be

9

prohibited by applicable law, the Company agrees to indemnify, defend, and hold the Executive harmless from and against any and all claims and/or liability arising from, as a result of, or in connection with the Executive’s employment by the Company or any outside appointments and offices held at the Company’s request, except to the extent such claims or liability are attributable to the Executive’s gross negligence or willful misconduct.

     15. Injunctive Relief. The Executive expressly agrees that the covenants set forth in Sections 9 and 10 of this Agreement are reasonable and necessary to protect the Company and its legitimate business interests, and to prevent the unauthorized dissemination of Proprietary Information to competitors of the Company. The Executive also agrees that the Company will be irreparably harmed and that damages alone cannot adequately compensate the Company if there is a violation of Section 9 or 10 of this Agreement by the Executive, and that injunctive relief against the Executive is essential for the protection of the Company. Therefore, in the event of any such breach, it is agreed that, in addition to any other remedies available, the Company shall be entitled as a matter of right to injunctive relief in any court of competent jurisdiction, plus attorneys’ fees actually incurred for the securing of such relief.

     16. Survival of Certain Provisions. The provisions of Sections 8, 9, 10, 11 through 21, and 24 will survive any termination of this Agreement.

     17. Withholdings. Any compensation and/or benefits provided to the Executive by the Company shall be subject to the Company’s collection of all applicable payroll deductions and applicable withholding and payroll taxes.

     18. Successors and Assigns. This Agreement will be binding upon and will inure to the benefit of the Company, its successors and assigns, and the Company will require any successor or assign to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. The term “the Company” as used herein will include any such successors and assigns to the Company’s business and/or assets. The term “successors and assigns” as used herein will mean a corporation or other entity acquiring or otherwise succeeding to, directly or indirectly, all or substantially all the assets and business of the Company (including this Agreement) whether by operation of law or otherwise. This Agreement will inure to the benefit of and be enforceable by the Executive’s legal personal representative.

     19. Arbitration. Except as otherwise provided in Section 15, any controversy or claim between the Company or any of its affiliates and the Executive arising out of or relating to this Agreement or its termination or any other dispute between the parties, whether arising in tort, contract, or pursuant to a statute, regulation, or ordinance now in existence or which may in the future be enacted or recognized will be settled and determined by a single arbitrator whose award will be accepted as final and binding upon the parties. The arbitration shall be conducted in Phoenix, Arizona and in accordance with the American Arbitration Association (“AAA”) Employment Arbitration Rules in effect at the time such arbitration is properly initiated. To the extent that any of the AAA rules or anything in the Agreement conflicts with any arbitration procedures required by applicable law, the arbitration procedures required by applicable law shall govern. The costs of the arbitration, including administrative fees and fees charged by the arbitrator, will be borne by the Company. Each party will bear its or his own travel expenses and attorneys’ fees: provided, however that the arbitrator (i) shall award attorneys’ fees to the Executive with respect to any claim for breach of this Agreement on which he is the prevailing party and may award attorneys’ fees to the Executive as otherwise allowed by law and (ii) shall award attorneys’ fees to the Company with respect to any claim brought under Section 15 on which it is the prevailing party and may award attorneys’ fees to the Company with respect to any other claim on which it is the prevailing party and it is determined by the arbitrator that such claim by

10

the Executive was frivolous in that it presented no colorable arguments for recovery; but the maximum amount of attorneys’ fees that may be awarded to the Company other than with respect to any claim brought under Section 15 shall not exceed one hundred thousand dollars ($100,000). The arbitration shall be instead of any civil litigation; and the Executive hereby waives any right to a jury trial. The arbitrator’s decision shall be final and binding to the fullest extent permitted by law and enforceable by any court having jurisdiction thereof. In any situation in which emergency injunctive relief may be necessary, either party may seek such relief from a court until such time as the arbitrator is able to address the matter covered by this Section 19. Both parties agree that the state and federal courts located in Phoenix, Arizona, will be the sole venue for any such action involving emergency injunctive relief, and the parties submit to personal jurisdiction in these courts for this purpose. Judgment upon any award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

     20. Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement (including the Notice of Termination) will be in writing and will be deemed to have been given when personally delivered or on the third business day following mailing if sent by registered or certified mail, return receipt requested, postage prepaid, or upon receipt if overnight delivery service is used, addressed as follows:

To the Executive:

P. Robert Moya
5119 E. Desert Park Lane
Paradise Valley, Arizona 85253

To the Company:

Apollo Group, Inc
4615 East Elwood Street
Phoenix, AZ 85040
Attention: Chief Financial Officer

With a copy to:

Peter F. Donati
Levenfeld Pearlstein, LLC
2 N. LaSalle Street
Chicago, Illinois 60602

     21. Miscellaneous. No provision of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing and signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreement or representation, oral or otherwise, express or implied, with respect to the subject matter hereof has been made by either party which is not expressly set forth in this Agreement.

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     22. Counterparts. This Agreement may be executed in several counterparts, each of which will be deemed an original and all of which will constitute but one and the same instrument. An electronic facsimile of a signature, when delivered by the signing party to the non-signing party, will have the same force and effect as an original.

     23. Governing Law. This Agreement will be governed by and construed and enforced in accordance with the laws of the State of Arizona without giving effect to the conflict of law principles thereof.

     24. Severability. If any provision of this Agreement as applied to any party or to any circumstance should be adjudged by a court of competent jurisdiction (or determined by the arbitrator) to be void or unenforceable for any reason, the invalidity of that provision shall in no way affect (to the maximum extent permissible by law) the application of such provision under circumstances different from those adjudicated by the court or determined by the arbitrator, the application of any other provision of this Agreement, or the enforceability or invalidity of this Agreement as a whole. Should any provision of this Agreement become or be deemed invalid, illegal or unenforceable in any jurisdiction by reason of the scope, extent or duration of its coverage, then such provision shall be deemed amended to the extent necessary to conform to applicable law so as to be valid and enforceable or, if such provision cannot be so amended without materially altering the intention of the parties, then such provision will be stricken, and the remainder of this Agreement shall continue in full force and effect.

     25. Entire Agreement. This Agreement, together with the Proprietary Information and Inventions Agreement referred to in Section 9 and the documentation for the equity grants referred to in Section 4, shall constitute the entire agreement between the parties hereto with respect to the subject matter hereof and shall supersede all prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof.

          IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Executive has executed this Agreement as of the day and year first above written.

P. ROBERT MOYA	THE APOLLO GROUP, INC.
/s/ P. Robert Moya	By:	/s/ Joseph L. D’Amico
	Its:	Executive VP and CFO

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EXHIBIT A

FORM OF GENERAL RELEASE

GENERAL RELEASE

           This AGREEMENT is made as of                                          , 200                     , by and between P. Robert Moya (“Executive”), and Apollo Group, Inc. (the “Company”).

          In consideration for the severance benefits offered by the Company to Executive pursuant to Section 8 of his Employment Agreement with the Company dated                     , 2007 (the “Employment Agreement”), Executive agree as follows:

     1. Termination of Employment. Executive acknowledges that his employment with the Company is terminated effective                      (the “Termination Date”), and he agrees that he will not apply for or seek re-employment with the Company, its parent companies, subsidiaries and affiliates after that date. Executive agrees that he has received and reviewed his final paycheck and he has received all wages and accrued but unpaid vacation pay earned by him through the Termination Date.

     2. Waiver and Release.

          (a) Except as set forth in Section 2(b), which identifies claims expressly excluded from this release, Executive hereby releases the Company, all affiliated companies, and their respective officers, directors, agents, employees, stockholders, successors and assigns from any and all claims, liabilities, demands, causes of action, costs, expenses, attorney fees, damages, indemnities and obligations of every kind and nature, in law, equity or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, arising from or relating to Executive’s employment with the Company and the termination of that employment, including (without limitation): claims of wrongful discharge, emotional distress, defamation, fraud, breach of contract, breach of the covenant of good faith and fair dealing, discrimination claims based on sex, age, race, national origin, disability or any other basis under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), the Americans with Disability Act, the Employee Retirement Income Security Act, as amended, the Equal Pay Act of 1963, as amended, and any similar law of any state or governmental entity, any contract claims, tort claims and wage or benefit claims, including (without limitation) claims for salary, bonuses, commissions, equity awards (including stock grants, stock options and restricted stock units), vesting acceleration, vacation pay, fringe benefits, severance pay or any other form of compensation.

          (b) The only claims that Executive is not waiving and releasing under this Agreement are claims he may have for (1) unemployment, state disability, worker’s compensation, and/or paid family leave insurance benefits pursuant to the terms of applicable state law; (2) continuation of existing participation in Company-sponsored group health benefit plans under the federal law known as “COBRA” and/or under an applicable state law counterpart(s); (3) any benefits entitlements that are vested and unpaid as of his termination date pursuant to the terms of a Company- sponsored benefit plan; (4) any benefits to which he is entitled pursuant to Section 8 of the Employment Agreement or his rights to indemnification pursuant to Section 14 of the Employment Agreement, (5) violation of any federal state or local statutory and/or public policy right or entitlement that, by applicable law, is not waivable; and (6) any wrongful act or omission occurring after the date he executes this Agreement. In addition, nothing in this Agreement prevents or prohibits Executive from filing a claim with the Equal Employment Opportunity Commission (EEOC) or any other government agency that is responsible for enforcing a law on behalf of the government and deems such claims not waivable. However, because Executive is hereby waiving and releasing all claims “for monetary damages and any other form of personal relief (per Section 2(a) above), he may only seek and receive non-personal forms of relief from the EEOC and similar government agencies.

          (c) Executive represents that he has not filed any complaints, charges, claims, grievances, or lawsuits against the Company and/or any related persons with any local, state or federal agency or court, or with any other forum.

          (d) Executive acknowledges that he may discover facts different from or in addition to those he now knows or believes to be true with respect to the claims, demands, causes of action, obligations, damages, and liabilities of any nature whatsoever that are the subject of this Agreement, and he expressly agrees to assume the risk of the possible discovery of additional or different facts, and agrees that this Agreement shall be and remain in effect in all respects regardless of such additional or different facts. Executive expressly acknowledges that this Agreement is intended to include, and does include in its effect, without limitation, all claims which Executive does not know or suspect to exist in his favor against the Company and/or any related persons at the moment of execution thereof, and that this Agreement expressly contemplates extinguishing all such claims.

          (e) Executive understands and agrees that the Company has no obligation to provide him with any severance benefits under the Employment Agreement unless he executes this Agreement. Executive also understands that he has received or will receive, regardless of the execution of this Agreement, all wages owed to him, together with any accrued but unpaid vacation pay, less applicable withholdings and deductions, earned through the Termination Date.

          (f) This Agreement is binding on Executive, his heirs, legal representatives and assigns.

     3. Cooperation. Executive agrees reasonably to cooperate with and assist the Company and its counsel at any time and in any manner reasonably required by the Company or its counsel (with due regard for the Executive’s other commitments if he has obtained other employment) in connection with any litigation or other legal process affecting the Company or in answering questions concerning any other matter of which Executive has knowledge as result of his employment (other than any litigation with respect to this Agreement). In the event of such requested cooperation, the Company shall reimburse Executive for his reasonable out-of-pocket expenses.

     4. Entire Agreement. This Agreement and the Employment Agreement constitute the entire understanding and agreement between Executive and the Company in connection with the matters described, and replaces and cancels all previous agreements and commitments, whether spoken or written, with respect to such matters. Nothing in this Agreement supersedes or replaces any of Executive’s obligations under his Employment Agreement that survive termination, including, but not limited to (i) his (and the Company’s) agreement to arbitrate disputes, (ii) his restrictive covenants under Section 10 of the Employment Agreement and (iii) his obligations under Section 9 of the Employment Agreement, his existing Proprietary Information Inventions Agreement with the Company and any other obligations not to use or disclose Company confidential and/or proprietary information.

     5. Modification in Writing. No oral agreement, statement, promise, commitment or representation shall alter or terminate the provisions of this Agreement. This Agreement cannot be changed or modified except by written agreement signed by Executive and authorized representatives of the Company.

     6. Governing Law: Jurisdiction. This Agreement shall be governed by and enforced in accordance with the laws of the State of Arizona.

     7. Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such

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invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

     8. No Admission of Liability. This Agreement does not constitute an admission of any unlawful discriminatory acts or liability of any kind by the Company or anyone acting under their supervision or on their behalf. This Agreement may not be used or introduced as evidence in any legal proceeding, except to enforce or challenge its terms.

     9. Acknowledgements. Executive is advised to consult with an attorney of his choice prior to executing this Agreement. By signing below, Executive acknowledges and certifies that he:

          (a) has read and understands all of the terms of this Agreement and is not relying on any representations or statements, written or oral, not set forth in this Agreement;

          (b) has been provided a consideration period of twenty-one calendar days within which to decide whether he will execute this Agreement and that no one hurried him into executing this Agreement;

          (c) is signing this Agreement knowingly and voluntarily; and

          (d) has the right to revoke this Agreement within seven (7) days after signing it, by providing written notice of revocation via certified mail to the Company to the address specified in the Employment Agreement. Executive’s written notice of revocation must be postmarked on or before the end of the eighth (8th) calendar day after he has timely signed this Agreement. This deadline will be extended to the next business day should it fall on a Saturday, Sunday or holiday recognized by the U.S. Postal Service.

     Because of the revocation period, the Company’s obligations under this Agreement shall not become effective or enforceable until the eighth (8th) calendar day after the date Executive signs this Agreement provided he has delivered it to the Company without modification and not revoked it (the “Effective Date”).

I HAVE READ, UNDERSTAND AND VOLUNTARILY ACCEPT AND AGREE TO THE ABOVE TERMS

P. Robert Moya

                                                            
Signature Date:                                         , 20                    

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EXHIBIT B

FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

PROPRIETARY INFORMATION AND INVENTIONS
AGREEMENT

This Proprietary Information and Inventions Agreement (“PIIA”) confirms certain terms of my employment with The Apollo Group (the “Company”), is a condition of my employment, and is a material part of the consideration for my employment by the Company. The headings contained in this PIIA are for convenience only, have no legal significance, and are not intended to change or limit this PIIA in any matter whatsoever.

     A. Definitions

          1. The “Company”

          As used in this PIIA, the “Company” refers to The Apollo Group, each of its subsidiaries, affiliated and parent companies, and successors and assigns. I recognize and agree that my obligations under this PIIA and all terms of this PIIA apply to me regardless of whether I am employed by or provide services to The Apollo Group, any subsidiary, affiliate or parent companies of The Apollo Group.

          2. “Proprietary Information”

          I understand that the Company possesses and will possess Proprietary Information which is important to its business. For purposes of this PIIA, “Proprietary Information” is information that was or will be developed, created, or discovered by or on behalf of the Company, or which became or will become known by, or was or is conveyed to the Company, which has commercial value in the Company’s business. “Proprietary Information” includes information concerning the organization, business and finances of the Company or of any third party which the Company is under an obligation to keep confidential that is maintained by the Company as confidential, including (without limitation):

          a. the Company’s Lead List which is comprised of prospective students who meet the admission requirements of the Company;

          b. data and information on current and prospective corporate accounts, including, but not limited to, the identity of the corporate accounts, the decision makers or decision influencers, the buying criteria of the accounts and programs for those accounts;

          c. the management process, training materials, scripts, programs and preferred responses to features and benefits provided to Admission Counselors;

          d. the certification training materials and processes for the certification of the Company’s Student Advisors (known as the ACU online learning system program), including, but not limited to, the tests taken, materials provided and course work;

          e. the information and data contained in the Company’s enrollment data system, all monthly enrollment reports;

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          f. salary, terms of employment, tenure and performance review information on the faculty members and other employees of the Company, all business models and financial information, data and materials of the Company not otherwise available to the general public through the Company’s Annual Report or otherwise;

          g. all market research or works for hire materials, including, but not limited to, industry data, demographics, company profiles and/or specific consumer behavior information, all monthly financial, statistical and operational information and reports including but not limited to the “Yellow Book”, and all other information concerning enrollment by campus, profit and loss per campus and the terms of any lease;

          h. all monthly financial statements, including, but not limited to, the “Board Book”;

          i. all internally developed source code, including, but not limited to, modifications to existing source codes for student information systems (such as Galaxy, Campus Tracking, OSIRIS and eCampus), academic systems (such as rEsource and OnLine Learning System (OLS), proprietary modifications to packaged applications (such as PeopleSoft, Oracle Financials and ADP HRizon) and all future internally developed source code.

          I understand and agree that my employment creates a relationship of confidence and trust between the Company and me with respect to Proprietary Information.

          3. “Company Documents and Materials”

          I understand that the Company possesses or will possess “Company Documents and Materials” which are important to its business. For purposes of this PIIA, “Company Documents and Materials” are documents or other media or tangible items that contain or embody Proprietary Information or any other information concerning the business, operations or plans of the Company, whether such documents, media or items have been prepared by me or by others.

          “Company Documents and Materials” include (without limitation) blueprints, drawings, photographs, charts, graphs, notebooks, customer lists, computer disks, tapes, computer hard drives, floppy disks, CD ROMS, or printouts, sound recordings and other printed, typewritten or handwritten documents, sample products, prototypes and models and any information recorded in any other form whatsoever. “Company Documents and Materials” also include copies of any of the foregoing.

     B. Assignment of Rights

          All Proprietary Information and all patents, patent rights, copyrights, trade secret rights, trademark rights and other rights (including, without limitation, intellectual property rights) anywhere in the world in connection therewith is and shall be the sole property of the Company. I hereby assign to the Company any and all rights, title and interest I may have or acquire in such Proprietary Information.

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          At all times, both during my employment by the Company and after its termination, I will keep in confidence and trust and will not use or disclose any Proprietary Information or anything relating to it without the prior written consent of an officer of the Company, except as may be necessary in the ordinary course of performing my duties to the Company.

     C. Maintenance and Return of Company Documents and Materials

          I agree to make and maintain adequate and current written records, in a form specified by the Company, of all inventions, trade secrets and works of authorship assigned or to be assigned to the Company pursuant to this PIIA. All Company Documents and Materials are and shall be the sole property of the Company.

          I agree that during my employment by the Company, I will not remove any Company Documents and Materials from the business premises of the Company or deliver any Company Documents and Materials to any person or entity outside the Company, except in connection with performing the duties of my employment. I further agree that, immediately upon the termination of my employment by me or by the Company for any reason, or during my employment if so requested by the Company, I will return all Company Documents and Materials, apparatus, equipment and other physical property, or any reproduction of such property, excepting only (i) my personal copies of records relating to my compensation; (ii) my personal copies of any materials previously distributed generally to stockholders of the Company; and (iii) my copy of this PIIA.

     D. Disclosure of Inventions to the Company

          I will promptly disclose in writing to the Chair of the Company’s Board of Directors or to such other person designated by the Board all “Inventions,” which includes (without limitation) all software programs or subroutines, source or object code, algorithms, improvements, inventions, works of authorship, trade secrets, technology, designs, formulas, ideas, processes, techniques, know-how and data, whether or not patentable, made or discovered or conceived or reduced to practice or developed by me, either alone or jointly with others, during the term of my employment.

          I will also disclose to the Chair of the Company’s Board of Directors or to such other person designated by the Board all Inventions made, discovered, conceived, reduced to practice, or developed by me within six (6) months after the termination of my employment with the Company which resulted, in whole or in part, from my prior employment by the Company. Such disclosures shall be received by the Company in confidence (to the extent such Inventions are not assigned to the Company pursuant to Section (E) below) and do not extend the assignment made in Section (E) below.

          Notwithstanding any other provision of this Agreement to the contrary, this Agreement does not obligate me to assign to the Company any of my rights in an invention for which no equipment, supplies, facility, or trade secret information of the Company was used and

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which was developed entirely on my own time, unless (a) the invention relates (i) directly to the business of the Company, or (ii) to the Company’s actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by me for the Company.

     E. Right to New Ideas

          1. Assignment of Inventions to the Company

          I agree that all Inventions that I make, discover, conceive, reduce to practice or develop (in whole or in part, either alone or jointly with others) during my employment shall be the sole property of the Company to the maximum extent permitted by applicable law. However, any inventions that I make, discover, conceive, reduce to practice or develop (in whole or in part, either alone or jointly with others) during my employment shall not be the sole property of the Company so long as such inventions have been developed entirely on my own time without using any of the Company’s equipment, supplies, facilities or Proprietary Information, unless such inventions constitute Inventions for purposes of this Agreement because:

          a. they relate at the time of conception or reduction to practice of the invention to the Company’s business, or actual or demonstrably anticipated research or development of the Company, or

          b. they result from any work I performed for the Company.

          2. Works Made for Hire

          The Company shall be the sole owner of all patents, patent rights, copyrights, trade secret rights, trademark rights and all other intellectual property or other rights in connection with Inventions. I further acknowledge and agree that such Inventions, including (without limitation) any computer programs, programming documentation, and other works of authorship, are “works made for hire” for purposes of the Company’s rights under copyright laws. I hereby assign to the Company any and all rights, title and interest I may have or acquire in such Inventions. If in the course of my employment with the Company, I incorporate into a Company product, service or process a prior Invention owned by me or in which I have interest, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, sublicensable, worldwide license to make, have made, modify, use, market, sell and distribute such prior Invention as part of or in connection with such product, service or process.

          3. Cooperation

          I agree to perform, during and after my employment, all acts deemed necessary or desirable by the Company to permit and assist it, at the Company’s expense, in further evidencing and perfecting the assignments made to the Company under this PIIA and in obtaining, maintaining, defending and enforcing patents, patent rights, copyrights, trademark rights, trade secret rights or any other rights in connection with such Inventions and improvements thereto in any and all countries. Such acts may include (without limitation) execution of documents and assistance or cooperation in legal proceedings. I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents, as my agents and attorney-in-fact to act for and on my behalf and instead of me, to execute and file any

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documents, applications or related findings and to do all other lawfully permitted acts to further the purposes set forth above in this Subsection 3, including (without limitation) the perfection of assignment and the prosecution and issuance of patents, patent applications, copyright applications and registrations, trademark applications and registrations or other rights in connection with such Inventions and improvements thereto with the same legal force and effect as if executed by me.

          4. Assignment or Waiver of Moral Rights

          Any assignment of copyright hereunder (and any ownership of a copyright as a work made for hire) includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights” (collectively “Moral Rights”). To the extent such Moral Rights cannot be assigned under applicable law and to the extent the following is allowed by the laws in the various countries where Moral Rights exist, I hereby waive such Moral Rights and consent to any action of the Company that would violate such Moral Rights in the absence of such consent.

          5. List of Inventions

          I have attached hereto as Appendix A a complete list of all inventions or improvements to which I claim ownership and that I desire to remove from the operation of this PIIA (except for the license granted in Section (E)(2) above), and I acknowledge and agree that such list is complete. If no such list is attached to this PIIA, I represent that I have no such inventions or improvements at the time of signing this PIIA.

     F. Company Authorization for Publication

          Prior to my submitting or disclosing for possible publication or dissemination outside the Company any material prepared by me that incorporates information that concerns the Company’s business or anticipated research, I agree to deliver a copy of such material to an officer of the Company for his or her review. Within twenty (20) days following such submission, the Company agrees to notify me in writing whether the Company believes such material contains any Proprietary Information or Inventions, and I agree to make such deletions and revisions as are reasonably requested by the Company to protect its Proprietary Information and Inventions. I further agree to obtain the written consent of the Company prior to any review of such material by persons outside the Company.

     G. Restrictive Covenants

          I agree to abide by the restrictive covenants described in Section 10 of my Employment Agreement with the Company dated August 31^st 2007 (the “Employment Agreement”).

     H. Former Employer’s and Others’ Information

          I represent that my performance of all the terms of this PIIA does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired or developed by me in confidence or in trust prior to my employment by the Company.

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          I agree that I will not disclose to the Company, or use in the performance of my duties and responsibilities as an employee of the Company, any trade secrets or confidential or proprietary information or material belonging to any previous employers or other person or entity.

     I. Reformation and Severability

          I agree that if any provision, or portion of a provision, of this Agreement is deemed unenforceable by reason of the scope, extent or duration of its coverage, then such provision shall be deemed amended to the extent necessary to conform to applicable law so as to be valid and enforceable. Should any provision, or portion of a provision, of this Agreement be deemed unenforceable for any other reason, such unenforceability will not affect any other provision, or portion of a provision, of this Agreement and this Agreement shall be construed as if such unenforceable provision, or portion of provision, had never been contained herein.

     J. Authorization for Post-Termination Notification of Obligations Under PIIA

          I hereby authorize the Company to notify any person or entity with whom I become employed, or to whom I provide services, following the termination of my employment with the Company of my ongoing obligations under this PIIA.

     K. Entire Agreement

          This PIIA and the Employment Agreement set forth the entire agreement and understanding between the Company and me relating to the subject matters covered therein, and this PIIA and the Employee Agreement merge, cancel, supersede and replace all prior discussions between us, including (without limitation) any and all statements, representations, negotiations, promises or agreements relating to the subject matters covered by this PIIA and the Employment Agreement that may have been made by any officer, employee or representative of the Company.

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I HAVE READ THIS PIIA CAREFULLY, AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS THAT IT IMPOSES UPON ME WITHOUT RESERVATION.

I SIGN THIS PIIA FREELY AND VOLUNTARILY, WITHOUT COERCION OR DURESS.

Date: August 31, 2007	/s/ P. Robert Moya
	Employee Signature
	P. Robert Moya
	Employee Name [Please Print]

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APPENDIX A

1. The following is a complete list of all Inventions or improvements relevant to the subject matter of my employment by the Company that have been made or discovered or conceived or first reduced to practice by me or jointly with others prior to my employment by the Company that I desire to remove from the operation of the Company’s Proprietary Information and Inventions Agreement (“PIIA”), except for the license granted in Section (E)(2) of the PIIA:

þ  No inventions or improvements.

o  See below:

o   See                     (#) additional sheets attached.

2. I propose to bring to my employment the following materials and documents of a former employer or other person/entity:

þ  No materials or documents

o  See below:

o  See                     (#) additional sheet(s) attached:

Date: August 31, 2007	/s/ P. Robert Moya
	Employee Signature

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SCHEDULE I

LIST OF EXISTING BOARD MEMBERSHIPS

InPlay Technologies Inc.: Member of Board of Directors, Audit Committee and Compensation Committee; member and Chairman of Nominations and Corporate Governance Committee

EX-10.27

Exhibit 10.27

Execution

JOINT VENTURE AGREEMENT

          THIS JOINT VENTURE AGREEMENT (this “Agreement”) is made and entered into as of October 22, 2007, by and between Apollo Group, Inc., an Arizona corporation (“Apollo”), Carlyle Venture Partners III, L.P., a Delaware limited partnership (“Carlyle”, and together with Apollo and each Affiliate of Apollo and Carlyle that hereafter becomes an owner of shares of the Company’s capital stock, the “Participants”) and Apollo Global, Inc., a Delaware corporation (the “Company”).

          WHEREAS, Apollo and Carlyle have formed the Company under Delaware law (the “Company”) to acquire, own and operate international education services businesses outside of the United States of America (the “Business”);

          WHEREAS, the Participants will acquire, pursuant to the terms and conditions of this Agreement, certain shares of the Company’s Common Stock, par value $.001 per share (the “Common Stock”); and

          WHEREAS, the Participants intend that the transactions contemplated hereby shall qualify as part of an exchange of property for equity interests under §351 of the Internal Revenue Code;

          NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

1.1 Certain Definitions. As used in this Agreement, the following terms shall have the indicated meanings, unless the context otherwise requires:

“Acquisition” means the acquisition by the Company or any Subsidiary of (i) all or substantially all of the capital stock or other equity interests of another Person, whether by merger, consolidation, direct or indirect purchase or otherwise, and (ii) all or substantially all of the assets of another Person.

“Additional Agreements” means, collectively, the Shareholders’ Agreement, the Support Services Agreement and the Registration Rights Agreement.

“Affiliate” of a Person means any other Person, entity or investment or co-investment fund directly or indirectly controlling, controlled by or under common control with the Person and, in the case of a Person which is an entity, any shareholder , member, partner

or other equity holder of such Person, which, in each case, beneficially owns at least 10% of the outstanding voting interests of the Person. Each fund managed by Carlyle or an Affiliate of Carlyle shall be an Affiliate of Carlyle for purposes of this Agreement, and no portfolio company of Carlyle or its Affiliates shall be considered an Affiliate of Carlyle or such Affiliate for purposes of this Agreement.

“Apollo Board” means the Board of Directors of Apollo.

“Board” means the Board of Directors of the Company.

“Business Day” means any day other than a Saturday, Sunday or bank holiday in New York.

“Business Plan” shall have the meaning ascribed to it in Section 6.1(f) hereto.

“Carlyle Investment Committee” means the Carlyle Venture Partners Investment Committee.

“Fair Market Value” means the then current fair market value of shares of Company Stock as determined in good faith by the Board with reference to each of (i) the fair market value of Persons which are market comparables of the Company and (ii) a market-based multiple of EBITDA for the Company’s trailing twelve (12) months and anticipated EBITDA for the Company’s following twelve (12) months, in each case with appropriate adjustments for nonrecurring or extraordinary expenses and payments to Affiliates of the Company and without any discount for lack of marketability, restrictions on transfer or minority status of the             shares of Company Stock. Notwithstanding the immediately preceding sentence, in the event that the Carlyle Investment Committee has decided not to make additional contributions to the capital of the Company which is the subject of a Call Notice pursuant to Section 3.2(a), then from and after such decision, Fair Market Value shall be determined in accordance with the parameters set forth in this definition by the Valuation Firm, which shall reflect its determination in a written report (a “Valuation Report”) delivered to each of the Company, Carlyle and Apollo, provided however that the Board, not the Valuation Firm, shall determine the fair market value of shares of Company Stock in accordance with the parameters set forth in this definition which are the subject of Call Notices to Carlyle for dollar amounts of less than $2,000,000 so long as the aggregate dollar amounts subject to Call Notices to Carlyle in any twelve (12) month period does not exceed $7,500,000 (and in the event of such excess, the Valuation Firm, not the Board, shall determine the fair market value of shares of Company Stock from and after the date of such excess).

“International Students” means actual or prospective students (including leads for prospective students) who (i) reside outside of the United States of America and its

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territories; (ii) are not active duty members of the uniformed services of the United States of America and (iii) are not citizens of the United States of America.

“Person” means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, a limited liability company, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

“Prime Rate” means the then-current prime rate as announced by Citibank N.A.

“Purchased Shares” means, with respect to a Participant, any shares of Common Stock purchased by such Participant hereunder; and, generally, all such shares purchased hereunder.

“Shareholders’ Agreement Joinder Agreement” shall mean a joinder agreement in substantially the form attached as Exhibit A to the Shareholders’ Agreement.

“Specified Fraction” is a fraction (i) the numerator of which is the dollar amount, if any, proposed in a Call Notice to be used to provide additional funds to the Company, or to a Subsidiary of the Company which completed the Acquisition, for working capital, capital expenditures or other obligations or commitments of the target of the Acquisition and (ii) the denominator of which is the total dollar amount reflected in such Call Notice.

“Valuation Firm” means a nationally recognized Person that provides financial advisory or valuation services, has experience in the postsecondary education sector and is acceptable to each of Apollo and Carlyle.

Defined terms which are used in this Agreement but not expressly defined herein shall have the meanings ascribed to such terms in the Shareholders’ Agreement.

1.2 Construction. Any reference in this Agreement to an Article, Section, subsection, paragraph, clause, Schedule or Exhibit shall be deemed to be a reference to an Article, Section, subsection, paragraph, clause, Schedule or Exhibit to, this Agreement, unless otherwise indicated. The Schedules and Exhibits to this Agreement are incorporated herein by reference and shall be deemed a part of this Agreement.

1.3 Certain Conventions. Unless the context of this Agreement otherwise requires, (a) words of any gender include each other gender, (b) words such as “herein”, “hereof”, and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (c) words using the singular shall include the plural, and vice versa and (d) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”

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ARTICLE II
FORMATION OF THE COMPANY

     Contemporaneously with the execution and delivery of this Agreement, Apollo and Carlyle have formed the Company by (i) filing with the Secretary of State of the State of Delaware a Certificate of Incorporation in the form attached hereto as Exhibit A (the “Certificate of Incorporation”)and (ii) causing the Company to adopt Bylaws in the form attached hereto as Exhibit B (the “Bylaws”).

ARTICLE III
CAPITALIZATION OF THE COMPANY

3.1 Initial Shares. Subject to the terms and conditions of this Agreement, Apollo shall purchase from the Company eight thousand (8,000) shares of Common Stock and Carlyle shall purchase from the Company two thousand (2,000) shares of Common Stock, in each case at a purchase price per share of $1,000 (such shares, with respect to the purchasing Participant, its “Initial Shares”). Each of Apollo and Carlyle shall purchase its Initial Shares on the Initial Closing Date.

3.2 Obligatory Additional Shares. Subject to the terms and conditions of this Agreement, (i) so long as Apollo is a stockholder in the Company, Apollo shall purchase up to the number of additional shares of Common Stock which have an aggregate purchase price of $793,000,000 and (ii) so long as Carlyle is a stockholder in the Company, Carlyle and its Affiliates (provided, that the number of such Affiliates of Carlyle shall not exceed twenty (20)) shall purchase up to additional shares of Common Stock which have an aggregate purchase price of $197,000,000, in each case at a purchase price per share of Fair Market Value on the date of purchase, except as otherwise provided in Section 3.2(d) (such shares, with respect to the purchasing Participant, its “Obligatory Additional Shares”). Notwithstanding the immediately preceding sentence, Apollo shall not be obligated on any date to purchase Obligatory Additional Shares with an aggregate purchase price that exceeds four times the aggregate purchase price of Obligatory Additional Shares purchased by Carlyle and its Affiliates through and including such date. Any purchase by Carlyle or its Affiliates of Obligatory Additional Shares hereunder shall only be required to be made upon the prior approval of the Carlyle Investment Committee, which approval may be given or withheld in its sole discretion. Any purchase by Apollo of Obligatory Additional Shares hereunder shall only be required to be made upon the prior approval of the Apollo Board, which approval may be given or withheld in its sole discretion. Except as specifically provided in the Shareholders’ Agreement, no rights of Apollo or Carlyle under this Agreement or any Additional Agreement shall be affected by any decision of the Apollo Board or the Carlyle Investment Committee not to purchase Obligatory Additional Shares. Each Participant shall purchase its Obligatory Additional Shares in accordance with the following procedure:

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     (a) As and when the growth of the Business requires the Company to make Acquisitions within the Investment Scope and other investments and expenditures which are consistent with both the Investment Scope and the Business Plan (as from time to time in effect), the Board shall deliver to each Participant a written notice in accordance with Section 10.1 specifying the dollar amount (which shall be evenly divisible by $1,000) of the Company’s capital requirements in connection with such purchases or investments and the specific use or uses of such dollar amount by the Company (each such notice, a “Call Notice”), provided however, that no Call Notice relating to a proposed Acquisition that has an enterprise value in excess of $50,000,000 and that requires the Company to incur incremental debt or equity financing shall be delivered by the Company without the prior written consent of Carlyle. Each Call Notice shall include either a written determination of Fair Market Value per share of Common Stock by the Board or a Valuation Report, as described in the definition of Fair Market Value. Apollo and Carlyle shall cause the Company to issue, and the Company shall issue, a number of shares of Common Stock equal to the dollar amount specified in the Call Notice divided by the then current Fair Market Value per share of Common Stock.

     (b) If the Apollo Board and the Carlyle Investment Committee have each approved the purchase of Obligatory Additional Shares pursuant to corresponding Call Notices, Apollo and Carlyle and its Affiliates shall each purchase shares of Common Stock issued pursuant to Section 3.2(a) on the basis of 80.1% of the aggregate number of shares of Common Stock and 19.9% of the aggregate number of shares of Common Stock, respectively. If the Apollo Board approves the purchase of Obligatory Additional Shares pursuant to a Call Notice, but the Carlyle Investment Committee does not approve the purchase of Obligatory Additional Shares pursuant to the corresponding Call Notice, then Apollo may, in its sole discretion (i) have the corresponding Call Notice to Apollo rescinded and of no further force or effect, (ii) purchase its Obligatory Additional Shares, or (iii) purchase all of the Obligatory Additional Shares. If the Apollo Board does not approve the purchase of Obligatory Additional Shares pursuant to a Call Notice, Carlyle may, in its sole discretion, (i) have the corresponding Call Notice to Carlyle rescinded and of no further force or effect, (ii) purchase its Obligatory Additional Shares, or (iii) purchase all of the Obligatory Additional Shares. The Company agrees to rescind each Call Notice described in clause (i) of each of the two preceding sentences promptly upon the request of Apollo or Carlyle as specified in such sentences but in any event before the date for a Subsequent Closing scheduled in the Call Notice. The closing of such purchases (each such closing pursuant to a Call Notice, a “Subsequent Closing”), which shall occur simultaneously, shall occur on or before the tenth (10^th) Business Day following the date of the relevant Call Notice, or on such other date as Carlyle and Apollo may agree upon in writing. The date on which any Subsequent Closing is held is referred to in this Agreement as a “Subsequent Closing Date”.

     (c) For avoidance of doubt, the Participants shall not cause the Company to issue pursuant to Section 3.2(a), and the Participants shall not be required to purchase pursuant to Section 3.2(b), any Obligatory Additional Shares in excess of the number of shares set forth in the first paragraph of this Section 3.2.

     (d) Notwithstanding any other provision of this Agreement, including without limitation Section 3.2(a), in the event that the Carlyle Investment Committee has not approved the purchase of

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Obligatory Additional Shares which relates to an Acquisition and the Board subsequently issues one or more Call Notices to the Participants which total either (x) $25,000,000 for a single subsequent Closing or (y) $75,000,000 for all Subsequent Closings in any twelve (12) month period in each case with the specific use or uses of the dollar amounts that are the subject of such Call Notices being to provide additional funds to the Company, or a Subsidiary of the Company which completed such Acquisition, for working capital, capital expenditures or other obligations or commitments of the target of the Acquisition and the Carlyle Investment Committee does not approve, in its sole discretion, the purchase of Obligatory Additional Shares which are the subject of such subsequent Call Notices, then the Specified Fraction of the Obligatory Additional Shares, if any, purchased by Apollo and its Affiliates shall be purchased at a price described in the following sentence, with the remainder of the Obligatory Additional Shares that are the subject of such Call Notice purchased by Apollo and its Affiliates at Fair Market Value. For each subsequent Call Notice described in the preceding sentence, the price at which Apollo and its Affiliates shall purchase the Specified Fraction of the Obligatory Additional Shares shall be one and one-half times the current Fair Market Value per share of Common Stock.

          (e) The obligation of Apollo to purchase its Obligatory Additional Shares shall be the direct obligation of Apollo and shall be enforceable by the Company and Carlyle. The obligation of Carlyle to purchase its Obligatory Additional Shares shall be the direct obligation of Carlyle and shall be enforceable by the Company and Apollo against Carlyle. The failure of a Participant which is required to purchase its Obligatory Additional Shares pursuant to Sections 3.2(b), 6.1 and 6.2 shall constitute a material breach of this Agreement by such Participant. If a Participant fails to so purchase its Obligatory Additional Shares, all amounts distributable by the Company to such Participant in any capacity (whether by dividend, distribution, payment under an Additional Agreement or otherwise) shall be suspended, and the Participant’s (or Carlyle’s, in the case of a Participant that is an Affiliate of Carlyle) right to receive distributions from the Company shall not be restored until such Participant shall have paid in full to the Company the consideration due in connection with such Obligatory Additional Shares, plus interest thereon at the Prime Rate annually, calculated from the date such consideration should have been paid to the date it is paid by such Participant.

     (f) The Participants acknowledge that the purchase of any Obligatory Additional Shares hereunder may be made through the contribution of assets owned by either Apollo or Carlyle (“Contributed Assets”). Each of Carlyle and Apollo may request that, in addition to the assets of Apollo and its Subsidiaries that are primarily or fully dedicated to enrolling or serving International Students and the university owned by Apollo with half of its campuses presently located outside of the United States of America referred to in Section 10.1, the other consider the advisability of the contribution to the Company of Contributed Assets owned by either of Carlyle or Apollo and, upon the prior written consent of Apollo or Carlyle, as the case may be, Apollo, the Company and Carlyle shall proceed with a due diligence investigation of the Contributed Assets and the valuation thereof. Apollo and Carlyle shall use their good faith efforts to mutually determine the fair market value of any Contributed Assets and, subject to the terms of the Mutual Nondisclosure Agreement between Apollo and Carlyle Management L.L.C. dated August 2, 2007 (the “Confidentiality Agreement”), the Participant contributing assets shall, and shall cause its Subsidiaries to, afford to the other Participant’s officers, directors, employees, accountants, counsel, consultants, advisors and agents reasonable access to and the right to inspect, during normal

6

business hours and with reasonable advance notice, all of the real property, properties, assets, records, contracts and other documents related to the Contributed Assets, and shall permit them to consult, during normal business hours and with reasonable advance notice, with the officers, employees, accountants, counsel and agents of the Participant and its subsidiaries for the purpose of making such investigation of the Contributed Assets as such Participant shall desire to make. Each Participant contributing assets shall make available to the other Participant all such documents and copies of documents and records and information with respect to the Contributed Assets as the other Participant may reasonably request. If Apollo and Carlyle agree, the Contributed Assets shall be contributed to the Company at the agreed valuation therefor subject to the prior negotiation and agreement to the terms of definitive documentation which is appropriate for the transfer of such Contributed Assets and which definitive documentation shall contain customary representations and warranties, covenants, indemnification provisions (including customary caps and thresholds) and closing conditions (including compliance with all applicable regulatory requirements). Within five (5) days of the closing of the transfer of Contributed Assets, the Company shall deliver a Call Notice pursuant to Section 10.1 to the Participant which did not transfer Contributed Assets to the Company in such closing, setting forth the agreed upon fair market value of the Contributed Assets times such Participant’s percentage of the aggregate number of shares of Common Stock specified in the first sentence of Section 3.2(b), together with the determination of the Fair Market Value of shares of Common Stock described in the definition of Fair Market Value. Subject to the satisfaction of Section 6.2, the Participant which did not transfer the Contributed Assets to the Company shall within fifteen (15) days of its receipt of the Call Notice, shall make a capital contribution to the Company in an amount equal to the agreed upon fair market value of the Contributed Assets times such Participant’s percentage of the aggregate number of shares of Common Stock specified in the first sentence of Section 3.2(b) and receive the number of shares of Common Stock which is equal to the capital contribution made by such Participant pursuant to this Section 3.2(f) divided by the Fair Market Value of shares of Common Stock.

3.3 Termination and Survival of Rights and Obligations. A Participant’s obligation to pay consideration due to the Company for shares of capital stock purchased under this Article III shall survive (a) the termination, dissolution, liquidation and winding up of the Company, and for purposes of this Article III, the Company shall be treated as continuing in existence, and (b) the purchase of such Participant’s shares of capital stock by the other Participant or a third person, whether pursuant to the Shareholders Agreement or otherwise. The Company may pursue and enforce all rights and remedies that it may have against each Participant under this Article III, including, without limitation, instituting a lawsuit to collect such payments with interest.

3.4 Optional Capital Calls. From and after the date that either (i) Apollo and its Affiliates have purchased at least $801,000,000 in aggregate purchase price of shares of Common Stock pursuant to Sections 3.1 and 3.2 or (ii) Carlyle and its Affiliates have purchased at least $199,000,000 in aggregate purchase price of shares of Common Stock pursuant to Sections 3.1 and 3.2, the Board may deliver additional written notices to the Participant who has purchased all of its Obligatory Additional Shares for the purposes, and consistent with the requirements, set forth in Section 3.2(a) of this Agreement and paragraph in 2 of the Shareholders’ Agreement (the

7

“Optional Call Notices”). Each such Participant shall have the right, which it may exercise, in its sole discretion and in whole or in part, but not the obligation, to purchase at one or more Subsequent Closings additional shares of Common Stock (the “Optional Additional Shares”) at the prices and in the manner specified in Sections 3.2(b) and 3.2(d) and subject to the satisfaction of the conditions specified in Section 6.2.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PARTICIPANTS

     Each Participant represents and warrants to the other Participant as of the date hereof, and will represent and warrant to each other Participant and the Company as of the Initial Closing Date and each Subsequent Closing Date, as follows:

4.1 Accredited Investor. Such Participant (a) is an “accredited investor” (as that term is defined in Section 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”)) because it is either (x) a corporation not formed for the specific purpose of acquiring the securities offered, and has total assets in excess of $5,000,000 or (y) an entity in which all of the equity owners are accredited investors, (b) has such knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the investment contemplated hereby and (c) has reviewed the merits of such investment with tax and legal counsel and other advisors to the extent deemed advisable. Such Participant will acquire its Purchased Shares for its own account for investment and not with a view to the sale or distribution thereof, and such Participant has no present intention of distribution or selling to others any of such interest.

4.2 Access. Such Participant has had access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the investment in the Purchased Shares under this Agreement. Such Participant further has had the opportunity to obtain all additional information necessary to verify the information to which such Participant has had access.

4.3 Nature of Investment. Such Participant understands that the Purchased Shares are characterized as “restricted securities” under the Act inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under the Act and related regulations such securities may be resold under the Act only in certain limited circumstances. Such Participant is familiar with and understands such resale limitations imposed by the Act and related regulations and by the Shareholders’ Agreement. Such Participant understands that the Company has no present intention to register any of the Purchased Shares.

4.4 Authorization; Validity; No Conflicts. Such Participant is duly authorized (including by all requisite corporate or stockholder (or equivalent, for entities other than corporations) action on the part of such Participant and its officers and directors and its direct and indirect stockholders (or equivalent equity owners, for entities other than corporations)), and

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has full power and authority, to execute and perform its obligations under this Agreement and each Additional Agreement to which it is a party, and each such agreement, when executed and delivered by such Participant, constitutes such Participant’s legal, valid and binding obligation enforceable against it in accordance with its terms except (i) as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. The execution, delivery and performance by such Participant of this Agreement and each Additional Agreement to which it is a party, and the consummation by such Participant of the transactions contemplated hereby and thereby will not (a) conflict with or constitute a default under any agreement, indenture or instrument to which such Participant is a party, (b) conflict with or violate such Participant’s organizational documents or (c) result in a violation of any order, judgment or decree of any court or governmental or regulatory authority having jurisdiction over such Participant or any of its assets.

4.5 Limitation on Representations. Such Participant understands and agrees that the other Participant is only making the representations and warranties set forth in this Article IV, and no other representations or warranties, express or implied, are made by such other Participant.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company represents and warrants to each Participant as of the date hereof, and will represent and warrant to each Participant as of the Initial Closing Date and each Subsequent Closing Date as follows:

5.1 Corporate Organization; Authorization.

     (a) The Company is duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all corporate requisite power and authority to carry on its business as now conducted and to own or lease its properties and assets. The Company is duly qualified or licensed to do business as a foreign company in good standing in each state of the United States and in each foreign jurisdiction in which the conduct of its business or the ownership or leasing of its properties require such qualification.

     (b) The Company has full corporate power and authority to enter into this Agreement and the Additional Agreements and to carry out the transactions contemplated hereby and thereby. The Board of Directors and stockholders of the Company have taken all action required to authorize the execution and delivery of this Agreement and the Additional Agreements, the performance of the Company’s obligations hereunder and thereunder and the consummation of

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the transactions contemplated hereby and thereby. No other corporate proceedings on the part of the Company are necessary to authorize the execution, delivery and performance by it of this Agreement and the Additional Agreements.

     (c) This Agreement and the Additional Agreements to which it is a party have been duly executed and delivered by the Company and constitute legal, valid and binding obligations of the Company, enforceable against it in accordance with the terms of such agreements, except (i) as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

5.2 No Violation.

     The execution, delivery and performance by the Company of this Agreement and the Additional Agreements and the consummation of the transactions contemplated hereby and thereby does not (a) violate, conflict with or result in the breach of any provisions of the Certificate of Incorporation or Bylaws of the Company, (b)  in any material respect, violate, conflict with, result in any breach of, constitute a default under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any lien on any shares of Common Stock or any of the assets or property of the Company pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which the Company is a party or by which any shares of Common Stock or any of such assets or properties is bound or affected, (c) require the consent of any party to any material agreement or commitment to which the Company is a party, or by which the Company is bound, or (d) in any material respect, conflict with or violate any law or governmental order to which the Company is subject.

5.3 Consents and Approvals of Governmental Authorities.

     The execution, delivery and performance of this Agreement and each Additional Agreement by the Company does not require any consent, approval, authorization or other order of, action by or declaration, filing or registration with or notification to, any governmental authority to be made or obtained by the Company in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby.

5.4 Capitalization.

     The authorized and issued shares of capital stock of the Company are set forth on Schedule 5.4. All issued and outstanding shares of capital stock of the Company are validly

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issued, fully paid and nonassessable and the Initial Shares to be issued on the Initial Closing Date and all shares of Capital Stock to be issued on each Subsequent Closing Date will, assuming payment in full of the amount specified in the Call Notice or the Optional Call Notice, be validly issued, fully paid and nonassessable. Except as set forth in Schedule 5.4, there are no other authorized, issued or outstanding shares of capital stock of the Company, nor any options, warrants or other securities convertible into or exchangeable or exercisable for shares of capital stock of the Company, outstanding. Except as set forth on Schedule 5.4, there are no outstanding options, warrants, rights, contracts, commitments, understandings or arrangements by which the Company is bound to issue, repurchase or otherwise acquire or retire any additional shares of capital stock or other securities of the Company. There are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any shares of capital stock of the Company other than the Shareholders’ Agreement.

5.5 Subsidiaries.

     Except as set forth on Schedule 5.5, the Company has no Subsidiaries and does not own any capital stock or other equity securities of any other corporation and has no other type of capital or equity interest in any Person (other than the Company). The Company is not subject to any obligation or requirement to make any investment (in the form of a loan or capital contribution) in any Person (other than the Company), except as set forth in Schedule 5.5.

ARTICLE VI
CLOSINGS; CONDITIONS TO CLOSINGS

6.1 Initial Closing. The closing of the sale and purchase of the Initial Shares (the “Initial Closing”) under this Agreement shall take place at the offices of Morgan, Lewis & Bockius LLP, One Market Street, San Francisco, CA 94105 (or such other place as Apollo and Carlyle may agree upon in writing) as promptly as reasonably practicable after the date hereof (or on such other date as the Participants may agree upon in writing). The date on which the Initial Closing occurs is referred to in this Agreement as the “Initial Closing Date”. Notwithstanding the foregoing provisions of this Section 6.1, the obligation of each Participant to purchase the Initial Shares to be purchased by it at the Initial Closing shall be subject to the fulfillment of the following conditions:

     (a) The representations and warranties of the other Participant set forth in Article IV shall be true and correct on the Initial Closing Date.

     (b) The representations and warranties of the Company shall be true and correct on the Initial Closing Date

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     (c) Apollo and Carlyle shall have received written confirmation from the Secretary of State of the State of Delaware that the Certificate of Incorporation has been filed with and accepted by such Secretary of State.

     (d) Apollo and Carlyle shall have received all required governmental and regulatory approvals, and all waiting periods under any applicable antitrust regulations shall have expired, in connection with the formation of the Company and the consummation of the transactions contemplated by this Agreement (including without limitation the expiration of any applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended).

     (e) The Company shall have received payment from each of Apollo and Carlyle of the purchase price for their respective Initial Shares by wire transfer of immediately available funds to an account designated by or on behalf of the Company on or prior to the Initial Closing.

     (f) Each of Apollo, Carlyle and the Company shall have each executed and delivered to each other a counterpart signature pages to each Additional Agreement to which it is a party pursuant to Sections 7.1 and 7.2.

     (g) The Company shall have obtained a directors’ and officers’ liability insurance policy and an error and omissions insurance policy in such amounts and on such terms mutually acceptable to the Participants.

6.2 Subsequent Closings. Each Subsequent Closing under this Agreement shall take place at the offices of Morgan, Lewis & Bockius LLP, One Market Street, San Francisco, CA 94105 (or such other place as the Participants may agree upon in writing) on the relevant Subsequent Closing Date. Notwithstanding the foregoing provisions of this Section 6.2, the obligation of each Participant to purchase the Obligatory Additional Shares or Optional Additional Shares to be purchased by it at a Subsequent Closing shall be subject to the fulfillment of the following conditions:

     (h) The representations and warranties of the other Participant set forth in Article IV shall be true and correct on such Subsequent Closing Date.

     (i) The representations and warranties of the Company set forth in Article V, including updated Schedules 5.4 and 5.5, shall be true and correct on the Subsequent Closing Date.

     (j) The other Participant shall have purchased all of the Initial Shares to be purchased by it at the Initial Closing.

     (k) The Participants shall have received all required governmental and regulatory approvals, and all waiting periods under any applicable antitrust regulations shall have expired, in connection with the formation of the Company and the consummation of the transactions contemplated by this Agreement.

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     (l) The Company shall have developed a written business plan mutually acceptable to the Participants (the “Business Plan”) and in the event that the Business Plan is dated more than twelve months before the date of a Subsequent Closing, the Business Plan shall have been updated on such terms mutually acceptable to the Participants.

     (m) The Company shall have received either (i) payment from the other Participant of the purchase price for the Obligatory Additional Shares or Optional Additional Shares to be purchased by such Participant at such Subsequent Closing by wire transfer of immediately available funds to an account designated by or on behalf of the Company on or prior to the Subsequent Closing, or (ii) transfer of Contributed Assets, pursuant to Section 3.2(f) by such Participant to the Company at their fair market value, as mutually agreed by the Participants pursuant to Section 3.2(f).

     (n) The Company shall have maintained in full force and effect a directors’ and officers’ liability policy and an errors and omissions policy in such amounts and on such terms mutually acceptable to the Participants.

     (o) This Agreement and the Additional Agreements shall be in full force and effect and neither the Company nor any other Participant which is not an Affiliate shall be in material breach of its obligations under this Agreement or under the Additional Agreements.

     (p) Each Participant shall have executed either the Shareholders’ Agreement or a Shareholders’ Agreement Joinder Agreement.

ARTICLE VII
CERTAIN COVENANTS

7.1 Shareholders’ Agreement; Restrictions on Transfer. At or prior to the Initial Closing, the Company, Carlyle and Apollo shall execute a Shareholders Agreement in the form attached hereto as Exhibit C (the “Shareholders’ Agreement”), pursuant to which the Company, Carlyle and Apollo shall impose certain restrictions on the transfer of Shares (as defined in the Shareholders Agreement) and set forth their agreement with respect to certain other matters as described therein. Each of Apollo and Carlyle agrees that no sale, assignment or transfer of its Purchased Shares shall be valid or effective, and the Company shall not be required to give any effect to any such sale, assignment or transfer, unless (a) the sale, assignment or transfer of such Purchased Shares is registered under the Act or (b) such sale, assignment or transfer is otherwise exempt from registration under the Act. In addition, each of Apollo and Carlyle agrees that any sale, assignment or transfer of its Purchased Shares shall be made in compliance with the Shareholders’ Agreement. Each of Apollo and Carlyle acknowledges that the certificate or certificates evidencing its Purchased Shares shall bear a legend stating or referring to the foregoing transfer restrictions.

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7.2 Registration Rights Agreement. At or prior to the Initial Closing, the Company, Carlyle and Apollo shall execute, and shall cause the Company to execute, a Registration Rights Agreement in the form attached hereto as Exhibit D, the “Registration Rights Agreement”).

7.3 Further Assurances. The Company, Apollo and Carlyle agree to use their best efforts to obtain all necessary consents and approvals and expiration of all waiting periods (including all required governmental and regulatory approvals and waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended), for the consummation of the transactions contemplated by this Agreement. The Company, Apollo and Carlyle further agree to take or cause to be taken all such corporate (or equivalent, for entities other than corporations) and other action, including executing and/or delivering further instruments and documents, as may be necessary to effect the intent and purposes of this Agreement.

7.4 Public Announcements. All press releases and other public disclosure concerning the existence or terms of this Agreement, the Additional Agreements or the transactions contemplated hereby and thereby from and after the date hereof will be subject to review by and approval each of Apollo and Carlyle, which approval shall not be unreasonably withheld; provided, that to the extent a Participant shall have received the written advice of counsel that it is required to make an announcement pursuant to any law, regulation, order or stock exchange rule, it shall be permitted to do so even if it has not obtained the approval of the other Participant so long as it has used reasonable efforts to consult with and obtain consent of the other Participant to the content of the announcement and strictly limits such announcement to the minimum disclosure required.

7.5 Support Services Agreement. The Company and Apollo shall use their reasonable efforts to execute and deliver a Support Services Agreement on terms and conditions mutually agreed upon by Apollo and Carlyle, which terms will include the reimbursement of Apollo’s expenses for such services at rates to be mutually agreed upon by Apollo and Carlyle.

7.6 International Students. Apollo and Carlyle expect that from and after the date that the International Assets (as defined in Section 10.1) are transferred to the Company, all educational and other related activities directed toward International Students engaged by Apollo or its Subsidiaries shall be engaged in by the Company to the exclusion of Apollo and its Subsidiaries. Apollo agrees that during the period which commences on the date that the International Assets have been contributed to the Company and ends on the last day of the term of this Agreement, neither Apollo nor any of its Subsidiaries (other than the Company) shall solicit or recruit International Students. Apollo and its Subsidiaries shall use their reasonable best efforts to transfer the International Assets to the Company within eighteen (18) months after the date of this Agreement. In the event that any International Asset is not contributed to the Company notwithstanding the use of reasonable best efforts by Apollo and its Subsidiaries, representatives of Apollo and Carlyle shall meet immediately after the meeting of the board of directors of the Company which follows the eighteen (18) month anniversary of this Agreement and engage in good faith negotiations regarding the reclassification of such International Asset that has not

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been contributed to the Company as a “Reclassified Asset” for purposes of this Agreement. Apollo agrees that it shall not unreasonably withhold, delay or condition its consent to the reclassification of an International Asset which is not contributed to the Company as a Reclassified Asset. Apollo agrees that commencing on the date that a business(es) or asset(s) become a Reclassified Asset, neither Apollo nor its Subsidiaries (other than the Company) shall directly or indirectly solicit International Students by, through or for the benefit of the Reclassified Asset or any part or division thereof until the last day of the term of this Agreement. In the event that after the date of this Agreement either Apollo or its Subsidiaries acquire any Person, business or assets that are either (a) within the Investment Scope and Carlyle has not withheld its consent to such acquisition pursuant to paragraph 2(b)(2)(v) of the Shareholders’ Agreement (if such consent is required under such paragraph) or (b) not within the Investment Scope because the principal operations and facilities of the educational services business of the acquired Person, business or assets are located within the United States but such Person, business or assets also include secondary or ancillary educational services operations and facilities outside of the United States (an “Ancillary International Business”), neither Apollo nor any of its Subsidiaries (other than the Company) shall directly or indirectly solicit International Students by, through or for the benefit of either an International Asset described in clause (a) of this sentence or an Ancillary International Business for a period which commences on the date that such International Asset or Ancillary International Business is acquired or controlled by Apollo or its Subsidiaries and ends on the last day of the term of this Agreement. Notwithstanding the first sentence of this Section 7.6 but subject to clause (b) of the fourth sentence of this Section 7.6, neither Apollo nor its Subsidiaries shall be prohibited or restricted in any manner from advertising, promoting or marketing: (I) to students and prospective students generally, including advertising, promoting or marketing via the internet (or using internet search methods) any programs or educational services to students and prospective students (including leads for prospective students) so long as such advertising, promotions or marketing activities are not developed for, intended to target or otherwise directed to, International Students; or (II) any business or assets that:(x) are not within the Investment Scope (as defined in the Shareholders’ Agreement); (y) are not actually engaged in, used for or planned to be engaged in or used for marketing, promoting, soliciting, responding to leads and related activities for, or on behalf of, education or corporate training programs or services for International Students and (z) have been acquired by Apollo or its Subsidiaries in accordance with this Agreement.

ARTICLE VIII
TERM AND TERMINATION

8.1 Term and Termination. This Agreement shall become effective as of the date hereof and thereafter shall remain in full force and effect until terminated in accordance with this Agreement. This Agreement shall be terminated upon the first to occur of the following events: (a) the written agreement of Apollo and Carlyle, (b) the dissolution of the Company, or (c) one Participant holds all the issued and outstanding shares of capital stock of the Company.

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8.2 Effect of Termination. The termination of this Agreement for any cause shall not in any way affect or be deemed to affect any obligation of either party having accrued prior to the termination hereof or any right or obligation which, by its terms, is to survive the termination of this Agreement.

ARTICLE IX
DISPUTE RESOLUTION

9.1 Arbitration; Consent to Jurisdiction and Service. Any dispute hereunder shall be settled by arbitration in Wilmington, Delaware in accordance with the commercial arbitration rules then in effect of the American Arbitration Association. The parties consent to the jurisdiction of the state or federal courts of the State of Delaware for all purposes in connection with arbitration, and to service of process by first class United States mail delivered in accordance with the applicable rules of such courts. The award entered by the arbitrator(s) shall be final and binding on all parties to arbitration. Each party shall bear its respective arbitration expenses and shall each pay its pro rata share of the arbitrator’s charges and expenses. All proceedings shall be conducted, and all submissions shall be made, in English.

9.2 Specific Performance. The parties hereby acknowledge and agree that the obligations imposed on them in this Agreement are special, unique and of an extraordinary character, and that irreparable damage may result in the event that this Agreement is not specifically enforced (including without limitation any restrictions on transfer of Purchased Shares) and the parties hereto agree that any damages available at law for a breach of this Agreement would not be an adequate remedy. Therefore, the provisions hereof and the obligations of the parties hereunder shall be enforceable by a decree of specific performance, and appropriate injunctive relief may be applied for and granted in connection therewith. Such remedies and all other remedies provided for in this Agreement shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which any party may have under this Agreement or otherwise.

9.3 NO EXTRAORDINARY DAMAGES. NOTWITHSTANDING ANY TERM OR PROVISION OF THIS AGREEMENT, NEITHER PARTY NOR THEIR RESPECTIVE OFFICERS, EMPLOYEES OR AGENTS, SHALL BE LIABLE TO THE OTHER PARTY OR ITS RESPECTIVE OFFICERS, EMPLOYEES OR AGENTS, FOR CLAIMS FOR PUNITIVE, SPECIAL, EXEMPLARY, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, REGARDLESS OF WHETHER A CLAIM IS BASED ON CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, VIOLATION OF ANY APPLICABLE DECEPTIVE TRADE PRACTICES ACT OR ANY OTHER LEGAL OR EQUITABLE PRINCIPLE.

9.4 Governing Law. This Agreement shall be construed according to and governed by the laws of the State of Delaware, without reference to conflicts of laws principles.

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ARTICLE X
GENERAL PROVISIONS

10.1 Expected Contributed Assets. Apollo and Carlyle expect that the business, operations, assets and goodwill of each of the assets of Apollo and its Subsidiaries that are primarily or fully dedicated to enrolling or serving International Students (collectively, the “International Assets”) will be contributed to the Company by Apollo in exchange for Obligatory Additional Shares pursuant to and in accordance with Section 3.2(f) after consolidating financial statements have been completed for each of the International Assets. Apollo and Carlyle anticipate that such consolidating financial statements will be completed, and the procedures described in Section 3.2(f) fully complied with in respect of the International Assets , on or before the first anniversary of the date of the Initial Closing.

10.2 Notices. All notices, requests, demands and other communications hereunder shall be in writing and delivered to the relevant party at its address set forth below (or such other address as notified by one party to the other) by any of the following methods: (a) personal delivery, (b) United States mail, postage prepaid, (c) pre-paid, nationally recognized overnight courier or (d) fax with a copy following by any method described in the foregoing clauses (a) to (c). Notices will be deemed to have been given hereunder when delivered personally, five days after deposit in the U.S. mail and one day after deposit with a nationally recognized overnight courier service.

If to the Company: Apollo Global, Inc.

c/o Apollo Group, Inc.
4615 East Elwood Street
Phoenix, AZ 85040
Attn: Chief Financial Officer
Facsimile: (602) 383-5159

If to Apollo or its Affiliates:

Apollo Group, Inc.
4615 East Elwood Street
Phoenix, AZ 85040
Attention: Chief Financial Officer
Facsimile: (602) 383-5159

With a required copy to:

Morgan, Lewis & Bockius LLP
One Market, Spear Street Tower
San Francisco, CA 94105
Attention: William A. Myers, Esq.
Facsimile: (415) 442-10001

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If to Carlyle or its Affiliates:

1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, DC 20004-2505
Attention: Brooke B. Coburn and Charles C. Moore
Facsimile: (202) 347-1818

With a required copy to:

Dickstein Shapiro LLP
1825 Eye Street, NW
Washington, DC 20006-5403
Attention: Neil Lefkowitz
Facsimile: (202) 420-2201

Any party shall have the right to change its address for notice hereunder from time to time to such other address as may hereafter be furnished in writing by such party to the other party

10.3 Relationship. Neither party, nor any of its employees, customers or agents, shall, by virtue of this Agreement, be deemed to be the representative, employee or agent of the other party for any purpose whatsoever, nor shall they or any of them have, by virtue of this Agreement, any authority or right to assume or create an obligation of any kind or nature, expressed or implied, on behalf of the other party, nor to accept service of any legal process of any kind addressed to, or intended for, the other party.

10.4 Amendments. This Agreement may be amended or modified only upon the express written agreement of Carlyle and Apollo.

10.5 No Waiver of Default. No consent or waiver, express or implied, by any party with respect to any breach or default hereunder by any other shall be deemed or construed to be a consent or waiver with respect to any other breach or default by such other party of the same provision or any other provision of this Agreement. Failure on the part of either party to complain of any act or failure to act of any other party or to declare such party in default shall not be deemed or constitute a waiver by such party of any rights hereunder with respect to such act or failure to act.

10.6 No Third Party Rights. None of the provisions contained in this Agreement shall be for the benefit of or enforceable by any person who is not a party to this Agreement; provided, that, Carlyle Affiliates which own shares of the capital stock of the Company shall be entitled to all rights and benefits of Carlyle under this Agreement. The parties hereto expressly retain any and all rights to amend this Agreement as provided herein, notwithstanding any interest in this Agreement held by the Company or any third person.

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10.7 No Assignment; Binding Agreement. No party hereto may assign this Agreement or any of its rights or obligations hereunder, except with the prior written consent of the others; provided, that in the event that either (i) a Participant transfers its shares of capital stock of the Company to a third person in accordance with the Shareholders’ Agreement or (ii) a Carlyle Affiliate purchases from the Company shares of the capital stock of the Company, consent to the assignment of this Agreement to such third person shall be deemed to have been given, so long as such third person agrees in writing to assume all of the obligations of the transferring Participant hereunder. Subject to the foregoing, the provisions of this Agreement shall be binding upon, and, except as otherwise provided herein, shall inure to the benefit of the parties and their respective successors and permitted assigns.

10.8 Severability. In the event any provision of this Agreement is held to be illegal, invalid or unenforceable to any extent, the legality, validity and enforceability of the remainder of this Agreement shall not be affected thereby and shall remain in full force and effect and shall be enforced to the greatest extent permitted by law.

10.9 Fees and Expenses. In the event the Initial Closing does not occur, all fees and out of pocket expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement, including any transfer or sales taxes and related costs associated with the transfer of operations or assets by any Participant to the Company (“Expenses”) shall be paid by the party incurring such Expenses. In the event the Initial Closing occurs, the reasonable Expenses of each Participant shall be paid by the Company.

10.10 No Election of Remedies. No provision of, or any rights granted or remedies available under, this Agreement or, when executed and delivered, any Additional Agreement shall limit the availability of any other right or remedy for the breach or violation of any of the provisions contained in this Agreement or, when executed and delivered, any Additional Agreement.

10.11 Headings. The headings of the articles and sections of this Agreement are for convenience only and shall not be considered in construing or interpreting any of the terms or provisions hereof.

10.12 Entire Agreement. This Agreement, the Confidentiality Agreement and, when executed and delivered, the Additional Agreements, and any document required to be executed by any of such agreements, contain the entire agreement between the parties, and supersede all prior writings or agreements, with respect to the subject matter hereof.

10.13 Counterparts. This Agreement may be executed in several counterparts, all of which together shall constitute one agreement binding on all parties, notwithstanding that all the parties have not signed the same counterpart.

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[Remainder of page intentionally left blank]

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          IN WITNESS WHEREOF, the parties hereto have caused this Joint Venture Agreement to be duly executed as of the date first written above.

THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION
THAT MAY BE ENFORCED BY THE PARTIES.

APOLLO GROUP, INC.
By: Name:	/s/ Joseph L. D’Amico Joseph L. D’Amico
Title:
CARLYLE INVESTMENTS III, L.P.
By:	TCG VENTURES III, L.P.
	Its General Partner
By: Name:	/s/ Brooke B. Coburn Brooke B. Coburn
Title:	Managing Director
APOLLO GLOBAL, INC.
By: Name:	/s/ Jeff Langenbach Jeff Langenbach
Title:	President

[Signature Page to Joint Venture Agreement]

EXHIBIT A

CERTIFICATE OF INCORPORATION

Delaware

PAGE 1

The First State

     I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF INCORPORATION OF “APOLLO GLOBAL, INC”, FILED IN THIS OFFICE ON THE EIGHTEENTH DAY OF OCTOBER, A.D. 2007, AT 6:42 O’CLOCK P.M.

     A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY RECORDER OF DEEDS.

		/s/ Harriet Smith Windsor
4427828     8100  071132428		Harriet Smith Windsor, Secretary of State AUTHENTICATION: 6088119                             DATE: 10-19-07

CERTIFICATE OF INCORPORATION
OF
APOLLO GLOBAL, INC.

ARTICLE I

     The name of this corporation is: APOLLO GLOBAL, INC.

ARTICLE II

     The address of the registered office of the corporation in the State of Delaware is 3500 South Dupont Highway, City of Dover, County of Kent, Delaware 19901. The name of its registered agent at such address is Incorporating Services Ltd.

ARTICLE III

     The nature of the business or purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

ARTICLE IV

     The name of the corporation’s incorporator is Peter S. Park, c/o Morgan Lewis & Bockius LLP, One Market, Spear Street Tower, San Francisco, California 94105.

ARTICLE V

     The corporation is authorized to issue one class of stock to he designated “Common Stock,” with a par value of $0.001 per share. The total number of shares that the corporation is authorized to issue is One Million (1,000,000) shares.

ARTICLE VI

     A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of the State of Delaware, or (iv) for any transaction from which the director derived any improper personal benefit. If the General Corporation Law of the State of Delaware is hereafter amended to authorize corporate action further eliminating or limiting the personal liability of directors then the liability of a director of the

corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of the State of Delaware as so amended.

     Any repeal or modification of the foregoing provisions of this Article VI by the stockholders of the corporation shall not adversely affect any right or protection of a director of the corporation existing at the time of such repeal or modification.

ARTICLE VII

     The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred on stockholders herein are granted subject to this reservation.

ARTICLE VIII

     Election of directors need not be by written ballot unless the bylaws of the corporation shall so provide.

ARTICLE IX

     The number of directors which shall constitute the whole Board of Directors of the corporation shall be fixed from time to time by, or in the manner provided in, the bylaws of the corporation or in an amendment thereof duly adopted by the Board of Directors of the corporation or by the stockholders of the corporation.

ARTICLE X

     Meetings of stockholders of the corporation may be held within or without the State of Delaware, as the bylaws of the corporation may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors of the corporation or in the bylaws of the corporation.

ARTICLE XI

     Except as otherwise provided in this Certificate of Incorporation, in furtherance and not in limitation of the powers conferred by statute, the Board of Directors of the corporation is expressly authorized to make, repeal, alter, amend and rescind any or all of the bylaws of the corporation.

          (ii) to purchase the entire interest of the Selling Shareholder and its Affiliates in the Company at a purchase price equal to the price set forth in the Offer and on the other terms and conditions specified in the Offer.

During such sixty (60) day period, subject to the terms of the Mutual Nondisclosure Agreement between Carlyle Investment Management, L.L.C. and Apollo dated August 2, 2007 (the “Confidentiality Agreement”), each of the Offeree Shareholder and the Selling Shareholder may perform a confirmatory due diligence evaluation of the Company and its Subsidiaries, and the Company shall, and shall cause its Subsidiaries to, afford to the Offeree Shareholder’s and the Selling Shareholder’s respective officers, directors, employees, accountants, counsel, consultants, advisors and agents reasonable access to and the right to inspect, during normal business hours and with reasonable advance notice, all of the real property, properties, assets, records, contracts and other documents related to the Company and its Subsidiaries, and shall permit them to consult, during normal business hours and with reasonable advance notice, with the officers, employees, accountants, counsel and agents of the Company and its Subsidiaries for the purpose of making such investigation of the Company and its Subsidiaries as the Offeree Shareholder and the Selling Shareholder shall desire to make. The parties agree that Carlyle shall act in all respects under this paragraph 9(b) on behalf of all of its Affiliates including without limitation providing Notices of Election.

          (c) If the Offeree Shareholder elects clause (i) of paragraph 9(b), the Investor Shareholders shall, within ninety (90) days after receipt of the Notice of Election, execute such documents and instruments reasonably required by the Selling Shareholder to sell and transfer the Offeree Shareholder’s interest in the Company to the Selling Shareholder at the purchase price and on the other terms and conditions specified in the Offer, which purchase price shall be payable in immediately available funds, and the closing of such sale shall take place at the principal office of the Company as soon as practicable, but in any event within one hundred twenty (120) days after receipt of the Offer. At such closing, the Offeree Shareholder shall sell and transfer its entire interest in the Company, and shall cause its Affiliates to sell and transfer their entitle interest in the Company, to the Selling Shareholder free and clear of pledges, liens, security interests and other encumbrances other than pledges arising out of Company financing.

          (d) If the Offeree Shareholder elects clause (ii) of paragraph 9(b), the Selling Shareholder will sell its entire interest in the Company, and will cause its Affiliates to sell their entire interest in the Company, to the Offeree Shareholder at the purchase price and on the other terms and conditions specified in the Offer, and the Selling Shareholders shall, within ninety (90) days after receipt of the Notice of Election, execute such documents and instruments reasonably required by the Offeree Shareholder to sell and transfer the Selling Shareholder’s interest in the Company to the Offeree Shareholder at the purchase price and on the other terms and conditions specified in the Offer, which purchase price shall be payable in immediately available funds, and the closing of such sale shall take place at the office of the Company as soon as practicable, but in any event within one hundred twenty (120) days after receipt of the Offer. At such closing, the Selling Shareholder shall sell and transfer its entire interest in the Company to the Offeree Shareholder free and clear of pledges, liens, security interests and other encumbrances other than pledges arising out of Company financing.

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          10. Representations and Warranties.

          (a) The Company represents and warrants to the Shareholders as follows:

               (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the state of Delaware with corporate power and authority to own, lease and operate its properties, to conduct its business as currently conducted and as proposed to be conducted and to enter into and perform its obligations under this Agreement.

               (ii) The Company has taken all actions necessary to authorize it (x) to execute, deliver and perform all of its obligations under this Agreement and (y) to consummate the transactions contemplated hereby.

               (iii) This Agreement is a legally valid and binding obligation of the Company, enforceable against it in accordance with its terms, except for (a) the effect thereon of bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting the rights of creditors generally and (b) limitations imposed by equitable principles upon the specific enforceability of any of the remedies, covenants or other provisions thereof and upon the availability of injunctive relief or other equitable remedies.

               (iv) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby nor compliance by the Company with any of the provisions hereof will (x) violate or conflict with any provisions of the Certificate of Incorporation or Bylaws of the Company, or any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to the Company, or (y) violate, or conflict with, or result in a breach in any provision of, or constitute a default (or any event that, with or without due notice or lapse of time, or both, would constitute such a default) under, or result in the termination of, accelerate the performance required by, or result in the creation of any lien, security interest, charge or other encumbrance upon any of the properties or assets of the Company under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation of which the Company is a party or by which it or any of its assets are bound.

               (v) No permit, application, notice, transfer, consent, approval, order, qualification, waiver from, or authorization of, or declaration, filing or registration with, any governmental or regulatory authority or third party is necessary in connection with the execution and delivery by the Company of this Agreement or the consummation by the Company of the transactions contemplated hereby.

          (b) Each Shareholder represents and warrants to each other Shareholder and to the Company as follows:

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               (i) It is a corporation, limited partnership, limited liability company or other entity duly organized and validly existing under the laws of its respective state of organization;

               (ii) It has taken all actions necessary to authorize it (x) to execute, deliver and perform all of its obligations under this Agreement and (y) to consummate the transactions contemplated hereby.

               (iii) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby nor compliance by the Shareholder with any of the provisions hereof will (i) violate or conflict with the organic organizational documents of the Shareholder, or any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to the Shareholder, or (ii) violate, or conflict with, or result in a breach in any provision of, or constitute a default (or any event that, with or without due notice or lapse of time, or both, would constitute such a default) under, or result in the termination of, accelerate the performance required by, or result in the creation of any lien, security interest, charge or other encumbrance upon any of the properties or assets of the Shareholder under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation of which the Shareholder is a party or by which it or any of its assets are bound.

               (iv) No permit, application, notice, transfer, consent, approval, order, qualification, waiver from, or authorization of, or declaration, filing or registration with, any governmental or regulatory authority or third party is necessary on the part of the Shareholder in connection with the execution and delivery by the Shareholder of this Agreement or the consummation by the Shareholder of the transactions contemplated hereby.

          11. Legend. Each certificate evidencing Shareholder Shares and each certificate issued in exchange for or upon the Transfer of any Shareholder Shares (if such shares remain Shareholder Shares as defined herein after such Transfer) will be stamped or otherwise imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN TRANSFER RESTRICTIONS PURSUANT TO A SHAREHOLDERS AGREEMENT DATED AS OF OCTOBER 22, 2007, BY AND AMONG THE ISSUER OF SUCH SECURITIES (THE “COMPANY”) AND CERTAIN OF THE COMPANY’S SHAREHOLDERS. A COPY OF SUCH SHAREHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

The Company will imprint such legend on certificates evidencing Shareholder Shares. The legend set forth above will be removed from the certificates evidencing any shares which cease

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to be Shareholder Shares in accordance with the definition of such terms as set forth in paragraph 13 hereof.

               12. Transfer. Prior to Transferring any Shareholder Shares (other than in a Public Sale or in an Approved Sale) to any Person, the transferring Shareholder will cause the prospective transferee to execute and deliver to the Company and the other Shareholders a Joinder Agreement. The provisions of this paragraph 12 shall terminate upon the occurrence of (i) the consummation of an Approved Sale and (ii) a Public Offering.

               13. Definitions.

     “Affiliate” of a Shareholder means any other Person, entity or investment or co-investment fund directly or indirectly controlling, controlled by or under common control with the Shareholder and, in the case of a Shareholder which is an entity, any shareholder, member, partner or other equity holder of such Shareholder, which, in each case, beneficially owns at least 10% of the outstanding voting interests of the Shareholder. Each fund managed by a Carlyle or an Affiliate of Carlyle shall be an Affiliate of Carlyle for purposes of this Agreement, and no portfolio company of Carlyle or its Affiliates shall be considered an Affiliate of Carlyle or such Affiliate for purposes of this Agreement.

               “Certificate of Incorporation” means the Company’s certificate of incorporation in effect at the time as of which any determination is being made.

               “Common Stock” means the Company’s Common Stock, par value $.001 per share.

               “Company Indebtedness” means all indebtedness of the Company (including without limitation, any loans, advances, letters of credit, bank overdrafts, capital lease obligations and all other indebtedness of any kind including interest, principal and fees).

               “Company Stock” means the Common Stock and any other class or series of shares of capital stock hereafter created by the Company.

               “Fair Market Value” has the meaning ascribed to that term in the Joint Venture Agreement.

               “Fully Diluted Basis” means, without duplication, all shares of the applicable class of Company Stock issued or issuable directly or indirectly upon the exercise or exchange of all outstanding options, warrants or similar rights, excluding outstanding options or warrants that are Out of the Money or not then exercisable, and all shares of such class of Company Stock issuable upon the conversion of any securities convertible into such class of Company Stock.

               “Independent Third Party” means any Person who (together with its Affiliates), immediately prior to the contemplated transaction, (i) does not own, directly or indirectly, in excess of 5% of any class of the Company Stock on a Fully-Diluted Basis (a “5% Owner”), (ii) is not controlling, controlled by or under common control with any such 5% Owner, (iii) is not the

19

spouse or descendant (by birth or adoption), parent or dependent of any such 5% Owner, (iv) is not a trust for the benefit of such 5% Owner and/or any Person referenced in clause (ii) or (iii), and (v) is not a group consisting of any of the foregoing.

               “Joinder Agreement” means a joinder agreement in substantially the form of Exhibit A hereto pursuant to which transferees of shares of Company Stock which are permitted under this Agreement become parties to this Agreement.

               “Out of the Money” means, in the case of an option or warrant, that the fair market value per share of the shares of Company Stock which the holder thereof is entitled to purchase or subscribe for is less than the exercise price per share of such option or warrant.

               “Person” means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, a limited liability company, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

               “Public Offering” means an initial public offering by the Company of its capital stock to the public effected pursuant to an effective registration statement under the Securities Act, or any comparable statement under any similar United States federal statute then in effect.

               “Public Sale” means any sale of Shareholder Shares to the public pursuant to an offering registered under the Securities Act, to the public through a broker, dealer or market maker pursuant to the provisions of Rule 144 adopted under the Securities Act or pursuant to the provisions of Rule 144(k) adopted under the Securities Act.

               “Securities Act” means the Securities Act of 1933, as amended from time to time.

               “Securities and Exchange Commission” includes any governmental body or agency succeeding to the functions thereof.

               “Shareholder Shares” means any Company Stock owned directly or indirectly by the Shareholders. As to any particular shares constituting Shareholder Shares, such shares will cease to be Shareholder Shares (A) upon the occurrence of a Public Offering, (B) upon the termination of this Agreement, or (C) when they have been (i) effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, or (ii) sold to the public through a broker, dealer or market maker pursuant to Rule 144 (or by similar provision then in force) under the Securities Act.

               “Subsidiary” means with respect to any Person, any corporation, partnership, limited liability company, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, limited liability company, association or other business entity, a majority of the partnership, membership or other similar ownership interest

20

thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a partnership, limited liability company, association or other business entity if such Person or Persons shall be allocated a majority of such partnership, limited liability company, association or other business entity gains or losses or shall be or control the managing director or general partner of such partnership, limited liability company, association or business entity.

          “Valuation Firm” has the meaning ascribed to that term in the Joint Venture Agreement.

          14. Transfers in Violation of Agreement. Any Transfer or attempted Transfer of any Shareholder Shares in violation of any provision of this Agreement will be void, and the Company will not record such Transfer on its books or treat any purported transferee of such Shareholder Shares as the owner of such shares for any purpose.

          15. Amendment and Waiver. Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Agreement (including the schedules hereto) will be effective against the Company or the Shareholders unless such modification, amendment or waiver is approved in writing by each of the Company, Carlyle and the holders of at least a majority of the then outstanding Shareholder Shares; provided that if such amendment or waiver would adversely affect a holder or group of holders of Shareholder Shares in a manner different than any other holders of Shareholder Shares, then such amendment or waiver will require the consent of such holder or a majority of the Shareholder Shares held by such group of holders adversely affected. The Company will give prompt written notice to the Shareholders of any amendments, modifications, or waivers of the provisions of this Agreement. The failure of any party to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

          16. Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

          17. Entire Agreement. Except as otherwise expressly set forth herein, this Agreement, the Joint Venture Agreement, the Confidentiality Agreement and that certain Registration Rights Agreement dated as of the date hereof between the Company and certain of its shareholders embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

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          18. Successors and Assigns. Except as otherwise provided herein, this Agreement will bind and inure to the benefit of and be enforceable by the Company and its successors and assigns and the Shareholders and any subsequent holders of Shareholder Shares and the respective successors and assigns of each of them, so long as they hold Shareholder Shares.

          19. Counterparts. This Agreement may be executed in separate counterparts each of which will be an original and all of which taken together will constitute one and the same agreement.

          20. Remedies. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that the Company and each Shareholder will have the right to injunctive relief, in addition to all of its rights and remedies at law or in equity, to enforce the provisions of this Agreement. Nothing contained in this Agreement will be construed to confer upon any Person who is not a signatory hereto or any successor or permitted assign of a signatory hereto any rights or benefits, as a third party beneficiary or otherwise, except that each member of the Board and each Board Observer will be a third party beneficiary of respect to the indemnification described in paragraph l(c).

          21. Notices. Any notice provided for in this Agreement will be in writing and will be either (i) personally delivered, (ii) delivered by certified mail, return receipt requested, (iii) sent by nationally recognized overnight courier service (charges prepaid) or (iv) faxed with a copy following by any method described in the foregoing clauses (i) to (iii), to the address set forth below or at any address listed in the Company’s records, or at such address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder when delivered personally, five days after deposit in the U.S. mail and one day after deposit with a nationally recognized overnight courier service.

If to the Company:

Apollo Global, Inc.
c/o Apollo Group. Inc.
4615 East Elwood Street
Phoenix, AZ 85040
Attn: Chief Financial Officer
Facsimile: (602) 383-5159

If to Apollo or its Affiliates:

The Apollo Group, Inc.
4615 East Elwood Street
Phoenix, AZ 85040
Attn: Chief Financial Officer

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Facsimile: (602) 383-5159

With a required copy to:

Morgan, Lewis & Bockius LLP
One Market Street
San Francisco, CA 94105
Attn: William A. Myers, Esq.
Facsimile: (415) 442-1001

If to Carlyle or its Affiliates:

Carlyle Venture Partners III, L.P.
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, DC 20004-2505
Attention: Brooke B. Coburn and Charles C. Moore
Facsimile: (202) 347-1818

With a required copy to:

Dickstein Shapiro LLP
1825 Eye Street, NW
Washington, DC 20006-5403
Attn: Neil Lefkowitz
Facsimile: (202) 420-2201

If to any of the Other Shareholders:

At the address listed on Schedule I.

               22. Governing Law. This Agreement shall be construed according to and governed by the laws of the State of Delaware, without reference to conflicts of laws principles.

               23. Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

[Remainder of this page intentionally left blank]

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          IN WITNESS WHEREOF, the parties hereto have executed this Shareholders Agreement on the day and year first above written.

COMPANY:
APOLLO GLOBAL, INC.
By:
	Name:
	Title:
INVESTOR SHAREHOLDERS:
APOLLO GROUP, INC.
By:
	Name:
	Title:
CARLYLE VENTURE PARTNERS III, L.P.
By:	TCG VENTURES III, L.P.
	Its General Partner
By:
	Name:
	Title:

SCHEDULE I

Other Shareholders

None as of October 22, 2007

Exhibit A

JOINDER AGREEMENT

Apollo Global, Inc.
c/o Apollo Group, Inc.
4615 East Elwood Street
Phoenix, AZ 85040

Ladies and Gentlemen,

Reference is hereby made to that certain Shareholders’ Agreement (the “Shareholders’ Agreement”), dated as of October 22, 2007, by and among Apollo Global, Inc., a Delaware corporation (the “Company”), Apollo Group, Inc., an Arizona corporation, and Carlyle Venture Partners III, L.P., a Delaware limited partnership. Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to them in the Shareholders’ Agreement.

By execution and delivery of this Joinder Agreement, the undersigned hereby agrees as follows:

2. Shareholders’ Agreement. The undersigned acknowledges that it is acquiring shares of the Company’s Common Stock (the “Purchased Shares”), subject to the terms and conditions of the Shareholders’ Agreement, and agrees that it shall become, and by execution and delivery of this Agreement does become, and assumes each and every obligation of, a “Shareholder” under and as defined in the Shareholders’ Agreement as of the date set forth below (the “Effective Date”). Notwithstanding the immediately preceding sentence, the undersigned does not hereby assume, and will not otherwise become subject to, any liability resulting from any breach, default or failure to comply with any provision of the Shareholders’ Agreement by or on behalf of any Person other than the undersigned.

3. Representations and Warranties. The undersigned represents and warrants to the Company and the existing Shareholders as of the Effective Date and, to the extent that the undersigned purchases additional shares of Common Stock from the Company on any Subsequent Closing Date (as defined in the Joint Venture Agreement dated as of October 22, 2007, by and among the Company, Apollo Group, Inc. and Carlyle Venture Partners III, L.P.), the undersigned will represent and warrant to the Company and the existing Shareholders on such Subsequent Closing Date as follows:

     3.1 Accredited Investor. The undersigned (a) is an “accredited investor” (as that term is defined in Section 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”)) because it is either (x) a corporation not formed for the specific purpose of acquiring the securities offered, and has total assets in excess of $5,000,000 or (y) an entity in which all of the equity owners are accredited investors, (b) has such knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the investment contemplated hereby and (c) has reviewed the merits of such investment with tax and legal counsel and other advisors to the extent deemed advisable. The undersigned will acquire the Purchased Shares for its own account for investment and not with a view to the sale or

distribution thereof, and the undersigned has no present intention of distribution or selling to others any of such interest.

          3.2 Access. The undersigned has had access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the investment in the Purchased Shares. The undersigned further has had the opportunity to obtain all additional information necessary to verify the information to which the undersigned has had access.

          3.3 Nature of Investment. The undersigned understands that the Purchased Shares are characterized as “restricted securities” under the Act inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under the Act and related regulations such securities may be resold under the Act only in certain limited circumstances. The undersigned is familiar with and understands such resale limitations imposed by the Act and related regulations and by the Shareholders’ Agreement. The undersigned understands that the Company has no present intention to register any of the Purchased Shares.

          3.4 Authorization; Validity; No Conflicts. The undersigned is duly authorized (including by all requisite corporate or stockholder (or equivalent, for entities other than corporations) action on the part of the undersigned and its officers and directors and its direct and indirect stockholders (or equivalent equity owners, for entities other than corporations)), and has full power and authority, to execute and perform its obligations under this Joinder Agreement and the Shareholders’ Agreement, and constitutes the undersigned’s legal, valid and binding obligation enforceable against it in accordance with their respective terms except (i) as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. The execution, delivery and performance by the undersigned of this Joinder Agreement, the performance by the undersigned of the Shareholders’ Agreement, and the consummation by the undersigned of the transactions contemplated hereby and thereby will not (a) conflict with or constitute a default under any agreement, indenture or instrument to which the undersigned is a party, (b) conflict with or violate the undersigned’s organizational documents or (c) result in a violation of any order, judgment or decree of any court or governmental or regulatory authority having jurisdiction over the undersigned or any of its assets.

4. Sale of Purchased Shares. In reliance upon the representations and warranties made by the undersigned in this Joinder Agreement and the undersigned’s agreement herein to be bound by the Shareholders’ Agreement as a “Shareholder” (as such term is used in the Shareholders’ Agreement), the Company shall sell to the undersigned, and the undersigned shall purchase from the Company, the following Purchased Shares:

	Number of shares:
		Price per share:
Total Purchase Price:

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the undersigned have executed this Joinder Agreement as of the date first set forth below.

Date:

Investor:

Signature:

Printed Name:

Title (if applicable):

Address:

Phone No.:

Facsimile No.:

AGREED AND ACCEPTED:

APOLLO GLOBAL, INC.,
a Delaware corporation

By:

Name:

Title:

[Signature Page to Joinder Agreement]

EXHIBIT D

REGISTRATION RIGHTS AGREEMENT

Execution

REGISTRATION RIGHTS AGREEMENT

          THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of October 22, 2007, by and among Apollo Global, Inc., a Delaware corporation (the “Company”), Apollo Group, Inc., an Arizona corporation (“Apollo”) and Carlyle Ventures Partners III, L.P., a Delaware limited partnership (“Carlyle” and, together with Apollo and each Affiliate of Carlyle and Apollo that hereafter becomes a shareholder of the Company, the “Shareholders”). Unless otherwise indicated herein, capitalized terms used herein are defined in paragraph 9 hereof.

RECITALS

          The Company, Apollo and Carlyle are parties to (i) a Joint Venture Agreement dated as of the date hereof (the “Joint Venture Agreement”), and (ii) a Shareholders’ Agreement dated as of the date hereof (the “Shareholders’ Agreement”).

          As a condition to the consummation of the transactions contemplated by the Joint Venture Agreement, the parties hereto are entering into this Agreement to provide the registration rights set forth herein and to provide for certain rights and obligations in respect thereto as hereinafter provided.

AGREEMENT

          NOW, THEREFORE, the parties to this Agreement agree as follows:

          1. Demand Registrations.

          (a) Requests for Registration. At any time after the date that is 180 days after an Initial Public Offering, (i) the holders of a majority of the Apollo Registrable Securities or (ii) the holders of a majority of the Carlyle Registrable Securities, each may request registration under the Securities Act of all or part of their Registrable Securities on Form S-l or any similar long-form registration statement (“Long-Form Registrations”) or, if available, such holders may request registration under the Securities Act of all or part of their Registrable Securities on Form S-3 (including pursuant to Rule 415 under the Securities Act) or any similar short-form registration statement (“Short-Form Registrations”). Each request for a Demand Registration shall specify the approximate number of Registrable Securities requested to be registered and the anticipated per share price range for such offering. Within ten days after receipt of any such request, the Company shall give written notice of such requested registration to all other holders of Registrable Securities and, subject to paragraph l(d) below, will include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 10 days after the receipt of the Company’s notice. Subject to paragraph 5(b), a Demand Registration shall not count as a request for registration pursuant to this paragraph 1 if at least 50% of the Registrable Securities that the holders initiating such Demand Registration have requested to be registered in such Demand Registration are not registered for reasons other than their voluntary decision not to do so. All registrations requested pursuant to this paragraph l(a) are referred to herein as “Demand Registrations.”

          (b) Long-Form Registrations. The holders of a majority of the Apollo Registrable Securities will be entitled to request four Long-Form Registrations in which the Company will pay all Registration Expenses. The holders of a majority of the Carlyle Registrable Securities will be entitled to request two Long-Form Registrations in which the Company will pay all Registration Expenses. Subject to paragraph 5(b), a registration will not count as one of the permitted Long-Form Registrations until it has become effective unless a Shareholder requesting a Long-Form Registration that did not become effective elects to have its Registration Expenses paid by the Company in connection with such Long-Form Registration. Subject to paragraph 5(b), a Company will pay all Registration Expenses in connection with any registration initiated as a Long-Form Registration whether or not it becomes effective. All Long-Form Registrations shall be underwritten registrations.

          (c) Short-Form Registrations. In addition to the Long-Form Registrations provided pursuant to paragraph 1(b), the (i) holders of a majority of the Apollo Registrable Securities, and (ii) holders of a majority of the Carlyle Registrable Securities, will each be entitled, subject to the limitations set forth herein, to request an unlimited number of Short-Form Registrations in which the Company will pay all Registration Expenses; provided that the aggregate offering value of the Registrable Securities requested to be registered by Apollo or Carlyle in any Short-Form Registration must equal at least $[1,000,000] in the aggregate. Subject to paragraph 5(b), the Company will pay all Registration Expenses in connection with any registration initiated as a Short-Form Registration whether or not it becomes effective. Demand Registrations will be Short-Form Registrations whenever the Company is permitted to use any applicable short form. After the Company has become subject to the reporting requirements of the Securities Exchange Act, the Company will use its best efforts to make Short-Form Registrations available for the sale of Registrable Securities, including but not limited to compliance with paragraph 8 hereof.

          (d) Priority on Demand Registrations. The Company will not include in any Demand Registration any securities which are not Registrable Securities without the prior written consent of the holders of a majority of the Registrable Securities included in such Demand Registration. If a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing (with a copy to each party hereto requesting registration of Registrable Securities) that in their opinion the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in such offering exceeds the number of Registrable Securities and other securities, if any, which can be sold therein without adversely affecting the marketability of the offering, the Company will include in such registration prior to the inclusion of any securities which are not Registrable Securities the number of Registrable Securities requested to be included which in the opinion of such underwriters can be sold without adversely affecting the marketability of the offering, pro rata among the respective holders thereof on the basis of the number of shares of Registrable Securities owned by such Shareholder.

          (e) Restrictions on Demand Registrations. The Company will not be obligated to effect any Demand Registration within three months after the effective date of a previous Demand Registration. The Company may postpone for up to three months the filing or the effectiveness of a registration statement for a Demand Registration if the Company’s board of directors determines in its reasonable good faith judgment that such Demand Registration would

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reasonably be expected to have a material adverse effect on any proposal or plan by the Company or any of its subsidiaries to engage in any acquisition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer or similar transaction; provided that in such event, the holders of a majority of Registrable Securities initially requesting such Demand Registration will be entitled to withdraw such request and, if such request is withdrawn, such Demand Registration will not count as one of the permitted Demand Registrations hereunder and the Company will pay all Registration Expenses in connection with such registration; provided, that the Company may delay a Demand Registration hereunder only once in any twelve-month period.

          (f) Selection of Underwriters. The holders of a majority of the Apollo Registrable Securities included in any Demand Registration will have the right to select the investment banker(s) and manager(s) to administer the offering, subject to the (x) approval of the Board of Directors of the Company, which approval will not be unreasonably withheld or delayed and (y) Carlyle’s right to name a co-manager for the offering if Carlyle Registrable Securities are to be included in the offering. In the event that none of the Apollo Registrable Securities are included in such Demand Registration, Carlyle will have the right to make such selection, subject to the approval of the Board of Directors of the Company, which approval will not be unreasonably withheld or delayed.

          (g) Other Registration Rights. The Company will not grant to any Persons the right to request the Company to register any equity securities of the Company, or any securities convertible or exchangeable into or exercisable for such securities (whether as a demand registration or a piggyback registration), without the prior written consent of the holders of a majority of the Apollo Registrable Securities and of a majority of the Carlyle Registrable Securities.

          2. Piggyback Registrations.

          (a) Right to Piggyback. Upon completion by the Company of an Initial Public Offering (and any Initial Public Offering that is not a Qualified IPO shall be undertaken only with the prior written consent of Carlyle), whenever the Company proposes to register any of its securities (including any proposed registration of the Company’s securities by any third party) under the Securities Act (other than pursuant to a registration on Form S-4 or S-8 or any successor or similar forms) and the registration form to be used may be used for the registration of Registrable Securities (a “Piggyback Registration”), whether or not for sale for its own account, the Company will give prompt written notice to all holders of Registrable Securities of its intention to effect such a registration and will include in such registration all Registrable Securities of the same class or series of securities that the Company proposes to register with respect to which the Company has received written requests for inclusion therein within 30 days after the receipt of the Company’s notice.

          (b) Piggyback Expenses. The Registration Expenses of the holders of Registrable Securities will be paid by the Company in all Piggyback Registrations whether or not such registration is consummated.

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          (c) Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing (with a copy to each party hereto requesting registration of Registrable Securities) that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of such offering, the Company will include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the Registrable Securities requested to be included in such registration, pro rata among the holders of such Registrable Securities on the basis of the number of Registrable Securities owned by each such holder and (iii) third, any other securities requested to be included in such registration pro rata among the holders thereof on the basis of the number of such securities owned by each such holder.

          (d) Priority on Secondary Registrations. If a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company’s securities, and the managing underwriters advise the Company in writing (with a copy to each party hereto requesting registration of Registrable Securities) that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of the offering, the Company will include in such registration (i) first, the securities requested to be included therein by the holders requesting such registration and the Registrable Securities requested to be included in such registration, pro rata among the holders of such securities on the basis of the number of Registrable Securities owned by each such holder and (ii) second, any other securities requested to be included in such registration.

          (e) Other Registrations. If the Company has previously filed a registration statement with respect to Registrable Securities pursuant to paragraph 1 or pursuant to this paragraph 2, and if such previous registration has not been withdrawn or abandoned, the Company will not file or cause to be effected any other registration of any of its equity securities or securities convertible or exchangeable into or exercisable for its equity securities under the Securities Act (except on Form S-4 or S-8 or any successor form), whether on its own behalf or at the request of any holder or holders of such securities, until a period of at least three months has elapsed from the effective date of such previous registration.

          3. Holdback Agreements.

          (a) To the extent not inconsistent with applicable law, each holder of Registrable Securities agrees not to effect any public sale or distribution (including sales pursuant to Rule 144) of equity securities of the Company, or any securities, options or rights convertible into or exchangeable or exercisable for such securities, during the seven days prior to and the 180-day period beginning on the effective date of the Company’s Initial Public Offering of Common Stock under the Securities Act or during the seven days prior to and the 90-day period beginning on the effective date of any other underwritten registration filed under the Securities Act (in each case, except as part of such underwritten registration and except for such shorter period as the underwriters managing the registered public offering and the holders of a majority of the Registrable Securities otherwise agree in writing with respect to all holders of Registrable Securities).

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          (b) The Company agrees (i) not to effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the seven days prior to and during the 180-day period beginning on the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration (except as part of such underwritten registration or pursuant to registrations on Form S-4 or S-8 or any successor form), unless the underwriters managing the registered public offering otherwise agree, and (ii) to cause each holder of its Common Stock, or any securities convertible into or exchangeable or exercisable for Common Stock, purchased from the Company at any time after the date of this Agreement (other than in a registered public offering) to agree not to effect any public sale or distribution (including sales pursuant to Rule 144) of any such securities during such period (except as part of such underwritten registration, if otherwise permitted), unless the underwriters managing the registered public offering otherwise agree in writing.

          4. Registration Procedures. Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, the Company will use its best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company will as expeditiously as possible:

          (a) prepare and (within 60 days after the end of the period within which requests for registration may be given to the Company) file with the Securities and Exchange Commission a registration statement with respect to such Registrable Securities and thereafter use its best efforts to cause such registration statement to become effective (provided that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company will furnish to the holders of a majority of the Registrable Securities covered by such registration statement and their counsel and if Carlyle Registrable Securities are covered by such registration statement to Carlyle and its counsel copies of all such documents proposed to be filed, which documents will be subject to the review of such counsel);

          (b) notify each holder of Registrable Securities of the effectiveness of each registration statement filed hereunder and prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of either (i) not less than the number of days until all such securities have been disposed of (subject to extension pursuant to paragraph 7(b)) or, if such registration statement relates to an underwritten offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer or (ii) such shorter period as will terminate when all of the securities covered by such registration statement have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement (but in any event not before the expiration of any longer period required under the Securities Act), and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement;

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          (c) furnish to each seller of Registrable Securities such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller;

          (d) use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph (d), (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction);

          (e) notify each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the discovery of the happening of any event as a result of which, the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made, and, at the request of any such seller, the Company will prepare and furnish to such seller a reasonable number of copies of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made;

          (f) cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed or quoted;

          (g) provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement;

          (h) enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold and, if Carlyle Registrable Securities are being sold, Carlyle, or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, effecting a stock split or a combination of shares);

          (i) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement;

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          (j) otherwise use its best efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Company’s first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

          (k) notify each seller of such Registrable Securities in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any securities included in such registration statement for sale in any jurisdiction, and use its best efforts promptly to obtain the withdrawal of such order;

          (1) obtain one or more comfort letters, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), signed by the Company’s independent public accountants in customary form and covering such matters of the type customarily covered by comfort letters as the holders of a majority of the Registrable Securities being sold reasonably request and Carlyle, if Carlyle Registrable Securities are also being sold;

          (m) permit any holder of Registrable Securities which holder, in its reasonable judgment, might be deemed to be an underwriter or a controlling Person of the Company, to participate in the preparation of such registration or comparable statement and to require the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included; and

          (n) provide a legal opinion of the Company’s outside counsel, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), with respect to the registration statement, each amendment and supplement thereto, the prospectus included therein (including the preliminary prospectus) and such other documents relating thereto in customary form and covering such matters of the type customarily covered by legal opinions of such nature.

The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish the Company such information regarding such seller and the distribution of such securities as the Company may from time to time reasonably request in writing.

          5. Registration Expenses.

          (a) All expenses incident to the Company’s performance of or compliance with this Agreement, including, without limitation, all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding discounts and commissions) and other Persons retained by the Company (all such expenses being herein called “Registration

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Expenses”), will be borne as provided in this Agreement, except that the Company will, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed.

          (b) Notwithstanding anything in this Agreement to the contrary, the Company shall not be required to pay for any Registration Expenses in connection with a registration proceeding begun pursuant to paragraph l(a) if the registration request is subsequently withdrawn at the request of the initiating holders, unless such initiating holders agree to forfeit their right to one Demand Registration pursuant to paragraph l(b) (in which case such right shall be forfeited by the holders initiating such request and all holders exercising their Piggyback Registration rights with respect to such request); provided, however, that if at or prior to the time of such withdrawal, such holders have learned of a material adverse change in the condition, business, or prospects of the Company not known to such holders at the time of their request for such registration (it being understood that a change in the Company’s stock price shall not constitute in and of itself a material adverse change) and withdrawn their request for registration with reasonable promptness after learning of such material adverse change, then such holders shall not be required to pay any of such expenses and shall retain their rights pursuant to paragraph 1.

          (c) In connection with each Demand Registration and each Piggyback Registration, the Company will reimburse (i) the holders of Registrable Securities covered by such registration for the reasonable fees and disbursements of (A) one counsel chosen by the holders of a majority of the Registrable Securities included in such registration and (B) any such other counsel retained for the purpose of rendering opinions and reviewing documents on behalf of one or more holders of Registrable Securities on behalf of whom such first counsel does not act and (ii) Carlyle for the reasonable fees and disbursements of counsel to Carlyle in the event that Carlyle Registrable Securities are covered by such registration.

          (d) To the extent Registration Expenses are not required to be paid by the Company, each holder of securities included in any registration hereunder will pay those Registration Expenses allocable to the registration of such holder’s securities so included, and any Registration Expenses not so allocable will be borne by all sellers of securities included in such registration in proportion to the aggregate selling price of the securities to be so registered for each seller.

          6. Indemnification.

          (a) The Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, each holder of Registrable Securities, its officers and directors and each Person that controls such holder (within the meaning of the Securities Act) against any losses, claims, damages, liabilities, joint or several, to which such holder or any such director or officer or controlling Person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (i) any untrue or alleged untrue

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statement of material fact contained (A) in any registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or (B) in any application or other document or communication (in this paragraph 6 collectively called an “application”) executed by or on behalf of the Company or based upon written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify any securities covered by such registration statement under the “blue sky” or securities laws thereof, or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein under the circumstances which such statements have been made not misleading, and the Company will reimburse such holder and each such director, officer and controlling Person for any legal or any other expenses incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement, or omission or alleged omission, made in such registration statement, any such prospectus or preliminary prospectus or any amendment or supplement thereto, or in any application, in reliance upon, and in conformity with, written information prepared and furnished to the Company by such holder expressly for use therein or by such holder’s failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has timely furnished such holder with a sufficient number of copies of the same. In connection with an underwritten offering, the Company will indemnify such underwriters, their officers and directors and each Person that controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities.

          (b) In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder will furnish to the Company in writing such information as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the extent permitted by law, will indemnify and hold harmless the Company, its directors and officers and each other Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities, joint or several, to which the Company or any such director or officer or controlling Person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (i) any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or in any application or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is made in such registration statement, any such prospectus or preliminary prospectus or any amendment or supplement thereto, or in any application, in reliance upon and in conformity with written information prepared and furnished to the Company by such holder expressly for use therein, and such holder will reimburse the Company and each such director, officer and controlling Person for any legal or any other expenses incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided that the obligation to indemnify will be individual, not joint and several, to each holder and will be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement.

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          (c) Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give such prompt notice shall not impair any Person’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim.

          (d) The indemnification provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and will survive the transfer of securities. If the indemnification provided for in paragraph 6(a) from the Company is unavailable to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses referred to herein, then the Company, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the Company and the indemnified party, as well as any other relevant equitable considerations. The relative faults of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by, the Company or such indemnified party, and the Company’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities or expenses referred to above shall be deemed to include any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this paragraph 6(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the preceding sentences. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this paragraph 6(d).

          7. Participation in Underwritten Registrations.

          (a) No Person may participate in any registration hereunder which is underwritten unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements (including, without limitation, pursuant to the terms of any over-allotment or “green shoe” option requested by the managing underwriter(s), provided that

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no holder of Registrable Securities will be required to sell more than the number of Registrable Securities that such holder has requested the Company to include in any registration) and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements; provided that no holder of Registrable Securities included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding such holder and such holder’s intended method of distribution) or to undertake any indemnification or “holdback” obligations to the Company or the underwriters with respect thereto, except as otherwise provided in paragraphs 3 and 6 hereof.

          (b) Each Person that is participating in any registration hereunder agrees that, upon receipt of any written notice from the Company of the happening of any event of the kind described in paragraph 4(e) and 4(k) above, such Person will forthwith discontinue the disposition of its Registrable Securities pursuant to the registration statement until such Person’s receipt of the copies of a supplemented or amended prospectus as contemplated by such paragraph 4(e). If the Company gives any such written notice, the applicable time period mentioned in paragraph 4(b) during which a registration statement is to remain effective will be extended by the number of days during the period from and including the date of the giving of such written notice pursuant to this paragraph to and including the date when each seller of a Registrable Security covered by such registration statement has received the copies of the supplemented or amended prospectus contemplated by paragraph 4(e).

          8. Current Public Information. At all times after the Company has filed a registration statement with the Securities and Exchange Commission pursuant to the requirements of either the Securities Act or the Securities Exchange Act, the Company will file in a timely manner all reports and other documents required to be filed by it under the Securities Act and the Securities Exchange Act and the rules and regulations adopted by the Securities and Exchange Commission thereunder, and will take such further action as any holder or holders of Registrable Securities may reasonably request, all to the extent required to enable such holders to sell Registrable Securities pursuant to Rule 144 adopted by the Securities and Exchange Commission under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the Securities and Exchange Commission. Without limiting the foregoing, the Company covenants that, at its own expense, it will promptly take such action as any Shareholder may reasonably request, all to the extent required from time to time to enable such Shareholder to transfer its Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rules 144, 144A or Regulation S under the Securities Act or (ii) any similar rule or regulation hereafter adopted by the Securities and Exchange Commission. Upon the request of a Shareholder, the Company, at its own expense, will promptly deliver to such Shareholder (i) a written statement as to whether it has complied with such requirements (and such Shareholder shall be entitled to rely upon the accuracy of such written statement), (ii) a copy of the most recent annual or quarterly report of the Company and (iii) such other reports and documents as such Shareholder may reasonably request in order to avail itself of any rule or regulation of the Securities and Exchange Commission allowing it to transfer its shares without registration.

          9. Definitions.

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          “Affiliate” of a Shareholder means any other Person, entity or investment or co-investment fund directly or indirectly controlling, controlled by or under common control with the Shareholder and, in the case of a Shareholder which is an entity, any shareholder, member, partner or other equity holder of such Shareholder, which, in each case, beneficially owns at least 10% of the outstanding voting interests of the Shareholder. Each fund managed by Carlyle or an Affiliate of Carlyle shall be an Affiliate of Carlyle for purposes of this Agreement and no portfolio company of Carlyle or its Affiliates shall be considered an Affiliate of Carlyle or such Affiliate for purposes of this Agreement.

          “Common Stock” means the common stock of the Company, par value $.001 per share.

          “Apollo Registrable Securities” means (i) any shares of Common Stock issued to Apollo pursuant to the Joint Venture Agreement; (ii) any equity securities issued or issuable directly or indirectly with respect to the securities referred to in clause (i) by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization, including a recapitalization or exchange and (iii) any other shares of Common Stock now held or hereafter acquired by Apollo; provided, that in the event that pursuant to such recapitalization or exchange, equity securities are issued which do not participate in the residual equity of the Company (“Non-Participating Securities”), such Non-Participating Securities will not be Registrable Securities. As to any particular shares constituting Apollo Registrable Securities, such shares will cease to be Apollo Registrable Securities when they have (x) been effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, or (y) been sold to the public through a broker, dealer or market maker pursuant to Rule 144 (or by similar provision then in force) under the Securities Act or (z) have become eligible for sale under Rule 144(k).

          “Carlyle Registrable Securities” means (i) any shares of Common Stock issued to Carlyle or Carlyle Affiliates pursuant to the Joint Venture Agreement; (ii) any equity securities issued or issuable directly or indirectly with respect to the securities referred to in clause (i) by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization, including a recapitalization or exchange and (iii) any other shares of Common Stock now held or hereafter acquired by Carlyle or any of Carlyle’s Affiliates; provided, that in the event that pursuant to such recapitalization or exchange, equity securities are issued which do not participate in the residual equity of the Company (“Non-Participating Securities”), such Non-Participating Securities will not be Registrable Securities. As to any particular shares constituting Carlyle Registrable Securities, such shares will cease to be Carlyle Registrable Securities when they have (x) been effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, or (y) been sold to the public through a broker, dealer or market maker pursuant to Rule 144 (or by similar provision then in force) under the Securities Act or (z) have become eligible for sale under Rule 144(k).

          “Initial Public Offering” means an initial public offering by the Company of its Common Stock to the public effected pursuant to an effective registration statement under the Securities Act of 1933, as amended, or any comparable statement under any similar United States federal statute then in effect.

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          “Person” means an individual, a limited liability company, an association, a joint stock company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department, agency or political subdivision thereof.

          “Qualified IPO” means the closing of the sale of shares of Common Stock in a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act, in which the gross aggregate cash proceeds to the Company (before deduction of underwriting discount, commissions and expenses of sale) are at least $50,000,000.

          “Registrable Securities” means the Apollo Registrable Securities and the Carlyle Registrable Securities, including such shares of Common Stock hereafter acquired by transferees of the Apollo Registrable Securities and the Carlyle Registrable, provided that such transfers are effected in accordance with the terms and conditions the Shareholders’ Agreement of even date herewith with respect to transfers of Common Stock.

          “Securities Act” means the Securities Act of 1933, as amended, or any similar federal law then in force.

          “Securities and Exchange Commission” includes any governmental body or agency succeeding to the functions thereof.

          “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal law then in force.

          10. Miscellaneous.

          (a) No Inconsistent Agreements. The Company will not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement.

          (b) Adjustments Affecting Registrable Securities. The Company will not take any action, or permit any change to occur, with respect to its securities which would materially and adversely affect the ability of the holders of Registrable Securities to include such Registrable Securities in a registration undertaken pursuant to this Agreement or which would adversely affect the marketability of such Registrable Securities in any such registration (including, without limitation, effecting a stock split or a combination of shares).

          (c) Remedies. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party hereto will have the right to injunctive relief, in addition to all of its other rights and remedies at law or in equity, to enforce the provisions of this Agreement.

          (d) Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may be amended or waived only upon the prior written consent of each of the Company, Carlyle and the holders of a majority of the Registrable Securities; provided, that if such amendment or waiver would treat a holder or group of holders of Registrable Securities in a manner different from any other holders of Registrable Securities (other than as already provided herein), then such amendment or waiver will require the consent

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of such holder or the holders of a majority of the Registrable Securities of such group adversely treated. The Company will give prompt written notice to the parties hereto of any amendments, modifications, or waivers of the provisions of this Agreement.

          (e) Successors and Assigns. This Agreement will be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. In addition, and whether or not any express assignment has been made, the provisions of this Agreement that are for the benefit of the holders of Registrable Securities (or any portion thereof) as such will be for the benefit of and enforceable by any subsequent holder of any Registrable Securities (or of such portion thereof), subject to the provisions respecting the minimum numbers or percentages of shares of Registrable Securities (or of such portion thereof) required in order to be entitled to certain rights, or take certain actions, contained herein.

          (f) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

          (g) Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same Agreement.

          (h) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

          (i) Governing Law. This Agreement shall be construed according to and governed by the laws of the State of Delaware, without reference to conflicts of laws principles.

          (j) Notices. Any notice provided for in this Agreement will be in writing and will be either (i) personally delivered, (ii) delivered by certified mail, return receipt requested, (iii) sent by a nationally recognized overnight courier service (charges prepaid), or (iv) faxed with a copy following by any method described in the foregoing clauses (i) to (iii), to each Shareholder that is a party hereto at the address indicated in the Shareholders Agreement and to the Company at the address indicated below, or at such address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder when delivered personally, five days after deposit in the U.S. mail and one day after deposit with a nationally recognized overnight courier service.

If to the Company:

Apollo Global, Inc.
c/o Apollo Group, Inc.
4615 East Elwood Street
Phoenix, AZ 85040

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Attention: Chief Financial Officer
Facsimile: (602) 383-5159

[Remainder of page intentionally left blank]

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          IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement on the day and year first above written.

APOLLO GLOBAL, INC.
By:
	Name:
	Title:
APOLLO GROUP, INC.
By:
	Name:
	Title:
CARLYLE VENTURE PARTNERS III, L.P.
By: TCG VENTURES III, L.P.
	Its General Partner
By:
	Name:
	Title:

Schedule 5.4 Capitalization

Schedule 5.5

Subsidiaries

ARTICLE XII

     To the fullest extent permitted by applicable law, the corporation is also authorized to provide indemnification of (and advancement of expenses to) such agents (and any other persons to which Delaware law permits the corporation to provide indemnification) through bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the General Corporation Law of the State of Delaware, subject only to limits created by applicable Delaware law (statutory or non-statutory), with respect to actions for breach of duty to the corporation, its stockholders, and others.

     Any repeal or modification of any of the foregoing provisions of this Article XII shall not adversely affect any right or protection of a director, officer, agent or other person existing at the time of, or increase the liability of any director of the corporation with respect to any acts or omissions of such director, officer or agent occurring prior to such repeal or modification.

Dated: October 18, 2007	/s/ Peter S. Park
	Peter S. Park, Sole Incorporator

EXHIBIT B

BYLAWS

BYLAWS
OF
APOLLO GLOBAL, INC.

ARTICLE I.
OFFICES

     Section 1. Registered Office. The registered office shall be at the office of City of Dover, County of Kent, State of Delaware.

     Section 2. Other Offices. The corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require.

ARTICLE II.
MEETINGS OF STOCKHOLDERS

     Section 1. Annual Meeting. An annual meeting of the stockholders for the election of directors shall be held at such place either within or without the State of Delaware as shall be designated on an annual basis by the Board of Directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Any other proper business may be transacted at the annual meeting.

     Section 2. Notice of Annual Meeting. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting.

     Section 3. Voting List. The officer who has charge of the stock ledger of the corporation shall prepare and make, or cause a third party to prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

     Section 4. Special Meetings. Special meetings of the stockholders of the corporation, for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, shall be called by the President or Secretary at the request in writing of a majority of the members of the Board of Directors or at the request in writing of stockholders owning at

least ten (10%) of the total voting power of all outstanding shares of stock of the corporation then entitled to vote, and may not be called absent such a request. Such request shall state the purpose or purposes of the proposed meeting.

     Section 5. Notice of Special Meetings. As soon as reasonably practicable after receipt of a request as provided in Section 4 of this Article II, written notice of a special meeting, stating the place, date (which shall be not less than ten nor more than sixty days from the date of the notice) and hour of the special meeting and the purpose or purposes for which the special meeting is called, shall be given to each stockholder entitled to vote at such special meeting.

     Section 6. Scope of Business at Special Meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

     Section 7. Quorum. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the chairman of the meeting or the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting as provided in Section 5 of this Article II.

     Section 8. Qualifications to Vote. The stockholders of record on the books of the corporation at the close of business on the record date as determined by the Board of Directors and only such stockholders shall be entitled to vote at any meeting of stockholders or any adjournment thereof.

     Section 9. Record Date. The Board of Directors may fix a record date for the determination of the stockholders entitled to notice of or to vote at any stockholders’ meeting and at any adjournment thereof, or to express consent to corporate action in writing without a meeting, or to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action. The record date shall not be more than sixty nor less than ten days before the date of such meeting, and not more than sixty days prior to any other action. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

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     Section 10. Action at Meetings. When a quorum is present at any meeting, the vote of the holders of a majority of the shares of stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of applicable law or of the Certificate of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question.

     Section 11. Voting and Proxies. Unless otherwise provided in the Certificate of Incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Each proxy shall be revocable unless expressly provided therein to be irrevocable and unless it is coupled with an interest sufficient in law to support an irrevocable power.

     Section 12. Action by Stockholders Without a Meeting. Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in the State of Delaware (by hand or by certified or registered mail, return receipt requested), to its principal place of business, or to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded, provided, however, that action by written consent to elect directors, if less than unanimous, shall be in lieu of holding an annual meeting only if all the directorships to which directors could be elected at an annual meeting held at the effective time of such action are vacant and are filled by such action. Prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of stockholders to take the action were delivered to the corporation by delivery to its registered office in the State of Delaware (by hand or by certified or registered mail, return receipt requested), to its principal place of business, or to an officer or agent of the corporation having custody of the book in which proceedings or meetings of stockholders are recorded.

ARTICLE III.
DIRECTORS

     Section 1. Powers. The business of the corporation shall be managed by or under the direction of its Board of Directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by applicable law or by the Certificate of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders.

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     Section 2. Number; Election; Tenure and Qualification. The number of directors which shall constitute the whole board shall be fixed from time to time by resolution of the Board of Directors or by the stockholders at an annual meeting of the stockholders, with the exception of the first Board of Directors, which shall be elected by the incorporator. Directors need not be stockholders. Except as provided in the corporation’s Certificate of Incorporation or in Section 3 of this Article III, the directors shall be elected at the annual meeting of the stockholders by a plurality vote of the shares represented in person or by proxy and each director elected shall hold office until his successor is elected and qualified unless he shall resign, become disqualified, disabled, or otherwise removed, subject to the following:

     (a) Four (4) directors shall be designated by Apollo Group, Inc. (the “Apollo Directors”);

     (b) Two (2) directors shall be designated by Carlyle Venture Partners III, L.P. (the “Carlyle Directors”), provided that on any date that Carlyle Venture Partners III, L.P. and its Affiliates (as defined in the Shareholders’ Agreement, dated as of October 22, 2007, as the same may be amended from time to time (the “Shareholders’ Agreement”)) do not own, in the aggregate, either (i) ten percent (10%) or more of the issued and outstanding Shareholder Shares (as defined in the Shareholders’ Agreement) or (ii) shares of the Company Stock (as defined in the Shareholders’ Agreement) with a Fair Market Value (as defined in the Shareholders’ Agreement) of one hundred million dollars ($100,000,000) or more, one (1) director shall be designated by Carlyle Venture Partners III, L.P.; and

     (c) One (1) director shall be designated as the then elected and qualified President and Chief Executive Officer of the corporation.

     Section 3. Vacancies and Newly Created Directorships. In the event that any representative designated pursuant to Section 2 of this Article III ceases to serve as a member of the Board of Directors during his term of office for any reason, the resulting vacancy on the Board of Directors will be filled by a representative selected by the party entitled to designate such representative pursuant to Section 2 of this Article III. Newly-created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, provided that the directors designated by Apollo Group, Inc. shall constitute at least a majority of the Board at all times. The directors so chosen shall serve until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced.

     Section 4. Location of Meetings. The Board of Directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware.

     Section 5. Meeting of Newly Elected Board of Directors. The first meeting of each newly elected Board of Directors shall be held immediately following the annual meeting of stockholders and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event such meeting is not held at such time, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the directors.

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     Section 6. Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors; provided that any director who is absent when such a determination is made shall be given notice of such location.

     Section 7. Special Meetings. Special meetings of the Board of Directors may be called by the President on two days’ notice to each director by mail, nationally recognized overnight courier service or facsimile; special meetings shall be called by the President or Secretary in a like manner and on like notice on the written request of two directors unless the Board of Directors consists of only one director, in which case special meetings shall be called by the President or Secretary in a like manner and on like notice on the written request of the sole director. Notice may be waived in accordance with Section 229 of the General Corporation Law of the State of Delaware.

     Section 8. Quorum and Action at Meetings. At all meetings of the Board of Directors, a majority of the directors then in office shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

     Section 9. Action Without a Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee.

     Section 10. Telephonic Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear and communicate with each other, and such participation in a meeting shall constitute presence in person at the meeting.

     Section 11. Committees. The Board of Directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of at least one (1) Apollo Director and one (1) Carlyle Director. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

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     Section 12. Committee Authority. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to (a) approving, adopting or recommending to the stockholders, any action or matter expressly required by the General Corporation Law of the State of Delaware to be submitted to stockholders for approval, or (b) adopting, amending or repealing any Bylaw of the corporation. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors.

     Section 13. Committee Minutes. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required to do so by the Board of Directors.

     Section 14. Directors Compensation. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, the Board of Directors shall have the authority to fix the compensation of directors. The directors shall be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

     Section 15. Resignation. Any director or officer of the corporation may resign at any time. Each such resignation shall be made in writing and shall take effect at the time specified therein, or, if no time is specified, at the time of its receipt by either the Board of Directors, the President or the Secretary. The acceptance of a resignation shall not be necessary to make it effective unless expressly so provided in the resignation.

     Section 16. Removal. Unless otherwise restricted by the Certificate of Incorporation, these Bylaws or applicable law, (a) the removal from the Board of Directors (without cause) of any of the Apollo Directors shall be at Apollo Group, Inc.’s written request, and only upon such request and under no other circumstances, and (b) the removal from the Board of Directors (without cause) of any of the Carlyle Directors shall be at Carlyle Venture Partners III, L.P.’s written request, and only upon such request and under no other circumstances, provided that one of the Carlyle Directors shall be removed promptly after any date that Carlyle Venture Partners III, L.P. and its Affiliates do not own, in the aggregate, either (i) ten percent (10%) or more of the issued and outstanding Shareholder Shares or (ii) shares of the Company Stock with a Fair Market Value of one hundred million dollars ($100,000,000) or more. Any newly created directors may be removed, without cause, by the affirmative vote of a majority of the remaining directors. Any director may be removed from the Board of Directors for cause by the affirmative vote of a majority of the remaining directors.

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ARTICLE IV.
NOTICES

     Section 1. Notice to Directors and Stockholders. Whenever, under the provisions of the statutes or of the Certificate of Incorporation or of these Bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail or nationally recognized overnight courier, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given five days after the same shall be deposited in the United States mail or one day after delivery to a nationally recognized overnight courier. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent of the corporation that the notice has been given shall in the absence of fraud, be prima facie evidence of the facts stated therein. Notice to directors may also be given by telephone or facsimile (with confirmation of receipt).

     Section 2. Waiver. Whenever any notice is required to be given under the provisions of the statutes or of the Certificate of Incorporation or of these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. The written waiver need not specify the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors, or members of a committee of directors. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Attendance at the meeting is not a waiver of any right to object to the consideration of matters required by the General Corporation Law of the State of Delaware to be included in the notice of the meeting but not so included, if such objection is expressly made at the meeting.

ARTICLE V.
OFFICERS

     Section 1. Enumeration. The officers of the corporation shall be chosen by the Board of Directors and shall include a President, a Secretary, a Treasurer or Chief Financial Officer and such other officers with such other titles as the Board of Directors shall determine. The Board of Directors may elect from among its members a Chairman or Chairmen of the Board and a Vice Chairman of the Board. The Board of Directors may also choose one or more Vice-Presidents, Assistant Secretaries and Assistant Treasurers. Any number of offices may be held by the same person, unless the Certificate of Incorporation or these Bylaws otherwise provide.

     Section 2. Election. The Board of Directors at its first meeting after each annual meeting of stockholders shall elect a President, a Secretary, a Treasurer and such other officers with such other titles as the Board of Directors shall determine.

     Section 3. Appointment of Other Agents. The Board of Directors may appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms

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and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.

     Section 4. Compensation. The salaries of all officers of the corporation shall be fixed by the Board of Directors or a committee thereof. The salaries of agents of the corporation shall, unless fixed by the Board of Directors, be fixed by the President or any Vice-President of the corporation.

     Section 5. Tenure. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the directors of the Board of Directors. Any vacancy occurring in any office of the corporation shall be filled by the Board of Directors.

     Section 6. Chairman of the Board and Vice-Chairman of the Board. The Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which the Chairman shall be present. The Chairman shall have and may exercise such powers as are, from time to time, assigned to the Chairman by the Board of Directors and as may be provided by law. In the absence of the Chairman of the Board, the Vice Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which the Vice Chairman shall be present. The Vice Chairman shall have and may exercise such powers as are, from time to time, assigned to such person by the Board of Directors and as may be provided by law.

     Section 7. President. The President shall be the Chief Executive Officer of the corporation unless such title is assigned to another officer of the corporation; in the absence of a Chairman and Vice Chairman of the Board, the President shall preside as the chairman of meetings of the stockholders and the Board of Directors; and the President shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The President or any Vice President shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation.

     Section 8. Vice-President. In the absence of the President or in the event of the President’s inability or refusal to act, the Vice-President, if any (or in the event there be more than one Vice-President, the Vice-Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President. The Vice-President shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

     Section 9. Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The Secretary shall give, or

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cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision the Secretary shall be subject. The Secretary shall have custody of the corporate seal of the corporation and the Secretary, or an Assistant Secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the Secretary’s signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by such officer’s signature.

     Section 10. Assistant Secretary. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the Secretary or in the event of the Secretary’s inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

     Section 11. Chief Financial Officer. The Chief Financial Officer may also be designated by the alternate title of “Treasurer.” The Chief Financial Officer shall have the custody of all moneys and securities of the Corporation and shall keep regular books of account. Such officer shall disburse funds of the Corporation in payment of the just demands against the Corporation, or as may be ordered by the Board, taking proper vouchers for such disbursements, and shall render to the Board from time to time as may be required of such officer, an account of all transactions as Chief Financial Officer and of the financial condition of the Corporation. Such officer shall perform all duties incident to such office or that are properly required by the President or by the Board. If required by the Board of Directors, the Chief Financial Officer shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of such officer’s office and for the restoration to the corporation, in case of such officer’s death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in such officer’s possession or control belonging to the corporation.

     Section 12. Assistant Treasurer. The Assistant Treasurer or the Assistant Treasurers, in the order of their seniority, shall, in the absence or disability of the Chief Financial Officer, or in the event of such officer’s refusal to act, perform the duties and exercise the powers of the Chief Financial Officer, and shall have such powers and discharge such duties as may be assigned from time to time by the President or by the Board of Directors.

ARTICLE VI.
CAPITAL STOCK

     Section 1. Certificates. The shares of the corporation shall be represented by a certificate. Certificates shall be signed by, or in the name of the corporation by, (a) the Chairman of the Board, the Vice-Chairman of the Board, the President or a Vice-President, and (b) the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, certifying the number of shares owned by such stockholder in the corporation. Certificates may be issued for

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partly paid shares and in such case upon the face or back of the certificates issued to represent any such partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be specified.

     Section 2. Signature. Any of or all of the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

     Section 3. Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or such owner’s legal representative, to indemnify the corporation against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

     Section 4. Transfer of Stock. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

     Section 5. Record Date. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholder or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

     Section 6. Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

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ARTICLE VII.
GENERAL PROVISIONS

     Section 1. Dividends. Dividends upon the capital stock of the corporation, subject to the applicable provisions, if any, of the Certificate of Incorporation, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property or in shares of capital stock, subject to the provisions of the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purposes as the Board of Directors shall think conducive to the interest of the corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created.

     Section 2. Checks. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

     Section 3. Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.

     Section 4. Seal. The Board of Directors may adopt a corporate seal having inscribed thereon the name of the corporation, the year of its organization and the words “Corporate Seal, Delaware”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

     Section 5. Loans. The Board of Directors of the corporation may, without stockholder approval, authorize loans to, or guaranty obligations of, or otherwise assist, including, without limitation, the adoption of employee benefit plans under which loans and guarantees may be made, any officer or other employee of the corporation or of its subsidiary, including any officer or employee who is a director of the corporation or its subsidiary, whenever, in the judgment of the Board of Directors, such loan, guaranty or assistance may reasonably be expected to benefit the corporation; provided, however, that (a) no material loan may be made to Carlyle Venture Partners III, L.P. or any Affiliate, member, partner, director, officer or employee of Carlyle Venture Partners III, L.P. or any “associate” (as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of any such Person (as defined in the Shareholders’ Agreement) or Carlyle Venture Partners III, L.P. without the prior consent of Apollo Group, Inc. (which consent may be given or withheld in Apollo Group, Inc.’s sole discretion), except for transactions contemplated by the Shareholders’ Agreement or the Joint Venture Agreement, dated as of October 22, 2007, as the same may be amended from time to time, (b) no material loan may be made to Apollo Group, Inc. or any Affiliate, member, partner, director, officer or employee of Apollo Group, Inc. or any “associate” (as defined in Rule 12b-2 promulgated under the Exchange Act) of any such Person or Apollo Group, Inc. without the prior consent of Carlyle Venture Partners III, L.P. (which consent may be given or withheld in Carlyle Venture Partners III, L.P.’s sole discretion), except for (i) transactions contemplated by the Shareholders’ Agreement or the Joint Venture

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Agreement, dated as of October 22, 2007, as the same may be amended from time to time, or (ii) pursuant to the Support Services Agreement, by and between Apollo Group, Inc. and the corporation, or (c) on any date that Carlyle Venture Partners III, L.P. and its Affiliates own, in the aggregate, either (i) ten percent (10%) or more of the issued and outstanding Shareholder Shares or (ii) shares of the Company Stock with a Fair Market Value of one hundred million dollars ($100,000,000) or more, the corporation shall not, without the prior written consent of Carlyle Venture Partners III, L.P. (which consent may be given or withheld in Carlyle Venture Partners III, L.P.’s sole discretion), make any loan (other than intercompany loans) to any Person which (1) is outside of the ordinary course of business of the corporation and (2) equals or exceeds $1,000,000. The loan, guaranty or other assistance may be with or without interest, and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation.

ARTICLE VIII.
INDEMNIFICATION

     Section 1. Scope. The corporation shall, to the fullest extent permitted by Section 145 of the General Corporation Law of the State of Delaware, as that Section may be amended and supplemented from time to time, indemnify any present or former director, officer, employee or agent of the corporation, against expenses (including attorneys’ fees), judgments, fines, amounts paid in settlement and/or other matters referred to in or covered by that Section, by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.

     Section 2. Advancing Expenses. Expenses (including attorneys’ fees) incurred by a present or former director or officer of the corporation in defending a civil, criminal, administrative or investigative action, suit or proceeding by reason of the fact that such person is or was a director, officer, employee or agent of the corporation (or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized by relevant provisions of the General Corporation Law of the State of Delaware; provided, however, the corporation shall not be required to advance such expenses to a director (i) who commences any action, suit or proceeding as a plaintiff unless such advance is specifically approved by a majority of the Board of Directors, or (ii) who is a party to an action, suit or proceeding brought by the corporation and approved by a majority of the Board of Directors which alleges willful misappropriation of corporate assets by such director, disclosure of confidential information in violation of such director’s fiduciary or contractual obligations to the corporation, or any other willful and deliberate breach in bad faith of such director’s duty to the corporation or its stockholders.

     Section 3. Liability Offset. The corporation’s obligation to provide indemnification under this Article VIII shall be offset to the extent the indemnified party is indemnified by any

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other source including, but not limited to, any applicable insurance coverage under a policy maintained by the corporation, the indemnified party or any other person.

     Section 4. Continuing Obligation. The provisions of this Article VIII shall be deemed to be a contract between the corporation and each director of the corporation who serves in such capacity at any time while this bylaw is in effect, and any repeal or modification thereof shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought based in whole or in part upon any such state of facts.

     Section 5. Nonexclusive. The indemnification and advancement of expenses provided for in this Article VIII shall (i) not be deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement or vote of stockholders or disinterested directors or otherwise, both as to action in their official capacities and as to action in another capacity while holding such office, (ii) continue as to a person who has ceased to be a director and (iii) inure to the benefit of the heirs, executors and administrators of such a person.

     Section 6. Other Persons. In addition to the indemnification rights of directors, officers, employees, or agents of the corporation, the Board of Directors in its discretion shall have the power on behalf of the corporation to indemnify any other person made a party to any action, suit or proceeding who the corporation may indemnify under Section 145 of the General Corporation Law of the State of Delaware.

     Section 7. Definitions. The phrases and terms set forth in this Article VIII shall be given the same meaning as the identical terms and phrases are given in Section 145 of the General Corporation Law of the State of Delaware, as that Section may be amended and supplemented from time to time.

ARTICLE IX.
AMENDMENTS

     Except as otherwise provided in the Certificate of Incorporation, these Bylaws may be altered, amended or repealed, or new Bylaws may be adopted, by the holders of a majority of the outstanding voting shares or by the Board of Directors, when such power is conferred upon the Board of Directors by the Certificate of Incorporation, at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new Bylaws be contained in the notice of such special meeting. If the power to adopt, amend or repeal Bylaws is conferred upon the Board of Directors by the Certificate of Incorporation, it shall not divest or limit the power of the stockholders to adopt, amend or repeal Bylaws.

[Remainder of page intentionally left blank]

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CERTIFICATE OF SECRETARY
OF
APOLLO GLOBAL, INC.

     The undersigned certifies:

          1. That the undersigned is the duly elected and acting Secretary of Apollo Global, Inc., a Delaware corporation (the “Corporation”); and

          2. That the foregoing Bylaws constitute the Bylaws of the Corporation as duly adopted by the Action by Unanimous Written Consent in Lieu of the Organizational Meeting by the Board of Directors of the Corporation, dated the 22nd day of October, 2007.

          IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the seal of the Corporation as of this 22nd day of October, 2007.

P. Robert Moya, Secretary 

EXHIBIT C

SHAREHOLDERS AGREEMENT

Execution

SHAREHOLDERS’ AGREEMENT

          THIS SHAREHOLDERS’ AGREEMENT (this “Agreement”) is made and entered into as of October 22, 2007, by and among Apollo Global, Inc., a Delaware corporation (the “Company”), Apollo Group, Inc., an Arizona corporation (“Apollo”), Carlyle Venture Partners III, L.P., a Delaware limited partnership (“Carlyle” and, together with Apollo and each Affiliate of Carlyle and Apollo that hereafter becomes a Shareholder, collectively the “Investor Shareholders”), and the Persons listed on Schedule I attached hereto or who otherwise agree to be bound by the provisions hereof as an Other Shareholder by executing a joinder agreement (the “Other Shareholders”). Apollo, Carlyle and the Other Shareholders are collectively referred to herein as the “Shareholders.” Unless otherwise indicated herein, capitalized terms used herein are defined in paragraph 13 hereof.

RECITALS

          Apollo and Carlyle are parties to a Joint Venture Agreement dated as of the date hereof (the “Joint Venture Agreement”), and the closing of the initial purchase and sale of the Company’s common stock pursuant to the Joint Venture Agreement is conditioned, among other things, on the execution and delivery of this Agreement.

          The parties hereto are entering into this Agreement to establish the composition of the Company’s board of directors (the “Board”), to restrict the sale, assignment, transfer, encumbrance or other disposition of the Shareholder Shares (as defined below) and to provide for certain rights and obligations in respect thereto as hereinafter provided.

AGREEMENT

          NOW, THEREFORE, the parties to this Agreement agree as follows:

          1. Voting Agreement and Proxy.

          (a) From and after the date hereof and until the provisions of this paragraph 1 cease to be effective, each Shareholder shall vote all of his or its Shareholder Shares which are voting shares and any other voting securities of the Company over which such Shareholder has voting control and shall take all other necessary or desirable actions within such holder’s control (whether in such holder’s capacity as a shareholder, director, member of a board committee or officer of the Company or otherwise, and including, without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings), and the Company shall take all necessary or desirable actions within its control (including, without limitation, calling special board and shareholder meetings), so that:

               (i) the authorized number of directors on the Board shall be seven (7);

               (ii) four directors shall be designated by Apollo, which representatives shall, as of the date of this Agreement, be Gregory Cappelli, Brian Mueller, Roy Herberger and Peter Sperling (the “Apollo Directors”);

               (iii) two directors shall be designated by Carlyle, which representatives shall, as of the date of this Agreement, be Brooke B. Coburn and Charles C. Moore (the “Carlyle Directors”), provided however that on any date that Carlyle and its Affiliates do not own, in the aggregate, either (x) ten percent (10%) (or more) of the issued and outstanding Shareholder Shares or (y) shares of the Company Stock with a Fair Market Value of one hundred million dollars ($100,000,000) (or more), one director shall be designated by Carlyle;

               (iv) the President of the Company shall be a director;

               (v) the removal from the Board without cause of any of the Apollo Directors under paragraph l(a)(ii) above shall be at Apollo’s written request, and only upon such written request and under no other circumstances; and

               (vi) the removal from the Board without cause of any of the Carlyle Directors under paragraph l(a)(iii) above shall be at Carlyle’s written request, and only upon such written request and under no other circumstances. Carlyle agrees to remove one of the Carlyle Directors promptly after any date that Carlyle and its Affiliates do not own, in the aggregate, either (x) ten percent (10%) (or more) of the issued and outstanding Shareholder Shares or (y) shares of the Company Stock with a Fair Market Value of one hundred million dollars ($100,000,000) (or more).

          (b) In the event that any representative designated hereunder by any party ceases to serve as a member of the Board during his term of office for any reason, the resulting vacancy on the Board will be filled by a representative selected by the party entitled to designate such representative pursuant to paragraph l(a). The parties agree that any director may be removed from the Board for cause by resolution adopted by a majority of the remaining directors.

          (c) Each of Apollo and Carlyle, for so long as it remains a Shareholder hereunder, shall have the right to designate and remove two representatives (each such representative, a “Board Observer”) who shall (1) have the right to receive due notice of and to attend and participate in discussions at (but not vote on any matters on which the directors are entitled to vote) all meetings of the Board and all meetings of committees of the Board, (2) have the right to receive copies of all documents and other information, including minutes, consents,business plans, presentation materials, budgets and financial information furnished generally to members of the Board and committees thereof, and (3) be entitled to be indemnified by the Company pursuant to the Certificate of Incorporation of the Company to the same extent mutatis mutandis as if he or she were a member of the Board (and the Company hereby agrees to so indemnify each Board Observer). Notwithstanding the preceding sentence, on any date that Carlyle and its Affiliates do not own, in the aggregate, either (i) ten percent (10%) (or more) of the issued and outstanding Shareholder Shares or (y) shares of the Company Stock with a Fair Market Value of one hundred million dollars (or more), Carlyle shall have the right to designate and remove one Board Observer.

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          (d) The Company will pay or promptly reimburse the actual reasonable out-of-pocket expenses incurred by each member of the Board and each Board Observer in connection with attending meetings of the Board or any committee of the Board.

          (e) In order to secure the obligations of each Other Shareholder who now or hereafter holds any voting securities to vote such Person’s Shareholder Shares in accordance with the provisions of this paragraph 1, each Other Shareholder hereby appoints Apollo as his or its true and lawful proxy and attorney-in-fact, with full power of substitution, to vote all of his or its Shareholder Shares for the election and/or removal of directors and all such other matters as expressly provided for in paragraph 1. Apollo may exercise the irrevocable proxy granted to it hereunder by any Other Shareholder at any time if any such Other Shareholder fails to comply with the provisions of this Agreement. The proxies and powers granted by each such Other Shareholder pursuant to this paragraph l(e) are coupled with an interest and are given to secure the performance of such Other Shareholder’s obligations under this Agreement. Such proxies and powers shall be irrevocable until termination of this paragraph 1 and shall survive the death, incompetency, disability, bankruptcy or dissolution of each such Shareholder and the subsequent holders of his or its Shareholder Shares. No Shareholder shall grant any proxy or become party to any voting trust or other agreement which is inconsistent with, conflicts with or violates any provision of this Agreement.

          (f) The provisions of this paragraph 1 shall terminate automatically and be of no further force and effect upon the earlier to occur of (i) the consummation of an Approved Sale and (ii) a Public Offering.

          2. Matters Requiring Specific Approval.

          (a) Matters Requiring Approval of the Board. The business and affairs of the Company shall be managed by the Board as described in Section 141 of the Delaware General Corporation Law. Without limiting the generality of the preceding sentence, the Company shall not take any of the following actions without the prior approval of at least a majority of the Board of Directors and as provided in the Company’s Bylaws:

               (i) acquire or sell any interest in any Person or business; provided, however, that any acquisition or sale of a Person or business involving, individually or in the aggregate, consideration in excess of $50,000,000 shall be subject to paragraph 2(b)(2)(v) below;

               (ii) incur any Company Indebtedness, or issue or sell any debt securities or other rights to acquire any debt securities of the Company or any of its Subsidiaries, except for transactions between the Company and any of its Subsidiaries; provided, however, that any security interests in connection with such debt arrangements shall be limited solely to the Company’s assets unless otherwise approved by the Investor Shareholders;

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               (iii) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any of its capital stock;

               (iv) hire or terminate the employment of the Company’s President, Chief Financial Officer or Chief Operating Officer, subject to paragraph 2(b)(2)(iv) below;

               (v) establish or materially modify the compensation or benefits payable or to become payable by the Company to the Company’s President, Chief Financial Officer or Chief Operating Officer, other than benefits generally provided to senior management or employees on the same terms; or

               (vi) approve the annual operating plan and budget.

          (b) Matters Requiring Approval of Carlyle.

               (1) The Company shall not, without the prior written consent of Carlyle (which consent may be given or withheld in Carlyle’s sole discretion):

          (i) (a) dissolve or wind-up the Company, (b) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (c) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition seeking relief under Title 11 of the United States Code, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (d) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or any Subsidiary or for a substantial part of the property or assets of the Company or any Subsidiary, (e) file an answer admitting the material allegations of a petition filed against it in any proceeding described in clause (b) above, (f) make a general assignment for the benefit of creditors, or (g) take any action for the purpose of effecting any of the foregoing.

          (ii) amend, revise, modify, supplement or discontinue the Investment Scope; or

          (iii) amend, modify or restate the Certificate of Incorporation or Bylaws of the Company in any respect that is adverse to Carlyle or the ownership of Shareholder Shares by Carlyle.

               (2) On any date that Carlyle and its Affiliates own, in the aggregate, either (i) ten percent (10%) (or more) of the issued and outstanding Shareholder Shares or (ii) shares of the Company Stock with a Fair Market Value of one hundred million dollars (or more), the Company shall not, without the prior written consent of Carlyle (which consent may be given or withheld in Carlyle’s sole discretion):

               (i) issue any new class or series of stock, or any other equity securities, or any other securities convertible into equity securities of the Company, other than any shares or

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equity securities issued pursuant to (x) the Joint Venture Agreement or (y) an employee stock option plan or similar arrangement approved by the Board to the extent that the limit described in paragraph 6 is not exceeded for all employee plans and arrangements;

               (ii) approve any employee stock option or similar arrangement or reserve or issue shares of the Company Stock thereunder to the extent that the limit described in paragraph 6 is exceeded in the aggregate by all employee plans and arrangements;

               (iii) redeem or repurchase any equity securities of the Company (except for acquisitions of Common Stock by the Company pursuant to (x) agreements which permit the Company to repurchase such shares upon termination of services to the Company, and (y) the Joint Venture Agreement);

               (iv) hire or terminate the employment of the Company’s President and Chief Executive Officer, provided that determination of the compensation of the President and Chief Executive Officer shall be at the discretion of the Board and Carlyle will not have the right to approve such compensation;

               Additionally, in the event the Company does not have a President or Chief Executive Officer at anytime, the duties of the President or Chief Executive Officer will be performed by the Board or its designee in accordance with Section 2(a).

               (v) acquire or sell any interest in any business or entity with, individually or in the aggregate, an enterprise value in excess of $50,000,000 and that requires the Company to incur incremental debt or equity financing;

               (vi) initiate or settle any litigation, action or proceeding to which the Company is, or may be, a party in which the amount in controversy would reasonably be expected to exceed ten percent (10%) of the current Fair Market Value;

               (vii) make any loan (other than intercompany loans) to any Person which either (a) is outside of the ordinary course of business of the Company and (b) equals or exceeds $1,000,000, subject in each case to the provisions of paragraph 2(c);

               (viii) approve the Company’s principal outside counsel and, if different, principal transaction counsel, and any change in such counsel and, to the extent that the Company’s independent auditors are not Apollo’s independent auditors, approve the Company’s independent auditors and any change to such independent auditors; or

               (ix) make or commit to make any capital expenditure outside of the ordinary course of business and in excess of $10,000,000 that requires incremental debt or equity financing.

     (c) Matters Requiring Approval of Unaffiliated Investor Shareholders.

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               (i) The Company shall not, without the prior written consent or affirmative vote of Apollo, enter into or be a party to any material transaction with Carlyle or any Affiliate, member, partner, director, officer or employee of Carlyle or any “associate” (as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) of any such Person or Carlyle, except for transactions expressly provided for in this Agreement or the Joint Venture Agreement.

               (ii) The Company shall not, without the prior written consent or affirmative vote of Carlyle, enter into or be a party to any material transaction with Apollo or any Affiliate, member, partner, director, officer or employee of Apollo or any “associate” (as defined in Rule 12b-2 promulgated under the Exchange Act) of any such Person or Apollo, except for (w) transactions contemplated by this Agreement or the Joint Venture Agreement, (x) the employment of persons currently employed by Apollo, (y) reimbursement of amounts paid by Apollo to professionals after the date of this Agreement and before the execution of the Support Services Agreement for such professionals’ reasonable fees and expenses for the due diligence of potential investments within the Investment Scope, or (z) pursuant to a Support Services Agreement between Apollo and the Company whereby Apollo will provide services to the Company upon terms and conditions satisfactory to Apollo and Carlyle.

          (d) EITF No. 96 - 16. Apollo and Carlyle acknowledge that the approval rights granted to Carlyle as set forth in paragraph 2(b) above are intended to be “protective rights” rather than “participating rights”, as described in Emerging Issues Task Force Issue No. 96 - 16 (“EITF No. 96 - 16”). Apollo and Carlyle further acknowledge that, unless otherwise agreed by Apollo and Carlyle, none of the approval rights granted to Carlyle hereunder will be in any way amended, terminated or revoked to the extent that at anytime hereafter any of the approval rights granted to Carlyle hereunder are re-characterized as being “participating rights” and not “protective rights” under EITF No. 96-16 or any successor to it, or under any other accounting policy, standard or procedure which may become applicable to the same subject matter as comprehended by EITF No. 96-16.

          (e) The Company’s accounting methods and policies shall be consistent with the accounting methods and policies of Apollo except as required by GAAP;

          3. Restrictions on Transfer of Shareholder Shares.

          (a) Transfer of Shareholder Shares. No holder of Shareholder Shares may sell, transfer, assign, pledge, encumber or otherwise directly or indirectly dispose of (a “Transfer”) any Shareholder Shares or any interest in any Shareholder Shares, including to the Company or any of its Subsidiaries, other than Permitted Transfers, prior to the fifth anniversary of the date hereof and, following such date, may Transfer Shareholder Shares or an interest in Shareholder Shares only pursuant to and in accordance with paragraphs 3(b), 3(c), 3(d), 5 or 9 below.

          (b) Right of First Offer. Prior to making any Transfer, other than as permitted under paragraph 3(d) below, a holder of Shareholder Shares wishing to transfer such Shareholder

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Shares (the “Selling Shareholder”) shall deliver written notice in accordance with paragraph 21 (the “Transfer Notice”) to each Investor Shareholder and the Company. The Transfer Notice shall disclose in reasonable detail the number of Shareholder Shares to be transferred, the cash purchase price (the “Offer Price”) at which the Selling Shareholder proposes to sell such number of Shareholder Shares, and the terms and conditions of the proposed Transfer. The Transfer Notice shall constitute a binding offer to sell the subject Shareholder Shares to the Investor Shareholders (other than the Selling Shareholder) and, if and to the extent that any such Shareholder Shares are not purchased by such Selling Shareholders, to the Company, in each case on the terms and conditions set forth in the Transfer Notice and in accordance with this paragraph 3(b). The Investor Shareholders may elect to purchase, pro-rata based on the number of Shareholder Shares held by each, all or any portion of the Shareholder Shares to be transferred upon the same economic terms and conditions as those set forth in the Transfer Notice by delivering a written notice of such election to the Selling Shareholder and the Company within 10 business days after the Transfer Notice has been delivered pursuant to this paragraph 3(b), provided that all elections by Carlyle’s Affiliates shall be made by Carlyle on behalf of its Affiliates. If the Investor Shareholders have not elected to purchase all of the Shareholder Shares to be transferred, the Company may elect to purchase all, but not less than all, of the remaining Shareholder Shares to be transferred upon the same economic terms and conditions as those set forth in the Transfer Notice by delivering written notice in accordance with paragraph 21 of such election to the Selling Shareholder within 15 business days after the Transfer Notice has been delivered pursuant to this paragraph 3(b) (such date, the “Authorization Date”). If the Investor Shareholders and the Company do not elect to purchase all of the Shareholder Shares specified in the Transfer Notice, the Selling Shareholder may Transfer the remaining Shareholder Shares specified in the Transfer Notice at a cash price no less than the Offer Price and on terms no more favorable to the Proposed Purchaser than those specified in the Transfer Notice during the 60 day period immediately following the Authorization Date. If the Investor Shareholders or the Company have elected to purchase Shareholder Shares pursuant to this paragraph 3(b), the Transfer of such shares shall be consummated as soon as practicable after the delivery of the election notice(s) to the Selling Shareholder, but in any event within 30 days after the Authorization Date.

          (c) Participation Rights.

               (i) At least 30 days prior to any Transfer of shares of Company Stock by any of Apollo or any of its Affiliates (the “Transferring Apollo Shareholder”) for value (other than pursuant to a Permitted Transfer or an Approved Sale as to which Carlyle has an independent right to approve under paragraph 5(a) as a consequence of Carlyle and its Affiliates owning, in the aggregate, either (i) seven and one-half percent (7.5%) (or more) of issued and outstanding Shareholders Shares or (ii) shares of the Company Stock with a Fair Market Value of seventy-five million dollars ($75,000,000) (or more)), the Transferring Apollo Shareholder will deliver written notice in accordance with paragraph 21 (the “Sale Notice”) to the Company, the other Investor Shareholders (including Carlyle and its Affiliates) and the Other Shareholders, specifying in reasonable detail the identity of the Proposed Purchaser and the terms and conditions of the Transfer. Notwithstanding any of the restrictions contained in this paragraph 3, any or all of the other Investor Shareholders (including Carlyle and its Affiliates) and Other Shareholders may

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elect to participate in the contemplated Transfer by delivering written notice in accordance with paragraph 21 (a “Tag-Along Notice”) to the Transferring Apollo Shareholder within 15 business days after the date that such Sale Notice is deemed given pursuant to paragraph 21, provided that all Tag-Along Notices of Carlyle’s Affiliates shall be delivered by Carlyle on behalf of its Affiliates. If no Tag-Along Notice is received by the Transferring Apollo Shareholder within such 15 business day period, the other Investor Shareholders and the Other Shareholders shall not have the right to participate in the Transfer, and the Transferring Apollo Shareholder shall have the right, during the succeeding three-month period, to transfer to the Proposed Purchaser up to the number of shares of Common Stock stated in the Sale Notice, on terms and conditions no more favorable to the Transferring Apollo Shareholder than those stated in the Sale Notice. If any of the other Investor Shareholders or Other Shareholders have elected to participate in such Transfer (such Shareholders, “Participating Shareholders”), each of the Transferring Apollo Shareholder and each Participating Shareholder will be entitled to sell in the contemplated Transfer, at the same price and on the same terms, up to a number of shares of Common Stock which is determined by multiplying (i) the number of shares of Common Stock owned by such Participating Shareholder on the date that the Tag-Along Notice is furnished by (ii) a fraction, the numerator of which is the number of shares of Common Stock which the Proposed Purchaser desires to purchase and the denominator of which is the sum of (x) the number of shares of Common Stock which are owned by the Transferring Apollo Shareholder and (y) the aggregate number of shares of Common Stock owned by all of the Participating Shareholders on the date that the Tag-Along Notice is furnished.

               (ii) The Transferring Apollo Shareholder will use reasonable efforts to obtain the agreement of the Proposed Purchaser to the participation of the Participating Shareholders in any contemplated Transfer, and the Transferring Apollo Shareholder will not transfer any of its Common Stock to the Proposed Purchaser unless (A) simultaneously with such Transfer, the Proposed Purchaser purchases from the Participating Shareholders the number of shares of Common Stock which such Participating Shareholders are entitled to sell to the Proposed Purchaser under paragraph 3(c)(i) or (B) simultaneously with such Transfer, the Transferring Apollo Shareholder purchases (at the same price and on the same terms and conditions on which such shares were sold to the Proposed Purchaser) the number of shares of Common Stock from the Participating Shareholders which the Participating Shareholders are entitled to sell to the Proposed Purchaser under paragraph 3(c)(i).

               (iii) The Transferring Apollo Shareholder and the Participating Shareholders will bear their pro-rata share (based upon the number of shares of Common Stock sold by such Person in relation to the number of shares of Common Stock sold by all Persons in such Transfer) of the out-of-pocket costs of any Transfer pursuant to this paragraph 3(c) which are borne by the Transferring Apollo Shareholder to the extent such costs are incurred for the benefit of all Persons participating in the Transfer and are not otherwise paid by the Company or the acquiring party. Costs incurred by the Participating Shareholders participating in the Transfer on their own behalf will not be considered costs of the Transfer hereunder.

               (iv) No Participating Shareholder participating in a sale of shares of the Common Stock pursuant to this paragraph 3(a) shall be required to provide any indemnification

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other than on a several basis with such Participating Shareholder’s indemnification obligation to the Proposed Purchaser (or Transferring Apollo Shareholder in the event that it purchases shares of the Common Stock pursuant to paragraph 3(c)(ii)) limited to the pro rata share of the aggregate purchase price received by all Shareholders that such Participating Shareholder receives at the closing of the Transfer. Notwithstanding the foregoing, if a Participating Shareholder electing to participate does not agree to execute and deliver or does not execute and deliver any documentation required by this paragraph 3(c)(iv) within ten (10) days after receipt thereof in connection with the Transfer, such Participating Shareholder shall be deemed to have withdrawn its request to participate and shall not be entitled to participate in the proposed Transfer.

          (d) Permitted Transfers. The restrictions contained in paragraph 3 will not apply to (i) a Public Sale, (ii) an Approved Sale, (iii) a Transfer of Shareholder Shares by any Shareholder to a trust solely for the benefit of such Shareholder and such Shareholder’s spouse and/or descendants (or a re-Transfer of such Shareholder Shares by such trust back to such Shareholder upon the revocation of any such trust) or pursuant to the laws of descent and distribution, (iv) a Transfer by any Shareholder to an Affiliate of such Shareholder (and subsequent Transfers by such Affiliates to other Affiliates of such Shareholder), so long as such Transfer does not cause the Company to be subject to the reporting requirements of the Exchange Act pursuant to Section 12(g) thereof; provided that the restrictions contained in this Agreement will continue to apply to the Shareholder Shares after any Transfer pursuant to clauses (iii) or (iv) above and the transferees of such Shareholder Shares pursuant to such clauses shall agree in writing to be bound by the provisions of this Agreement. Upon the Transfer of Shareholder Shares pursuant to clauses (iii) or (iv) of this subparagraph 3(d), the transferor will deliver a written notice to the Company and the Investor Shareholders, which notice will disclose in reasonable detail the identity of such transferee.

          (e) Termination of Restrictions. The rights and restrictions set forth in this paragraph 3 will continue with respect to each Shareholder Share until the first to occur of (i): date on which such Shareholder Share has been transferred in a Public Sale; (ii) the consummation of an Approved Sale; (iii) a closing described in paragraph 9(c) or (iv) the eighth anniversary of the date of this Agreement.

          4. Preemptive Rights.

          (a) If the Company or any of its Subsidiaries proposes to issue and sell any of its equity securities or any securities containing options or rights to acquire any equity securities or any securities convertible into equity securities for value, the Company will offer in a written notice furnished in accordance with paragraph 21 to sell to each Investor Shareholder a portion of the number or amount of such securities proposed to be sold in any such transaction or series of related transactions equal to the product of the percentage each such Investor Shareholder holds of all Common Stock then held by all of the Shareholders by the number of securities proposed to be issued and sold by the Company in any such transaction or series of related transactions, all for the same price and upon the same economic terms and otherwise on the same terms and conditions as the securities that are being offered in such transaction or series of transactions. If any Investor Shareholder having preemptive rights under this paragraph 4 fails to

9

accept such offer in whole or in part within the period provided below in paragraph 4(c), the Company shall offer in a written notice furnished in accordance with paragraph 21 the securities that were not so accepted to all Investor Shareholders who elected to accept such offer in whole or in part, in the same proportion as the respective Common Stock held by such electing Investor Shareholder bears to the aggregate Common Stock held by all Investor Shareholders who elected to accept such initial offer in whole or in part. Each electing Investor Shareholder shall have an additional period of ten days from and after the date of the Company’s re-offer within which to accept such re-offer in whole or in part. If an Investor Shareholder elects to accept such offer in whole or in part, such Investor Shareholder shall so accept by written notice to the Company given within such 10-day period, provided that all acceptances by Carlyle’s Affiliates shall be made by Carlyle on behalf of its Affiliates. No further offer to the Investor Shareholders under this paragraph 4 is then required with respect to the same offering of securities, except as otherwise required in paragraph 4(c).

          (b) Notwithstanding the foregoing, the provisions of this paragraph 4 shall not be applicable to the issuance of equity securities (i) pursuant to the Joint Venture Agreement, (ii) upon the exercise of warrants or options or upon the conversion of shares of one class of capital stock into shares of another class in accordance with the provisions of the Company’s Certificate of Incorporation, or (iii) as a stock dividend or any stock split or other subdivision or combination of the outstanding equity securities; provided, however, the provisions of this paragraph 4 shall terminate upon completion of a Public Offering.

          (c) The Company will cause to be given to the Investor Shareholders a written notice delivered in accordance with paragraph 21 setting forth in reasonable detail the terms and conditions upon which they may purchase such shares or other securities, including, without limitation, the number of shares or other securities offered by the Company, the price at which such shares or other securities are being offered and the date on which the sale is to be completed (the “Preemptive Notice”). After receiving a Preemptive Notice, if any of the Investor Shareholders wishes to exercise the preemptive rights granted by this paragraph 4 it must give notice to the Company in writing, within 15 business days after the date that such Preemptive Notice is deemed given pursuant to paragraph 21 (subject to extension in the event of a re-offer described in paragraph 3(a) above), stating the quantity of the shares or other securities offered pursuant to this paragraph 4 it agrees to purchase on the terms and conditions set forth in the Preemptive Notice (the “Preemptive Reply”), provided that all Preemptive Replies by Carlyle’s Affiliates shall be made by Carlyle on behalf of its Affiliates. The closing for the sale of the shares or other securities subject to the Preemptive Notice shall occur no earlier than 5 business days after the Preemptive Reply. If the Investor Shareholders fail to make a Preemptive Reply in accordance with this paragraph 4 within the 15-business day period specified in this paragraph 4(c) (subject to extension in the event of a re-offer described in paragraph 3(a) above), shares or other securities offered to it in accordance with this paragraph 4 may thereafter, for a period not exceeding 120 days following the expiration of such 15-business day period, be issued, sold or subjected to rights or options to any purchaser at a price not less than the price at which they were offered to such Investor Shareholders and on other terms and conditions no more favorable to the purchasers thereof than those offered to the Investor Shareholders. Any such shares or other securities not so issued, sold or subjected to rights or options to any purchaser during such

10

120-day period will thereafter again be subject to the preemptive rights provided for in this paragraph 4.

          5. Sale of the Company.

          (a) If Shareholders holding a majority of the outstanding Common Stock and Carlyle approve (and, in the case of any sale or other fundamental change which requires the approval of the board of directors of a Delaware corporation pursuant to the Delaware General Corporation Law, the Board shall have approved such sale or other fundamental change) a sale of all or substantially all of the Company’s assets determined on a consolidated basis or a sale of a majority of the Company’s outstanding capital stock (whether by merger, recapitalization, consolidation, reorganization, combination or otherwise) to any Independent Third Party or group of Independent Third Parties (collectively an “Approved Sale”), the Company shall deliver written notice to the Shareholders setting forth in reasonable detail the terms and conditions of the Approved Sale (including, to the extent then determined, the consideration to be paid with respect to each class of the Company’s capital stock), provided however that on any date that Carlyle and its Affiliates do not own, in the aggregate, either (i) seven and one-half percent (7.5%) (or more) of the issued and outstanding Shareholder Shares or (ii) shares of the Company Stock with a Fair Market Value of seventy-five million dollars ($75,000,000) (or more), Carlyle shall not have an independent right to approve an Approved Sale. Each holder of Shareholder Shares will consent to and raise no objections against such Approved Sale. If the Approved Sale is structured as (i) a merger or consolidation, each holder of Shareholder Shares will waive any dissenter’s rights, appraisal rights or similar rights in connection with such merger or consolidation or (ii) sale of stock (including by recapitalization, consolidation, reorganization, combination or otherwise), each holder of Shareholder Shares will agree to sell all of its Shareholder Shares and rights to acquire Shareholder Shares on the terms and conditions approved by the Board and such Shareholders. Each holder of Shareholder Shares shall be obligated to join, severally and not jointly, on a pro rata basis (based on the number of shares of the applicable class or series of Company Stock to be sold, and, in the case of an asset sale, based upon the number of shares of Company Stock (and the relative liquidation preferences of each class of Company Stock) owned beneficially on a Fully Diluted Basis) in any indemnification or other obligations that the sellers of Shareholder Shares are required to provide in connection with the Approved Sale (other than any such obligations that relate solely to a particular Shareholder, such as indemnification with respect to representations and warranties given by a Shareholder regarding such Shareholder’s title to and ownership of Shareholder Shares being sold, in respect of which only such Shareholder shall be liable); provided, that no holder shall be obligated in connection with such indemnification or other obligations with respect to any amount in excess of the consideration received by such holder in connection with such transfer. Each holder of Shareholder Shares will take all required actions in connection with the consummation of the Approved Sale as reasonably requested. Notwithstanding the provisions of this paragraph 5, neither Carlyle nor its Affiliates shall have any obligation under this paragraph 5 to the extent that Carlyle has an independent right to approve an Approved Sale under this paragraph 5 and Carlyle has not approved such Approved Sale. Notwithstanding the provisions of this paragraph 5, neither Carlyle nor its Affiliates shall be required to provide any indemnification other than on a several basis with the indemnification obligation of Carlyle and its Affiliates limited to the pro

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rata share of the aggregate purchase price received by all Shareholders at the closing of the Approved Sale.

          (b) The obligations of the holders of Company Stock with respect to an Approved Sale are subject to the satisfaction of the following conditions in addition to the conditions described in paragraph 5(a): (i) upon the consummation of the Approved Sale, each holder of Company Stock will receive the same form of consideration and the same portion of the aggregate consideration that such holders of Company Stock would have received if such aggregate consideration had been distributed by the Company in complete liquidation pursuant to the rights and preferences set forth in the Company’s Certificate of Incorporation as in effect immediately prior to such Approved Sale; (ii) if any holders of a class of Company Stock are given an option as to the form and amount of consideration to be received, each holder of such class of Company Stock will be given the same option; and (iii) each holder of then currently exercisable rights to acquire shares of a class of Company Stock will be given an opportunity to (A) exercise such rights prior to the consummation of the Approved Sale and participate in such sale as holders of such class of Company Stock or (B) make a direct transfer of such rights.

          (c) If the Company or the holders of the Company’s securities enter into any negotiation or transaction for which Rule 506 (or any similar rule then in effect) promulgated by the Securities and Exchange Commission may be available with respect to such negotiation or transaction (including a merger, consolidation or other reorganization), the holders of Shareholder Shares that do not qualify as “accredited investors” (as such term is defined in Rule 501 (or any similar rule then in effect) promulgated by the Securities And Exchange Commission) will, at the request of the Company, appoint a “purchaser representative” (as such term is defined in Rule 501 promulgated by the Securities and Exchange Commission) reasonably acceptable to the Company. If any holder of Shareholder Shares appoints a purchaser representative designated by the Company, the Company will pay the fees of such purchaser representative, but if any holder of Shareholder Shares declines to appoint the purchaser representative designated by the Company, such holder will appoint another purchaser representative, and such holder will be responsible for the fees of the purchaser representative so appointed.

          (d) Each holder of Shareholder Shares will bear its pro-rata share (based upon the number of shares sold by such holder of Company Stock in relation to the number of shares sold by all holders in such Approved Sale of Company Stock) of the out-of-pocket costs of any sale of Shareholder Shares pursuant to an Approved Sale which are borne by either Investor Shareholder to the extent such costs are incurred for the benefit of all holders of Shareholder Shares and are not otherwise paid by the Company or the acquiring party. Costs incurred by holders of Shareholder Shares on their own behalf will not be considered costs of the transaction hereunder.

          (e) In connection with an Approved Sale, each holder of Shareholder Shares (other than Carlyle and its Affiliates) hereby appoints Apollo as its true and lawful proxy and attorney-in-fact, with full power of substitution, to transfer such Shareholder Shares pursuant to the terms of such Approved Sale and to execute any purchase agreement or other documentation

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required to consummate such Approved Sale to the extent consistent with paragraph 5(a). Each Shareholder agrees to execute and deliver any other documentation reasonably required to consummate the Approved Sale to the extent consistent with paragraph 5(a). The powers granted in this clause (e) shall be deemed to be coupled with an interest, shall be irrevocable and shall survive death, incompetency or dissolution of any such holder of Shareholder Shares.

          (f) The provisions of this paragraph 5 will terminate upon the earlier to occur of (i) the consummation of an Approved Sale and (ii) completion of a Public Offering.

          6. Employee Phantom Stock Plan.

          The parties agree that phantom stock or similar bonuses will be offered to the management, consultants and key employees of the Company pursuant to a bonus plan or similar arrangement on terms and conditions satisfactory to the Board which will contemplate aggregate payments representing a value of between ten and fifteen percent (15%) of the Company’s Common Stock on a Fully Diluted Basis (after giving effect to the transactions contemplated by the Joint Venture Agreement).

          7. Public Offering; Apollo Call.

          (a) At any time after the fourth anniversary of the date of this Agreement (or as earlier agreed by Carlyle and Apollo), each of Carlyle and Apollo may notify the other of its intent to explore a public listing of the Common Stock. Following receipt of any such notice, the Company will solicit proposals from one or more nationally recognized investment banks as to the feasibility, expected valuation, structure and terms of the proposed listing of the Common Stock. If, after receiving such proposals, either of Apollo or Carlyle determines in good faith that a public listing of the Company is inadvisable for legitimate business reasons, Apollo or Carlyle may elect to defer the listing process by a period of one (1) year. After the deferral period, if applicable, Carlyle and Apollo shall thereafter again solicit proposals from one or more nationally recognized investment banks as to the feasibility, expected valuation, structure and terms of the proposed public listing of the Common Stock. If either of Apollo or Carlyle determines that the proposed public listing of the Common Stock is then feasible, the parties shall, within sixty (60) days thereafter, pursue in good faith the preparation of an S-l (or F-l) registration statement (“Registration Statement”) with the Securities and Exchange Commission. If neither Apollo nor Carlyle determines that the proposed public listing is feasible within the time period specified in the preceding sentence, the deferral described in this paragraph 7(a) shall be repeated. Notwithstanding the provisions of this paragraph 7(a), on any date that Carlyle and its Affiliates do not own, in the aggregate, either (i) ten percent (10%) (or more) of the Shareholder Shares or (ii) shares of the Company Stock with a Fair Market Value of one hundred million dollars ($100,000,000), Carlyle shall not have any rights under this paragraph 7(a).

          (b) At any time prior to the effective date of the Registration Statement, Apollo shall have an option to purchase the Company Stock held by Carlyle and its Affiliates at a price per share equal to the midpoint of the filing range as set forth in the Company’s Registration Statement. If Apollo elects to purchase Carlyle’s and its Affiliates’ Shares pursuant

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to this paragraph 7(b), the transfer of such shares shall be consummated as soon as practicable after the delivery of the notice(s) to Carlyle, but in any event within 30 days thereafter. Carlyle agrees to execute and deliver any other documentation reasonably required to consummate the transfer pursuant to this paragraph 7; provided that neither Carlyle nor its Affiliates shall be required to provide any representations and warranties (other than those relating to their respective existence, capacity, authorization, execution and delivery and unencumbered title to securities).

          8. Scope of Investments.

          (a) The Company will make investments exclusively in educational services businesses with the following characteristics (the “Investment Scope”):

               (i) principal operations and facilities outside of the United States (to include Latin America, Asia and Europe);

               (ii) provide post-secondary education (both degree and certificate programs), secondary and high school-level education, corporate or vocational training, or services related such educational and training programs, including distance learning services;

               (iii) attractive organic growth characteristics with target growth rates higher than experienced in the United States where possible;

               (iv) ability to generate strong positive cash flows and sustain a reasonable amount of financial leverage, including debt; and

               (v) businesses in which the Company can initially acquire a controlling interest or that have a path to acquiring a controlling interest.

          (b) Neither Carlyle nor Apollo may make any investment exceeding $ 20,000,000 in any Person whose primary line of business is within the Investment Scope except in accordance with this paragraph 8. Prior to making any such investment, the Investor Shareholder (the “Proposed Investor”), shall deliver written notice in accordance with paragraph 21 (the “Investor Notice”) to the Company and the other Investor Shareholders disclosing in reasonable detail the terms of the prospective investment. The Proposed Investor shall not consummate any such investment until 60 days after the Investor Notice is deemed given to the Company and the other Investor Shareholders pursuant to paragraph 21 (the “Investor Notice Period”). Subject to the provisions of paragraph 2(b)(2)(v), the Company may elect to make such investment upon the same economic terms and conditions as those set forth in the Investor Notice by delivering written notice of such election to the Proposed Investor and the other Investor Shareholder within the Investor Notice Period. If the Company does not for any reason elect to make the investment described in the Investor Notice, then for a period of thirty (30) days after the expiration of the Investor Notice Period, Carlyle may, in its sole discretion, elect by written notice delivered to the Proposed Investor pursuant to paragraph 21 either to (x) make (together with its Affiliates) the investment at a price and on the terms thus described in the

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Investor Notice or (y) co-invest (together with its Affiliates) in the investment described in the Investor Notice with the Proposed Investor on the basis of 80.1% of the aggregate investment being made by Apollo and its Affiliates and 19.9% of the aggregate investment being made by Carlyle and its Affiliates, in each case at a price and on terms described in the Investor Notice. The parties to each transaction described in clauses (x) and (y) of the preceding sentence shall use commercially reasonable efforts to complete such transaction within ninety (90) days after the expiration of the Investor Notice Period. If the Company elects to make the investment described in the Investor Notice but Carlyle does not approve the investment pursuant to paragraph 2(b)(2)(v), the Proposed Investor may make the investment at a price and on terms no more favorable to the Proposed Investor than those specified in the Investor Notice during the ninety (90) day period following the Investor Notice Period.

          (c) Carlyle will use its reasonable best efforts to cause its Affiliates to refer equity investment opportunities within the Investment Scope that are sourced by its Affiliates to the Company, and will use its reasonable best efforts to cause its Affiliates to allow the Company to co-invest alongside the applicable Carlyle Affiliate in any such transaction. Notwithstanding the preceding sentence, Carlyle shall not have any obligation to use its reasonable best efforts under this paragraph 8 to the extent that the use of such efforts is inconsistent with a fiduciary or other obligation of Carlyle or any of its Affiliates.

          (d) The provisions of this paragraph 8 will terminate upon the earlier to occur of (i) the consummation of an Approved Sale, and (ii) completion of a Public Offering, provided that the provisions of paragraph 8(c) will terminate upon the earlier to occur of (i) the consummation of an Approved Sale, (ii) the completion of a Public Offering or (iii) the first date that Carlyle no longer owns any shares of the Company Stock.

          9. Buy/Sell Agreement.

          (a) Each Shareholder shall have the right, after the fifth anniversary of the date of this Agreement to provide a written notice in accordance with paragraph 21 (an “Offer”) to the other Investor Shareholder (the “Offeree Shareholder”), to offer to sell all, but not less than all, of the interest of the Selling Shareholder and its Affiliates in the Company to the Offeree Shareholder at a per share purchase price and upon the other terms and conditions specified in the Offer. Notwithstanding the immediately preceding sentence, no Shareholder may provide an Offer at any time during the period which commences on the date that a Transfer Notice has been provided pursuant to paragraph 3(b) and ends sixty-one (61) days after the Authorization Date described in paragraph 3(b).

          (b) The Offeree Shareholder must elect by written notice (the “Notice of Election”) to the Selling Shareholder within thirty (30) days after receipt of the Offer, either:

          (i) to sell the Offeree Shareholder’s entire interest in the Company to the Selling Shareholder at the per share purchase price and on the other terms and conditions specified in the Offer, or

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EX-10.28

Exhibit 10.28

Execution

SHAREHOLDERS’ AGREEMENT

     THIS SHAREHOLDERS’ AGREEMENT (this “Agreement”) is made and entered into as of October 22, 2007, by and among Apollo Global, Inc., a Delaware corporation (the “Company”), Apollo Group, Inc., an Arizona corporation (“Apollo”), Carlyle Venture Partners III, L.P., a Delaware limited partnership (“Carlyle” and, together with Apollo and each Affiliate of Carlyle and Apollo that hereafter becomes a Shareholder, collectively the “Investor Shareholders”), and the Persons listed on Schedule I attached hereto or who otherwise agree to be bound by the provisions hereof as an Other Shareholder by executing a joinder agreement (the “Other Shareholders”). Apollo, Carlyle and the Other Shareholders are collectively referred to herein as the “Shareholders.” Unless otherwise indicated herein, capitalized terms used herein are defined in paragraph 13 hereof.

RECITALS

     Apollo and Carlyle are parties to a Joint Venture Agreement dated as of the date hereof (the “Joint Venture Agreement”), and the closing of the initial purchase and sale of the Company’s common stock pursuant to the Joint Venture Agreement is conditioned, among other things, on the execution and delivery of this Agreement.

     The parties hereto are entering into this Agreement to establish the composition of the Company’s board of directors (the “Board”), to restrict the sale, assignment, transfer, encumbrance or other disposition of the Shareholder Shares (as defined below) and to provide for certain rights and obligations in respect thereto as hereinafter provided.

AGREEMENT

     NOW, THEREFORE, the parties to this Agreement agree as follows:

     1. Voting Agreement and Proxy.

     (a) From and after the date hereof and until the provisions of this paragraph 1 cease to be effective, each Shareholder shall vote all of his or its Shareholder Shares which are voting shares and any other voting securities of the Company over which such Shareholder has voting control and shall take all other necessary or desirable actions within such holder’s control (whether in such holder’s capacity as a shareholder, director, member of a board committee or officer of the Company or otherwise, and including, without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings), and the Company shall take all necessary or desirable actions within its control (including, without limitation, calling special board and shareholder meetings), so that:

          (i) the authorized number of directors on the Board shall be seven (7);

          (ii) four directors shall be designated by Apollo, which representatives shall, as of the date of this Agreement, be Gregory Cappelli, Brian Mueller, Roy Herberger and Peter Sperling (the “Apollo Directors”);

          (iii) two directors shall be designated by Carlyle, which representatives shall, as of the date of this Agreement, be Brooke B. Coburn and Charles C. Moore (the “Carlyle Directors”), provided however that on any date that Carlyle and its Affiliates do not own, in the aggregate, either (x) ten percent (10%) (or more) of the issued and outstanding Shareholder Shares or (y) shares of the Company Stock with a Fair Market Value of one hundred million dollars ($100,000,000) (or more), one director shall be designated by Carlyle;

          (iv) the President of the Company shall be a director;

          (v) the removal from the Board without cause of any of the Apollo Directors under paragraph 1(a)(ii) above shall be at Apollo’s written request, and only upon such written request and under no other circumstances; and

          (vi) the removal from the Board without cause of any of the Carlyle Directors under paragraph 1(a)(iii) above shall be at Carlyle’s written request, and only upon such written request and under no other circumstances. Carlyle agrees to remove one of the Carlyle Directors promptly after any date that Carlyle and its Affiliates do not own, in the aggregate, either (x) ten percent (10%) (or more) of the issued and outstanding Shareholder Shares or (y) shares of the Company Stock with a Fair Market Value of one hundred million dollars ($100,000,000) (or more).

     (b) In the event that any representative designated hereunder by any party ceases to serve as a member of the Board during his term of office for any reason, the resulting vacancy on the Board will be filled by a representative selected by the party entitled to designate such representative pursuant to paragraph 1(a). The parties agree that any director may be removed from the Board for cause by resolution adopted by a majority of the remaining directors.

     (c) Each of Apollo and Carlyle, for so long as it remains a Shareholder hereunder, shall have the right to designate and remove two representatives (each such representative, a “Board Observer”) who shall (1) have the right to receive due notice of and to attend and participate in discussions at (but not vote on any matters on which the directors are entitled to vote) all meetings of the Board and all meetings of committees of the Board, (2) have the right to receive copies of all documents and other information, including minutes, consents, business plans, presentation materials, budgets and financial information furnished generally to members of the Board and committees thereof, and (3) be entitled to be indemnified by the Company pursuant to the Certificate of Incorporation of the Company to the same extent mutatis mutandis as if he or she were a member of the Board (and the Company hereby agrees to so indemnify each Board Observer). Notwithstanding the preceding sentence, on any date that Carlyle and its Affiliates do not own, in the aggregate, either (i) ten percent (10%) (or more) of the issued and outstanding Shareholder Shares or (y) shares of the Company Stock with a Fair Market Value of one hundred million dollars (or more), Carlyle shall have the right to designate and remove one Board Observer.

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          (d) The Company will pay or promptly reimburse the actual reasonable out-of-pocket expenses incurred by each member of the Board and each Board Observer in connection with attending meetings of the Board or any committee of the Board.

          (e) In order to secure the obligations of each Other Shareholder who now or hereafter holds any voting securities to vote such Person’s Shareholder Shares in accordance with the provisions of this paragraph 1, each Other Shareholder hereby appoints Apollo as his or its true and lawful proxy and attorney-in-fact, with full power of substitution, to vote all of his or its Shareholder Shares for the election and/or removal of directors and all such other matters as expressly provided for in paragraph 1. Apollo may exercise the irrevocable proxy granted to it hereunder by any Other Shareholder at any time if any such Other Shareholder fails to comply with the provisions of this Agreement. The proxies and powers granted by each such Other Shareholder pursuant to this paragraph 1(e) are coupled with an interest and are given to secure the performance of such Other Shareholder’s obligations under this Agreement. Such proxies and powers shall be irrevocable until termination of this paragraph 1 and shall survive the death, incompetency, disability, bankruptcy or dissolution of each such Shareholder and the subsequent holders of his or its Shareholder Shares. No Shareholder shall grant any proxy or become party to any voting trust or other agreement which is inconsistent with, conflicts with or violates any provision of this Agreement.

          (f) The provisions of this paragraph 1 shall terminate automatically and be of no further force and effect upon the earlier to occur of (i) the consummation of an Approved Sale and (ii) a Public Offering.

          2. Matters Requiring Specific Approval.

          (a) Matters Requiring Approval of the Board. The business and affairs of the Company shall be managed by the Board as described in Section 141 of the Delaware General Corporation Law. Without limiting the generality of the preceding sentence, the Company shall not take any of the following actions without the prior approval of at least a majority of the Board of Directors and as provided in the Company’s Bylaws:

               (i) acquire or sell any interest in any Person or business; provided, however, that any acquisition or sale of a Person or business involving, individually or in the aggregate, consideration in excess of $50,000,000 shall be subject to paragraph 2(b)(2)(v) below;

               (ii) incur any Company Indebtedness, or issue or sell any debt securities or other rights to acquire any debt securities of the Company or any of its Subsidiaries, except for transactions between the Company and any of its Subsidiaries; provided, however, that any security interests in connection with such debt arrangements shall be limited solely to the Company’s assets unless otherwise approved by the Investor Shareholders;

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                    (iii) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any of its capital stock;

                    (iv) hire or terminate the employment of the Company’s President, Chief Financial Officer or Chief Operating Officer, subject to paragraph 2(b)(2)(iv) below;

                    (v) establish or materially modify the compensation or benefits payable or to become payable by the Company to the Company’s President, Chief Financial Officer or Chief Operating Officer, other than benefits generally provided to senior management or employees on the same terms; or

                    (vi) approve the annual operating plan and budget.

     (b) Matters Requiring Approval of Carlyle.

               (1) The Company shall not, without the prior written consent of Carlyle (which consent may be given or withheld in Carlyle’s sole discretion):

               (i) (a) dissolve or wind-up the Company, (b) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (c) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition seeking relief under Title 11 of the United States Code, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (d) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or any Subsidiary or for a substantial part of the property or assets of the Company or any Subsidiary, (e) file an answer admitting the material allegations of a petition filed against it in any proceeding described in clause (b) above, (f) make a general assignment for the benefit of creditors, or (g) take any action for the purpose of effecting any of the foregoing.

               (ii) amend, revise, modify, supplement or discontinue the Investment Scope; or

               (iii) amend, modify or restate the Certificate of Incorporation or Bylaws of the Company in any respect that is adverse to Carlyle or the ownership of Shareholder Shares by Carlyle.

               (2) On any date that Carlyle and its Affiliates own, in the aggregate, either (i) ten percent (10%) (or more) of the issued and outstanding Shareholder Shares or (ii) shares of the Company Stock with a Fair Market Value of one hundred million dollars (or more), the Company shall not, without the prior written consent of Carlyle (which consent may be given or withheld in Carlyle’s sole discretion):

               (i) issue any new class or series of stock, or any other equity securities, or any other securities convertible into equity securities of the Company, other than any shares or

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equity securities issued pursuant to (x) the Joint Venture Agreement or (y) an employee stock option plan or similar arrangement approved by the Board to the extent that the limit described in paragraph 6 is not exceeded for all employee plans and arrangements;

          (ii) approve any employee stock option or similar arrangement or reserve or issue shares of the Company Stock thereunder to the extent that the limit described in paragraph 6 is exceeded in the aggregate by all employee plans and arrangements;

          (iii) redeem or repurchase any equity securities of the Company (except for acquisitions of Common Stock by the Company pursuant to (x) agreements which permit the Company to repurchase such shares upon termination of services to the Company, and (y) the Joint Venture Agreement);

          (iv) hire or terminate the employment of the Company’s President and Chief Executive Officer, provided that determination of the compensation of the President and Chief Executive Officer shall be at the discretion of the Board and Carlyle will not have the right to approve such compensation;

          Additionally, in the event the Company does not have a President or Chief Executive Officer at anytime, the duties of the President or Chief Executive Officer will be performed by the Board or its designee in accordance with Section 2(a).

          (v) acquire or sell any interest in any business or entity with, individually or in the aggregate, an enterprise value in excess of $50,000,000 and that requires the Company to incur incremental debt or equity financing;

          (vi) initiate or settle any litigation, action or proceeding to which the Company is, or may be, a party in which the amount in controversy would reasonably be expected to exceed ten percent (10%) of the current Fair Market Value;

          (vii) make any loan (other than intercompany loans) to any Person which either (a) is outside of the ordinary course of business of the Company and (b) equals or exceeds $1,000,000, subject in each case to the provisions of paragraph 2(c);

          (viii) approve the Company’s principal outside counsel and, if different, principal transaction counsel, and any change in such counsel and, to the extent that the Company’s independent auditors are not Apollo’s independent auditors, approve the Company’s independent auditors and any change to such independent auditors; or

          (ix) make or commit to make any capital expenditure outside of the ordinary course of business and in excess of $10,000,000 that requires incremental debt or equity financing.

     (c) Matters Requiring Approval of Unaffiliated Investor Shareholders.

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          (i) The Company shall not, without the prior written consent or affirmative vote of Apollo, enter into or be a party to any material transaction with Carlyle or any Affiliate, member, partner, director, officer or employee of Carlyle or any “associate” (as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) of any such Person or Carlyle, except for transactions expressly provided for in this Agreement or the Joint Venture Agreement.

          (ii) The Company shall not, without the prior written consent or affirmative vote of Carlyle, enter into or be a party to any material transaction with Apollo or any Affiliate, member, partner, director, officer or employee of Apollo or any “associate” (as defined in Rule 12b-2 promulgated under the Exchange Act) of any such Person or Apollo, except for (w) transactions contemplated by this Agreement or the Joint Venture Agreement, (x) the employment of persons currently employed by Apollo, (y) reimbursement of amounts paid by Apollo to professionals after the date of this Agreement and before the execution of the Support Services Agreement for such professionals’ reasonable fees and expenses for the due diligence of potential investments within the Investment Scope, or (z) pursuant to a Support Services Agreement between Apollo and the Company whereby Apollo will provide services to the Company upon terms and conditions satisfactory to Apollo and Carlyle.

     (d) EITF No. 96-16. Apollo and Carlyle acknowledge that the approval rights granted to Carlyle as set forth in paragraph 2(b) above are intended to be “protective rights” rather than “participating rights”, as described in Emerging Issues Task Force Issue No. 96 -16 (“EITF No. 96-16”). Apollo and Carlyle further acknowledge that, unless otherwise agreed by Apollo and Carlyle, none of the approval rights granted to Carlyle hereunder will be in any way amended, terminated or revoked to the extent that at anytime hereafter any of the approval rights granted to Carlyle hereunder are re-characterized as being “participating rights” and not “protective rights” under EITF No. 96-16 or any successor to it, or under any other accounting policy, standard or procedure which may become applicable to the same subject matter as comprehended by EITF No. 96-16.

     (e) The Company’s accounting methods and policies shall be consistent with the accounting methods and policies of Apollo except as required by GAAP;

     3. Restrictions on Transfer of Shareholder Shares.

     (a) Transfer of Shareholder Shares. No holder of Shareholder Shares may sell, transfer, assign, pledge, encumber or otherwise directly or indirectly dispose of (a “Transfer”) any Shareholder Shares or any interest in any Shareholder Shares, including to the Company or any of its Subsidiaries, other than Permitted Transfers, prior to the fifth anniversary of the date hereof and, following such date, may Transfer Shareholder Shares or an interest in Shareholder Shares only pursuant to and in accordance with paragraphs 3(b), 3(c), 3(d), 5 or 9 below.

     (b) Right of First Offer. Prior to making any Transfer, other than as permitted under paragraph 3(d) below, a holder of Shareholder Shares wishing to transfer such Shareholder

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Shares (the “Selling Shareholder”) shall deliver written notice in accordance with paragraph 21 (the “Transfer Notice”) to each Investor Shareholder and the Company. The Transfer Notice shall disclose in reasonable detail the number of Shareholder Shares to be transferred, the cash purchase price (the “Offer Price”) at which the Selling Shareholder proposes to sell such number of Shareholder Shares, and the terms and conditions of the proposed Transfer. The Transfer Notice shall constitute a binding offer to sell the subject Shareholder Shares to the Investor Shareholders (other than the Selling Shareholder) and, if and to the extent that any such Shareholder Shares are not purchased by such Selling Shareholders, to the Company, in each case on the terms and conditions set forth in the Transfer Notice and in accordance with this paragraph 3(b). The Investor Shareholders may elect to purchase, pro-rata based on the number of Shareholder Shares held by each, all or any portion of the Shareholder Shares to be transferred upon the same economic terms and conditions as those set forth in the Transfer Notice by delivering a written notice of such election to the Selling Shareholder and the Company within 10 business days after the Transfer Notice has been delivered pursuant to this paragraph 3(b), provided that all elections by Carlyle’s Affiliates shall be made by Carlyle on behalf of its Affiliates. If the Investor Shareholders have not elected to purchase all of the Shareholder Shares to be transferred, the Company may elect to purchase all, but not less than all, of the remaining Shareholder Shares to be transferred upon the same economic terms and conditions as those set forth in the Transfer Notice by delivering written notice in accordance with paragraph 21 of such election to the Selling Shareholder within 15 business days after the Transfer Notice has been delivered pursuant to this paragraph 3(b) (such date, the “Authorization Date”). If the Investor Shareholders and the Company do not elect to purchase all of the Shareholder Shares specified in the Transfer Notice, the Selling Shareholder may Transfer the remaining Shareholder Shares specified in the Transfer Notice at a cash price no less than the Offer Price and on terms no more favorable to the Proposed Purchaser than those specified in the Transfer Notice during the 60 day period immediately following the Authorization Date. If the Investor Shareholders or the Company have elected to purchase Shareholder Shares pursuant to this paragraph 3(b), the Transfer of such shares shall be consummated as soon as practicable after the delivery of the election notice(s) to the Selling Shareholder, but in any event within 30 days after the Authorization Date.

     (c) Participation Rights.

          (i) At least 30 days prior to any Transfer of shares of Company Stock by any of Apollo or any of its Affiliates (the “Transferring Apollo Shareholder”) for value (other than pursuant to a Permitted Transfer or an Approved Sale as to which Carlyle has an independent right to approve under paragraph 5(a) as a consequence of Carlyle and its Affiliates owning, in the aggregate, either (i) seven and one-half percent (7.5%) (or more) of issued and outstanding Shareholders Shares or (ii) shares of the Company Stock with a Fair Market Value of seventy-five million dollars ($75,000,000) (or more)), the Transferring Apollo Shareholder will deliver written notice in accordance with paragraph 21 (the “Sale Notice”) to the Company, the other Investor Shareholders (including Carlyle and its Affiliates) and the Other Shareholders, specifying in reasonable detail the identity of the Proposed Purchaser and the terms and conditions of the Transfer. Notwithstanding any of the restrictions contained in this paragraph 3, any or all of the other Investor Shareholders (including Carlyle and its Affiliates) and Other Shareholders may

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elect to participate in the contemplated Transfer by delivering written notice in accordance with paragraph 21 (a “Tag-Along Notice”) to the Transferring Apollo Shareholder within 15 business days after the date that such Sale Notice is deemed given pursuant to paragraph 21, provided that all Tag-Along Notices of Carlyle’s Affiliates shall be delivered by Carlyle on behalf of its Affiliates. If no Tag-Along Notice is received by the Transferring Apollo Shareholder within such 15 business day period, the other Investor Shareholders and the Other Shareholders shall not have the right to participate in the Transfer, and the Transferring Apollo Shareholder shall have the right, during the succeeding three-month period, to transfer to the Proposed Purchaser up to the number of shares of Common Stock stated in the Sale Notice, on terms and conditions no more favorable to the Transferring Apollo Shareholder than those stated in the Sale Notice. If any of the other Investor Shareholders or Other Shareholders have elected to participate in such Transfer (such Shareholders, “Participating Shareholders”), each of the Transferring Apollo Shareholder and each Participating Shareholder will be entitled to sell in the contemplated Transfer, at the same price and on the same terms, up to a number of shares of Common Stock which is determined by multiplying (i) the number of shares of Common Stock owned by such Participating Shareholder on the date that the Tag-Along Notice is furnished by (ii) a fraction, the numerator of which is the number of shares of Common Stock which the Proposed Purchaser desires to purchase and the denominator of which is the sum of (x) the number of shares of Common Stock which are owned by the Transferring Apollo Shareholder and (y) the aggregate number of shares of Common Stock owned by all of the Participating Shareholders on the date that the Tag-Along Notice is furnished.

          (ii) The Transferring Apollo Shareholder will use reasonable efforts to obtain the agreement of the Proposed Purchaser to the participation of the Participating Shareholders in any contemplated Transfer, and the Transferring Apollo Shareholder will not transfer any of its Common Stock to the Proposed Purchaser unless (A) simultaneously with such Transfer, the Proposed Purchaser purchases from the Participating Shareholders the number of shares of Common Stock which such Participating Shareholders are entitled to sell to the Proposed Purchaser under paragraph 3(c)(i) or (B) simultaneously with such Transfer, the Transferring Apollo Shareholder purchases (at the same price and on the same terms and conditions on which such shares were sold to the Proposed Purchaser) the number of shares of Common Stock from the Participating Shareholders which the Participating Shareholders are entitled to sell to the Proposed Purchaser under paragraph 3(c)(i).

          (iii) The Transferring Apollo Shareholder and the Participating Shareholders will bear their pro-rata share (based upon the number of shares of Common Stock sold by such Person in relation to the number of shares of Common Stock sold by all Persons in such Transfer) of the out-of-pocket costs of any Transfer pursuant to this paragraph 3(c) which are borne by the Transferring Apollo Shareholder to the extent such costs are incurred for the benefit of all Persons participating in the Transfer and are not otherwise paid by the Company or the acquiring party. Costs incurred by the Participating Shareholders participating in the Transfer on their own behalf will not be considered costs of the Transfer hereunder.

          (iv) No Participating Shareholder participating in a sale of shares of the Common Stock pursuant to this paragraph 3(a) shall be required to provide any indemnification

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other than on a several basis with such Participating Shareholder’s indemnification obligation to the Proposed Purchaser (or Transferring Apollo Shareholder in the event that it purchases shares of the Common Stock pursuant to paragraph 3(c)(ii)) limited to the pro rata share of the aggregate purchase price received by all Shareholders that such Participating Shareholder receives at the closing of the Transfer. Notwithstanding the foregoing, if a Participating Shareholder electing to participate does not agree to execute and deliver or does not execute and deliver any documentation required by this paragraph 3(c)(iv) within ten (10) days after receipt thereof in connection with the Transfer, such Participating Shareholder shall be deemed to have withdrawn its request to participate and shall not be entitled to participate in the proposed Transfer.

     (d) Permitted Transfers. The restrictions contained in paragraph 3 will not apply to (i) a Public Sale, (ii) an Approved Sale, (iii) a Transfer of Shareholder Shares by any Shareholder to a trust solely for the benefit of such Shareholder and such Shareholder’s spouse and/or descendants (or a re-Transfer of such Shareholder Shares by such trust back to such Shareholder upon the revocation of any such trust) or pursuant to the laws of descent and distribution, (iv) a Transfer by any Shareholder to an Affiliate of such Shareholder (and subsequent Transfers by such Affiliates to other Affiliates of such Shareholder), so long as such Transfer does not cause the Company to be subject to the reporting requirements of the Exchange Act pursuant to Section 12(g) thereof; provided that the restrictions contained in this Agreement will continue to apply to the Shareholder Shares after any Transfer pursuant to clauses (iii) or (iv) above and the transferees of such Shareholder Shares pursuant to such clauses shall agree in writing to be bound by the provisions of this Agreement. Upon the Transfer of Shareholder Shares pursuant to clauses (iii) or (iv) of this subparagraph 3(d), the transferor will deliver a written notice to the Company and the Investor Shareholders, which notice will disclose in reasonable detail the identity of such transferee.

     (e) Termination of Restrictions. The rights and restrictions set forth in this paragraph 3 will continue with respect to each Shareholder Share until the first to occur of (i): date on which such Shareholder Share has been transferred in a Public Sale; (ii) the consummation of an Approved Sale; (iii) a closing described in paragraph 9(c) or (iv) the eighth anniversary of the date of this Agreement.

     4. Preemptive Rights.

     (a) If the Company or any of its Subsidiaries proposes to issue and sell any of its equity securities or any securities containing options or rights to acquire any equity securities or any securities convertible into equity securities for value, the Company will offer in a written notice furnished in accordance with paragraph 21 to sell to each Investor Shareholder a portion of the number or amount of such securities proposed to be sold in any such transaction or series of related transactions equal to the product of the percentage each such Investor Shareholder holds of all Common Stock then held by all of the Shareholders by the number of securities proposed to be issued and sold by the Company in any such transaction or series of related transactions, all for the same price and upon the same economic terms and otherwise on the same terms and conditions as the securities that are being offered in such transaction or series of transactions. If any Investor Shareholder having preemptive rights under this paragraph 4 fails to

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accept such offer in whole or in part within the period provided below in paragraph 4(c), the Company shall offer in a written notice furnished in accordance with paragraph 21 the securities that were not so accepted to all Investor Shareholders who elected to accept such offer in whole or in part, in the same proportion as the respective Common Stock held by such electing Investor Shareholder bears to the aggregate Common Stock held by all Investor Shareholders who elected to accept such initial offer in whole or in part. Each electing Investor Shareholder shall have an additional period of ten days from and after the date of the Company’s re-offer within which to accept such re-offer in whole or in part. If an Investor Shareholder elects to accept such offer in whole or in part, such Investor Shareholder shall so accept by written notice to the Company given within such 10-day period, provided that all acceptances by Carlyle’s Affiliates shall be made by Carlyle on behalf of its Affiliates. No further offer to the Investor Shareholders under this paragraph 4 is then required with respect to the same offering of securities, except as otherwise required in paragraph 4(c).

     (b) Notwithstanding the foregoing, the provisions of this paragraph 4 shall not be applicable to the issuance of equity securities (i) pursuant to the Joint Venture Agreement, (ii) upon the exercise of warrants or options or upon the conversion of shares of one class of capital stock into shares of another class in accordance with the provisions of the Company’s Certificate of Incorporation, or (iii) as a stock dividend or any stock split or other subdivision or combination of the outstanding equity securities; provided, however, the provisions of this paragraph 4 shall terminate upon completion of a Public Offering.

     (c) The Company will cause to be given to the Investor Shareholders a written notice delivered in accordance with paragraph 21 setting forth in reasonable detail the terms and conditions upon which they may purchase such shares or other securities, including, without limitation, the number of shares or other securities offered by the Company, the price at which such shares or other securities are being offered and the date on which the sale is to be completed (the “Preemptive Notice”). After receiving a Preemptive Notice, if any of the Investor Shareholders wishes to exercise the preemptive rights granted by this paragraph 4 it must give notice to the Company in writing, within 15 business days after the date that such Preemptive Notice is deemed given pursuant to paragraph 21 (subject to extension in the event of a re-offer described in paragraph 3(a) above), stating the quantity of the shares or other securities offered pursuant to this paragraph 4 it agrees to purchase on the terms and conditions set forth in the Preemptive Notice (the “Preemptive Reply”), provided that all Preemptive Replies by Carlyle’s Affiliates shall be made by Carlyle on behalf of its Affiliates. The closing for the sale of the shares or other securities subject to the Preemptive Notice shall occur no earlier than 5 business days after the Preemptive Reply. If the Investor Shareholders fail to make a Preemptive Reply in accordance with this paragraph 4 within the 15-business day period specified in this paragraph 4(c) (subject to extension in the event of a re-offer described in paragraph 3(a) above), shares or other securities offered to it in accordance with this paragraph 4 may thereafter, for a period not exceeding 120 days following the expiration of such 15-business day period, be issued, sold or subjected to rights or options to any purchaser at a price not less than the price at which they were offered to such Investor Shareholders and on other terms and conditions no more favorable to the purchasers thereof than those offered to the Investor Shareholders. Any such shares or other securities not so issued, sold or subjected to rights or options to any purchaser during such

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120-day period will thereafter again be subject to the preemptive rights provided for in this paragraph 4.

     5. Sale of the Company.

     (a) If Shareholders holding a majority of the outstanding Common Stock and Carlyle approve (and, in the case of any sale or other fundamental change which requires the approval of the board of directors of a Delaware corporation pursuant to the Delaware General Corporation Law, the Board shall have approved such sale or other fundamental change) a sale of all or substantially all of the Company’s assets determined on a consolidated basis or a sale of a majority of the Company’s outstanding capital stock (whether by merger, recapitalization, consolidation, reorganization, combination or otherwise) to any Independent Third Party or group of Independent Third Parties (collectively an “Approved Sale”), the Company shall deliver written notice to the Shareholders setting forth in reasonable detail the terms and conditions of the Approved Sale (including, to the extent then determined, the consideration to be paid with respect to each class of the Company’s capital stock), provided however that on any date that Carlyle and its Affiliates do not own, in the aggregate, either (i) seven and one-half percent (7.5%) (or more) of the issued and outstanding Shareholder Shares or (ii) shares of the Company Stock with a Fair Market Value of seventy-five million dollars ($75,000,000) (or more), Carlyle shall not have an independent right to approve an Approved Sale. Each holder of Shareholder Shares will consent to and raise no objections against such Approved Sale. If the Approved Sale is structured as (i) a merger or consolidation, each holder of Shareholder Shares will waive any dissenter’s rights, appraisal rights or similar rights in connection with such merger or consolidation or (ii) sale of stock (including by recapitalization, consolidation, reorganization, combination or otherwise), each holder of Shareholder Shares will agree to sell all of its Shareholder Shares and rights to acquire Shareholder Shares on the terms and conditions approved by the Board and such Shareholders. Each holder of Shareholder Shares shall be obligated to join, severally and not jointly, on a pro rata basis (based on the number of shares of the applicable class or series of Company Stock to be sold, and, in the case of an asset sale, based upon the number of shares of Company Stock (and the relative liquidation preferences of each class of Company Stock) owned beneficially on a Fully Diluted Basis) in any indemnification or other obligations that the sellers of Shareholder Shares are required to provide in connection with the Approved Sale (other than any such obligations that relate solely to a particular Shareholder, such as indemnification with respect to representations and warranties given by a Shareholder regarding such Shareholder’s title to and ownership of Shareholder Shares being sold, in respect of which only such Shareholder shall be liable); provided, that no holder shall be obligated in connection with such indemnification or other obligations with respect to any amount in excess of the consideration received by such holder in connection with such transfer. Each holder of Shareholder Shares will take all required actions in connection with the consummation of the Approved Sale as reasonably requested. Notwithstanding the provisions of this paragraph 5, neither Carlyle nor its Affiliates shall have any obligation under this paragraph 5 to the extent that Carlyle has an independent right to approve an Approved Sale under this paragraph 5 and Carlyle has not approved such Approved Sale. Notwithstanding the provisions of this paragraph 5, neither Carlyle nor its Affiliates shall be required to provide any indemnification other than on a several basis with the indemnification obligation of Carlyle and its Affiliates limited to the pro

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rata share of the aggregate purchase price received by all Shareholders at the closing of the Approved Sale.

     (b) The obligations of the holders of Company Stock with respect to an Approved Sale are subject to the satisfaction of the following conditions in addition to the conditions described in paragraph 5(a): (i) upon the consummation of the Approved Sale, each holder of Company Stock will receive the same form of consideration and the same portion of the aggregate consideration that such holders of Company Stock would have received if such aggregate consideration had been distributed by the Company in complete liquidation pursuant to the rights and preferences set forth in the Company’s Certificate of Incorporation as in effect immediately prior to such Approved Sale; (ii)  if any holders of a class of Company Stock are given an option as to the form and amount of consideration to be received, each holder of such class of Company Stock will be given the same option; and (iii) each holder of then currently exercisable rights to acquire shares of a class of Company Stock will be given an opportunity to (A) exercise such rights prior to the consummation of the Approved Sale and participate in such sale as holders of such class of Company Stock or (B) make a direct transfer of such rights.

     (c) If the Company or the holders of the Company’s securities enter into any negotiation or transaction for which Rule 506 (or any similar rule then in effect) promulgated by the Securities and Exchange Commission may be available with respect to such negotiation or transaction (including a merger, consolidation or other reorganization), the holders of Shareholder Shares that do not qualify as “accredited investors” (as such term is defined in Rule 501 (or any similar rule then in effect) promulgated by the Securities And Exchange Commission) will, at the request of the Company, appoint a “purchaser representative” (as such term is defined in Rule 501 promulgated by the Securities and Exchange Commission) reasonably acceptable to the Company. If any holder of Shareholder Shares appoints a purchaser representative designated by the Company, the Company will pay the fees of such purchaser representative, but if any holder of Shareholder Shares declines to appoint the purchaser representative designated by the Company, such holder will appoint another purchaser representative, and such holder will be responsible for the fees of the purchaser representative so appointed.

     (d) Each holder of Shareholder Shares will bear its pro-rata share (based upon the number of shares sold by such holder of Company Stock in relation to the number of shares sold by all holders in such Approved Sale of Company Stock) of the out-of-pocket costs of any sale of Shareholder Shares pursuant to an Approved Sale which are borne by either Investor Shareholder to the extent such costs are incurred for the benefit of all holders of Shareholder Shares and are not otherwise paid by the Company or the acquiring party. Costs incurred by holders of Shareholder Shares on their own behalf will not be considered costs of the transaction hereunder.

     (e) In connection with an Approved Sale, each holder of Shareholder Shares (other than Carlyle and its Affiliates) hereby appoints Apollo as its true and lawful proxy and attorney-in-fact, with full power of substitution, to transfer such Shareholder Shares pursuant to the terms of such Approved Sale and to execute any purchase agreement or other documentation

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required to consummate such Approved Sale to the extent consistent with paragraph 5(a). Each Shareholder agrees to execute and deliver any other documentation reasonably required to consummate the Approved Sale to the extent consistent with paragraph 5(a). The powers granted in this clause (e) shall be deemed to be coupled with an interest, shall be irrevocable and shall survive death, incompetency or dissolution of any such holder of Shareholder Shares.

     (f) The provisions of this paragraph 5 will terminate upon the earlier to occur of (i) the consummation of an Approved Sale and (ii) completion of a Public Offering.

     6. Employee Phantom Stock Plan.

     The parties agree that phantom stock or similar bonuses will be offered to the management, consultants and key employees of the Company pursuant to a bonus plan or similar arrangement on terms and conditions satisfactory to the Board which will contemplate aggregate payments representing a value of between ten and fifteen percent (15%) of the Company’s Common Stock on a Fully Diluted Basis (after giving effect to the transactions contemplated by the Joint Venture Agreement).

     7. Public Offering; Apollo Call.

     (a) At any time after the fourth anniversary of the date of this Agreement (or as earlier agreed by Carlyle and Apollo), each of Carlyle and Apollo may notify the other of its intent to explore a public listing of the Common Stock. Following receipt of any such notice, the Company will solicit proposals from one or more nationally recognized investment banks as to the feasibility, expected valuation, structure and terms of the proposed listing of the Common Stock. If, after receiving such proposals, either of Apollo or Carlyle determines in good faith that a public listing of the Company is inadvisable for legitimate business reasons, Apollo or Carlyle may elect to defer the listing process by a period of one (1) year. After the deferral period, if applicable, Carlyle and Apollo shall thereafter again solicit proposals from one or more nationally recognized investment banks as to the feasibility, expected valuation, structure and terms of the proposed public listing of the Common Stock. If either of Apollo or Carlyle determines that the proposed public listing of the Common Stock is then feasible, the parties shall, within sixty (60) days thereafter, pursue in good faith the preparation of an S-1 (or F-1) registration statement (“Registration Statement”) with the Securities and Exchange Commission. If neither Apollo nor Carlyle determines that the proposed public listing is feasible within the time period specified in the preceding sentence, the deferral described in this paragraph 7(a) shall be repeated. Notwithstanding the provisions of this paragraph 7(a), on any date that Carlyle and its Affiliates do not own, in the aggregate, either (i) ten percent (10%) (or more) of the Shareholder Shares or (ii) shares of the Company Stock with a Fair Market Value of one hundred million dollars ($100,000,000), Carlyle shall not have any rights under this paragraph 7(a).

     (b) At any time prior to the effective date of the Registration Statement, Apollo shall have an option to purchase the Company Stock held by Carlyle and its Affiliates at a price per share equal to the midpoint of the filing range as set forth in the Company’s Registration Statement. If Apollo elects to purchase Carlyle’s and its Affiliates’ Shares pursuant

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to this paragraph 7(b), the transfer of such shares shall be consummated as soon as practicable after the delivery of the notice(s) to Carlyle, but in any event within 30 days thereafter. Carlyle agrees to execute and deliver any other documentation reasonably required to consummate the transfer pursuant to this paragraph 7; provided that neither Carlyle nor its Affiliates shall be required to provide any representations and warranties (other than those relating to their respective existence, capacity, authorization, execution and delivery and unencumbered title to securities).

     8. Scope of Investments.

     (a) The Company will make investments exclusively in educational services businesses with the following characteristics (the “Investment Scope”):

          (i) principal operations and facilities outside of the United States (to include Latin America, Asia and Europe);

          (ii) provide post-secondary education (both degree and certificate programs), secondary and high school-level education, corporate or vocational training, or services related such educational and training programs, including distance learning services;

          (iii) attractive organic growth characteristics with target growth rates higher than experienced in the United States where possible;

          (iv) ability to generate strong positive cash flows and sustain a reasonable amount of financial leverage, including debt; and

          (v) businesses in which the Company can initially acquire a controlling interest or that have a path to acquiring a controlling interest.

     (b) Neither Carlyle nor Apollo may make any investment exceeding $ 20,000,000 in any Person whose primary line of business is within the Investment Scope except in accordance with this paragraph 8. Prior to making any such investment, the Investor Shareholder (the “Proposed Investor”), shall deliver written notice in accordance with paragraph 21 (the “Investor Notice”) to the Company and the other Investor Shareholders disclosing in reasonable detail the terms of the prospective investment. The Proposed Investor shall not consummate any such investment until 60 days after the Investor Notice is deemed given to the Company and the other Investor Shareholders pursuant to paragraph 21 (the “Investor Notice Period”). Subject to the provisions of paragraph 2(b)(2)(v), the Company may elect to make such investment upon the same economic terms and conditions as those set forth in the Investor Notice by delivering written notice of such election to the Proposed Investor and the other Investor Shareholder within the Investor Notice Period. If the Company does not for any reason elect to make the investment described in the Investor Notice, then for a period of thirty (30) days after the expiration of the Investor Notice Period, Carlyle may, in its sole discretion, elect by written notice delivered to the Proposed Investor pursuant to paragraph 21 either to (x) make (together with its Affiliates) the investment at a price and on the terms thus described in the

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Investor Notice or (y) co-invest (together with its Affiliates) in the investment described in the Investor Notice with the Proposed Investor on the basis of 80.1% of the aggregate investment being made by Apollo and its Affiliates and 19.9% of the aggregate investment being made by Carlyle and its Affiliates, in each case at a price and on terms described in the Investor Notice. The parties to each transaction described in clauses (x) and (y) of the preceding sentence shall use commercially reasonable efforts to complete such transaction within ninety (90) days after the expiration of the Investor Notice Period. If the Company elects to make the investment described in the Investor Notice but Carlyle does not approve the investment pursuant to paragraph 2(b)(2)(v), the Proposed Investor may make the investment at a price and on terms no more favorable to the Proposed Investor than those specified in the Investor Notice during the ninety (90) day period following the Investor Notice Period.

     (c) Carlyle will use its reasonable best efforts to cause its Affiliates to refer equity investment opportunities within the Investment Scope that are sourced by its Affiliates to the Company, and will use its reasonable best efforts to cause its Affiliates to allow the Company to co-invest alongside the applicable Carlyle Affiliate in any such transaction. Notwithstanding the preceding sentence, Carlyle shall not have any obligation to use its reasonable best efforts under this paragraph 8 to the extent that the use of such efforts is inconsistent with a fiduciary or other obligation of Carlyle or any of its Affiliates.

     (d) The provisions of this paragraph 8 will terminate upon the earlier to occur of (i) the consummation of an Approved Sale, and (ii) completion of a Public Offering, provided that the provisions of paragraph 8(c) will terminate upon the earlier to occur of (i) the consummation of an Approved Sale, (ii) the completion of a Public Offering or (iii) the first date that Carlyle no longer owns any shares of the Company Stock.

     9. Buy/Sell Agreement.

     (a) Each Shareholder shall have the right, after the fifth anniversary of the date of this Agreement to provide a written notice in accordance with paragraph 21 (an “Offer”) to the other Investor Shareholder (the “Offeree Shareholder”), to offer to sell all, but not less than all, of the interest of the Selling Shareholder and its Affiliates in the Company to the Offeree Shareholder at a per share purchase price and upon the other terms and conditions specified in the Offer. Notwithstanding the immediately preceding sentence, no Shareholder may provide an Offer at any time during the period which commences on the date that a Transfer Notice has been provided pursuant to paragraph 3(b) and ends sixty-one (61) days after the Authorization Date described in paragraph 3(b).

     (b) The Offeree Shareholder must elect by written notice (the “Notice of Election”) to the Selling Shareholder within thirty (30) days after receipt of the Offer, either:

     (i) to sell the Offeree Shareholder’s entire interest in the Company to the Selling Shareholder at the per share purchase price and on the other terms and conditions specified in the Offer, or

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     (ii) to purchase the entire interest of the Selling Shareholder and its Affiliates in the Company at a purchase price equal to the price set forth in the Offer and on the other terms and conditions specified in the Offer.

During such sixty (60) day period, subject to the terms of the Mutual Nondisclosure Agreement between Carlyle Investment Management, L.L.C. and Apollo dated August 2, 2007 (the “Confidentiality Agreement”), each of the Offeree Shareholder and the Selling Shareholder may perform a confirmatory due diligence evaluation of the Company and its Subsidiaries, and the Company shall, and shall cause its Subsidiaries to, afford to the Offeree Shareholder’s and the Selling Shareholder’s respective officers, directors, employees, accountants, counsel, consultants, advisors and agents reasonable access to and the right to inspect, during normal business hours and with reasonable advance notice, all of the real property, properties, assets, records, contracts and other documents related to the Company and its Subsidiaries, and shall permit them to consult, during normal business hours and with reasonable advance notice, with the officers, employees, accountants, counsel and agents of the Company and its Subsidiaries for the purpose of making such investigation of the Company and its Subsidiaries as the Offeree Shareholder and the Selling Shareholder shall desire to make. The parties agree that Carlyle shall act in all respects under this paragraph 9(b) on behalf of all of its Affiliates including without limitation providing Notices of Election.

     (c) If the Offeree Shareholder elects clause (i) of paragraph 9(b), the Investor Shareholders shall, within ninety (90) days after receipt of the Notice of Election, execute such documents and instruments reasonably required by the Selling Shareholder to sell and transfer the Offeree Shareholder’s interest in the Company to the Selling Shareholder at the purchase price and on the other terms and conditions specified in the Offer, which purchase price shall be payable in immediately available funds, and the closing of such sale shall take place at the principal office of the Company as soon as practicable, but in any event within one hundred twenty (120) days after receipt of the Offer. At such closing, the Offeree Shareholder shall sell and transfer its entire interest in the Company, and shall cause its Affiliates to sell and transfer their entitle interest in the Company, to the Selling Shareholder free and clear of pledges, liens, security interests and other encumbrances other than pledges arising out of Company financing.

     (d) If the Offeree Shareholder elects clause (ii) of paragraph 9(b), the Selling Shareholder will sell its entire interest in the Company, and will cause its Affiliates to sell their entire interest in the Company, to the Offeree Shareholder at the purchase price and on the other terms and conditions specified in the Offer, and the Selling Shareholders shall, within ninety (90) days after receipt of the Notice of Election, execute such documents and instruments reasonably required by the Offeree Shareholder to sell and transfer the Selling Shareholder’s interest in the Company to the Offeree Shareholder at the purchase price and on the other terms and conditions specified in the Offer, which purchase price shall be payable in immediately available funds, and the closing of such sale shall take place at the office of the Company as soon as practicable, but in any event within one hundred twenty (120) days after receipt of the Offer. At such closing, the Selling Shareholder shall sell and transfer its entire interest in the Company to the Offeree Shareholder free and clear of pledges, liens, security interests and other encumbrances other than pledges arising out of Company financing.

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     10. Representations and Warranties.

     (a) The Company represents and warrants to the Shareholders as follows:

          (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the state of Delaware with corporate power and authority to own, lease and operate its properties, to conduct its business as currently conducted and as proposed to be conducted and to enter into and perform its obligations under this Agreement.

          (ii) The Company has taken all actions necessary to authorize it (x) to execute, deliver and perform all of its obligations under this Agreement and (y) to consummate the transactions contemplated hereby.

          (iii) This Agreement is a legally valid and binding obligation of the Company, enforceable against it in accordance with its terms, except for (a) the effect thereon of bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting the rights of creditors generally and (b) limitations imposed by equitable principles upon the specific enforceability of any of the remedies, covenants or other provisions thereof and upon the availability of injunctive relief or other equitable remedies.

          (iv) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby nor compliance by the Company with any of the provisions hereof will (x) violate or conflict with any provisions of the Certificate of Incorporation or Bylaws of the Company, or any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to the Company, or (y) violate, or conflict with, or result in a breach in any provision of, or constitute a default (or any event that, with or without due notice or lapse of time, or both, would constitute such a default) under, or result in the termination of, accelerate the performance required by, or result in the creation of any lien, security interest, charge or other encumbrance upon any of the properties or assets of the Company under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation of which the Company is a party or by which it or any of its assets are bound.

          (v) No permit, application, notice, transfer, consent, approval, order, qualification, waiver from, or authorization of, or declaration, filing or registration with, any governmental or regulatory authority or third party is necessary in connection with the execution and delivery by the Company of this Agreement or the consummation by the Company of the transactions contemplated hereby.

     (b) Each Shareholder represents and warrants to each other Shareholder and to the Company as follows:

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          (i) It is a corporation, limited partnership, limited liability company or other entity duly organized and validly existing under the laws of its respective state of organization;

          (ii) It has taken all actions necessary to authorize it (x) to execute, deliver and perform all of its obligations under this Agreement and (y) to consummate the transactions contemplated hereby.

          (iii) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby nor compliance by the Shareholder with any of the provisions hereof will (i) violate or conflict with the organic organizational documents of the Shareholder, or any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to the Shareholder, or (ii) violate, or conflict with, or result in a breach in any provision of, or constitute a default (or any event that, with or without due notice or lapse of time, or both, would constitute such a default) under, or result in the termination of, accelerate the performance required by, or result in the creation of any lien, security interest, charge or other encumbrance upon any of the properties or assets of the Shareholder under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation of which the Shareholder is a party or by which it or any of its assets are bound.

          (iv) No permit, application, notice, transfer, consent, approval, order, qualification, waiver from, or authorization of, or declaration, filing or registration with, any governmental or regulatory authority or third party is necessary on the part of the Shareholder in connection with the execution and delivery by the Shareholder of this Agreement or the consummation by the Shareholder of the transactions contemplated hereby.

     11. Legend. Each certificate evidencing Shareholder Shares and each certificate issued in exchange for or upon the Transfer of any Shareholder Shares (if such shares remain Shareholder Shares as defined herein after such Transfer) will be stamped or otherwise imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN TRANSFER RESTRICTIONS PURSUANT TO A SHAREHOLDERS AGREEMENT DATED AS OF OCTOBER 22, 2007, BY AND AMONG THE ISSUER OF SUCH SECURITIES (THE “COMPANY”) AND CERTAIN OF THE COMPANY’S SHAREHOLDERS. A COPY OF SUCH SHAREHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

The Company will imprint such legend on certificates evidencing Shareholder Shares. The legend set forth above will be removed from the certificates evidencing any shares which cease

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to be Shareholder Shares in accordance with the definition of such terms as set forth in paragraph 13 hereof.

          12. Transfer. Prior to Transferring any Shareholder Shares (other than in a Public Sale or in an Approved Sale) to any Person, the transferring Shareholder will cause the prospective transferee to execute and deliver to the Company and the other Shareholders a Joinder Agreement. The provisions of this paragraph 12 shall terminate upon the occurrence of (i) the consummation of an Approved Sale and (ii) a Public Offering.

          13. Definitions.

     “Affiliate” of a Shareholder means any other Person, entity or investment or co-investment fund directly or indirectly controlling, controlled by or under common control with the Shareholder and, in the case of a Shareholder which is an entity, any shareholder, member, partner or other equity holder of such Shareholder, which, in each case, beneficially owns at least 10% of the outstanding voting interests of the Shareholder. Each fund managed by a Carlyle or an Affiliate of Carlyle shall be an Affiliate of Carlyle for purposes of this Agreement, and no portfolio company of Carlyle or its Affiliates shall be considered an Affiliate of Carlyle or such Affiliate for purposes of this Agreement.

          “Certificate of Incorporation” means the Company’s certificate of incorporation in effect at the time as of which any determination is being made.

          “Common Stock” means the Company’s Common Stock, par value $.001 per share.

          “Company Indebtedness” means all indebtedness of the Company (including without limitation, any loans, advances, letters of credit, bank overdrafts, capital lease obligations and all other indebtedness of any kind including interest, principal and fees).

          “Company Stock” means the Common Stock and any other class or series of shares of capital stock hereafter created by the Company.

          “Fair Market Value” has the meaning ascribed to that term in the Joint Venture Agreement.

          “Fully Diluted Basis” means, without duplication, all shares of the applicable class of Company Stock issued or issuable directly or indirectly upon the exercise or exchange of all outstanding options, warrants or similar rights, excluding outstanding options or warrants that are Out of the Money or not then exercisable, and all shares of such class of Company Stock issuable upon the conversion of any securities convertible into such class of Company Stock.

          “Independent Third Party” means any Person who (together with its Affiliates), immediately prior to the contemplated transaction, (i) does not own, directly or indirectly, in excess of 5% of any class of the Company Stock on a Fully-Diluted Basis (a “5% Owner”), (ii) is not controlling, controlled by or under common control with any such 5% Owner, (iii) is not the

19

spouse or descendant (by birth or adoption), parent or dependent of any such 5% Owner, (iv) is not a trust for the benefit of such 5% Owner and/or any Person referenced in clause (ii) or (iii), and (v) is not a group consisting of any of the foregoing.

     “Joinder Agreement” means a joinder agreement in substantially the form of Exhibit A hereto pursuant to which transferees of shares of Company Stock which are permitted under this Agreement become parties to this Agreement.

     “Out of the Money” means, in the case of an option or warrant, that the fair market value per share of the shares of Company Stock which the holder thereof is entitled to purchase or subscribe for is less than the exercise price per share of such option or warrant.

     “Person” means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, a limited liability company, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

     “Public Offering” means an initial public offering by the Company of its capital stock to the public effected pursuant to an effective registration statement under the Securities Act, or any comparable statement under any similar United States federal statute then in effect.

     “Public Sale” means any sale of Shareholder Shares to the public pursuant to an offering registered under the Securities Act, to the public through a broker, dealer or market maker pursuant to the provisions of Rule 144 adopted under the Securities Act or pursuant to the provisions of Rule 144(k) adopted under the Securities Act.

     “Securities Act” means the Securities Act of 1933, as amended from time to time.

     “Securities and Exchange Commission” includes any governmental body or agency succeeding to the functions thereof.

     “Shareholder Shares” means any Company Stock owned directly or indirectly by the Shareholders. As to any particular shares constituting Shareholder Shares, such shares will cease to be Shareholder Shares (A) upon the occurrence of a Public Offering, (B) upon the termination of this Agreement, or (C) when they have been (i) effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, or (ii) sold to the public through a broker, dealer or market maker pursuant to Rule 144 (or by similar provision then in force) under the Securities Act.

     “Subsidiary” means with respect to any Person, any corporation, partnership, limited liability company, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, limited liability company, association or other business entity, a majority of the partnership, membership or other similar ownership interest

20

thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a partnership, limited liability company, association or other business entity if such Person or Persons shall be allocated a majority of such partnership, limited liability company, association or other business entity gains or losses or shall be or control the managing director or general partner of such partnership, limited liability company, association or business entity.

     “Valuation Firm” has the meaning ascribed to that term in the Joint Venture Agreement.

     14. Transfers in Violation of Agreement. Any Transfer or attempted Transfer of any Shareholder Shares in violation of any provision of this Agreement will be void, and the Company will not record such Transfer on its books or treat any purported transferee of such Shareholder Shares as the owner of such shares for any purpose.

     15. Amendment and Waiver. Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Agreement (including the schedules hereto) will be effective against the Company or the Shareholders unless such modification, amendment or waiver is approved in writing by each of the Company, Carlyle and the holders of at least a majority of the then outstanding Shareholder Shares; provided that if such amendment or waiver would adversely affect a holder or group of holders of Shareholder Shares in a manner different than any other holders of Shareholder Shares, then such amendment or waiver will require the consent of such holder or a majority of the Shareholder Shares held by such group of holders adversely affected. The Company will give prompt written notice to the Shareholders of any amendments, modifications, or waivers of the provisions of this Agreement. The failure of any party to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

     16. Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

     17. Entire Agreement. Except as otherwise expressly set forth herein, this Agreement, the Joint Venture Agreement, the Confidentiality Agreement and that certain Registration Rights Agreement dated as of the date hereof between the Company and certain of its shareholders embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

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                    18. Successors and Assigns. Except as otherwise provided herein, this Agreement will bind and inure to the benefit of and be enforceable by the Company and its successors and assigns and the Shareholders and any subsequent holders of Shareholder Shares and the respective successors and assigns of each of them, so long as they hold Shareholder Shares.

                    19. Counterparts. This Agreement may be executed in separate counterparts each of which will be an original and all of which taken together will constitute one and the same agreement.

                    20. Remedies. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that the Company and each Shareholder will have the right to injunctive relief, in addition to all of its rights and remedies at law or in equity, to enforce the provisions of this Agreement. Nothing contained in this Agreement will be construed to confer upon any Person who is not a signatory hereto or any successor or permitted assign of a signatory hereto any rights or benefits, as a third party beneficiary or otherwise, except that each member of the Board and each Board Observer will be a third party beneficiary of respect to the indemnification described in paragraph 1(c).

                    21. Notices. Any notice provided for in this Agreement will be in writing and will be either (i) personally delivered, (ii) delivered by certified mail, return receipt requested, (iii) sent by nationally recognized overnight courier service (charges prepaid) or (iv) faxed with a copy following by any method described in the foregoing clauses (i) to (iii), to the address set forth below or at any address listed in the Company’s records, or at such address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder when delivered personally, five days after deposit in the U.S. mail and one day after deposit with a nationally recognized overnight courier service.

If to the Company:

Apollo Global, Inc.
c/o Apollo Group, Inc.
4615 East Elwood Street
Phoenix, AZ 85040
Attn: Chief Financial Officer
Facsimile: (602) 383-5159

If to Apollo or its Affiliates:

The Apollo Group, Inc.
4615 East Elwood Street
Phoenix, AZ 85040
Attn: Chief Financial Officer
Facsimile: (602) 383-5159

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With a required copy to:

Morgan, Lewis & Bockius LLP
One Market Street
San Francisco, CA 94105
Attn: William A. Myers, Esq.
Facsimile: (415) 442-1001

If to Carlyle or its Affiliates:

Carlyle Venture Partners III, L.P.
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, DC 20004-2505
Attention: Brooke B. Coburn and Charles C. Moore
Facsimile: (202) 347-1818

With a required copy to:

Dickstein Shapiro LLP
1825 Eye Street, NW
Washington, DC 20006-5403
Attn: Neil Lefkowitz
Facsimile: (202) 420-2201

If to any of the Other Shareholders:

At the address listed on Schedule I.

                    22. Governing Law. This Agreement shall be construed according to and governed by the laws of the State of Delaware, without reference to conflicts of laws principles.

                    23. Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

[Remainder of this page intentionally left blank]

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          IN WITNESS WHEREOF, the parties hereto have executed this Shareholders Agreement on the day and year first above written.

COMPANY: APOLLO GLOBAL, INC.
By:	/s/ Jeff Langenbach
	Name:	Jeff Langenbach
	Title:	President
INVESTOR SHAREHOLDERS: APOLLO GROUP, INC.
By:	/s/ Joseph L. D’Amico
	Name:	Joseph L. D’Amico
	Title:
CARLYLE VENTURE PARTNERS III, L.P. By: TCG VENTURES III, L.P.       Its General Partner
By:	/s/ Brooke B. Coburn
	Name:	Brooke B. Coburn
	Title:	Managing Director

SCHEDULE I

Other Shareholders

None as of October 22, 2007

Exhibit A

JOINDER AGREEMENT

Apollo Global, Inc.
c/o Apollo Group, Inc.
4615 East Elwood Street
Phoenix, AZ 85040

Ladies and Gentlemen,

Reference is hereby made to that certain Shareholders’ Agreement (the “Shareholders’ Agreement”), dated as of October 22, 2007, by and among Apollo Global, Inc., a Delaware corporation (the “Company”), Apollo Group, Inc., an Arizona corporation, and Carlyle Venture Partners III, L.P., a Delaware limited partnership. Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to them in the Shareholders’ Agreement.

By execution and delivery of this Joinder Agreement, the undersigned hereby agrees as follows:

2. Shareholders’ Agreement. The undersigned acknowledges that it is acquiring shares of the Company’s Common Stock (the “Purchased Shares”), subject to the terms and conditions of the Shareholders’ Agreement, and agrees that it shall become, and by execution and delivery of this Agreement does become, and assumes each and every obligation of, a “Shareholder” under and as defined in the Shareholders’ Agreement as of the date set forth below (the “Effective Date”). Notwithstanding the immediately preceding sentence, the undersigned does not hereby assume, and will not otherwise become subject to, any liability resulting from any breach, default or failure to comply with any provision of the Shareholders’ Agreement by or on behalf of any Person other than the undersigned.

3. Representations and Warranties. The undersigned represents and warrants to the Company and the existing Shareholders as of the Effective Date and, to the extent that the undersigned purchases additional shares of Common Stock from the Company on any Subsequent Closing Date (as defined in the Joint Venture Agreement dated as of October 22, 2007, by and among the Company, Apollo Group, Inc. and Carlyle Venture Partners III, L.P.), the undersigned will represent and warrant to the Company and the existing Shareholders on such Subsequent Closing Date as follows:

     3.1 Accredited Investor. The undersigned (a) is an “accredited investor” (as that term is defined in Section 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”)) because it is either (x) a corporation not formed for the specific purpose of acquiring the securities offered, and has total assets in excess of $5,000,000 or (y) an entity in which all of the equity owners are accredited investors, (b) has such knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the investment contemplated hereby and (c) has reviewed the merits of such investment with tax and legal counsel and other advisors to the extent deemed advisable. The undersigned will acquire the Purchased Shares for its own account for investment and not with a view to the sale or

distribution thereof, and the undersigned has no present intention of distribution or selling to others any of such interest.

     3.2 Access. The undersigned has had access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the investment in the Purchased Shares. The undersigned further has had the opportunity to obtain all additional information necessary to verify the information to which the undersigned has had access.

     3.3 Nature of Investment. The undersigned understands that the Purchased Shares are characterized as “restricted securities” under the Act inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under the Act and related regulations such securities may be resold under the Act only in certain limited circumstances. The undersigned is familiar with and understands such resale limitations imposed by the Act and related regulations and by the Shareholders’ Agreement. The undersigned understands that the Company has no present intention to register any of the Purchased Shares.

     3.4 Authorization; Validity; No Conflicts. The undersigned is duly authorized (including by all requisite corporate or stockholder (or equivalent, for entities other than corporations) action on the part of the undersigned and its officers and directors and its direct and indirect stockholders (or equivalent equity owners, for entities other than corporations)), and has full power and authority, to execute and perform its obligations under this Joinder Agreement and the Shareholders’ Agreement, and constitutes the undersigned’s legal, valid and binding obligation enforceable against it in accordance with their respective terms except (i) as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. The execution, delivery and performance by the undersigned of this Joinder Agreement, the performance by the undersigned of the Shareholders’ Agreement, and the consummation by the undersigned of the transactions contemplated hereby and thereby will not (a) conflict with or constitute a default under any agreement, indenture or instrument to which the undersigned is a party, (b) conflict with or violate the undersigned’s organizational documents or (c) result in a violation of any order, judgment or decree of any court or governmental or regulatory authority having jurisdiction over the undersigned or any of its assets.

4. Sale of Purchased Shares. In reliance upon the representations and warranties made by the undersigned in this Joinder Agreement and the undersigned’s agreement herein to be bound by the Shareholders’ Agreement as a “Shareholder” (as such term is used in the Shareholders’ Agreement), the Company shall sell to the undersigned, and the undersigned shall purchase from the Company, the following Purchased Shares:

Number of shares:

Price per share:

Total Purchase Price:

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the undersigned have executed this Joinder Agreement as of the date first set forth below.

Date:

Investor:

Signature:

Printed Name:

Title (if applicable):

Address:

Phone No.:

Facsimile No.:

AGREED AND ACCEPTED:

APOLLO GLOBAL, INC.,
a Delaware corporation

By:                                                            
Name:
Title:

[Signature Page to Joinder Agreement]

EX-10.29

Exhibit 10.29

Execution

REGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of October 22, 2007, by and among Apollo Global, Inc., a Delaware corporation (the “Company”), Apollo Group, Inc., an Arizona corporation (“Apollo”) and Carlyle Ventures Partners III, L.P., a Delaware limited partnership (“Carlyle” and, together with Apollo and each Affiliate of Carlyle and Apollo that hereafter becomes a shareholder of the Company, the “Shareholders”). Unless otherwise indicated herein, capitalized terms used herein are defined in paragraph 9 hereof.

RECITALS

     The Company, Apollo and Carlyle are parties to (i) a Joint Venture Agreement dated as of the date hereof (the “Joint Venture Agreement”), and (ii) a Shareholders’ Agreement dated as of the date hereof (the “Shareholders’ Agreement”).

     As a condition to the consummation of the transactions contemplated by the Joint Venture Agreement, the parties hereto are entering into this Agreement to provide the registration rights set forth herein and to provide for certain rights and obligations in respect thereto as hereinafter provided.

AGREEMENT

     NOW, THEREFORE, the parties to this Agreement agree as follows:

     1. Demand Registrations.

     (a) Requests for Registration. At any time after the date that is 180 days after an Initial Public Offering, (i) the holders of a majority of the Apollo Registrable Securities or (ii) the holders of a majority of the Carlyle Registrable Securities, each may request registration under the Securities Act of all or part of their Registrable Securities on Form S-1 or any similar long-form registration statement (“Long-Form Registrations”) or, if available, such holders may request registration under the Securities Act of all or part of their Registrable Securities on Form S-3 (including pursuant to Rule 415 under the Securities Act) or any similar short-form registration statement (“Short-Form Registrations”). Each request for a Demand Registration shall specify the approximate number of Registrable Securities requested to be registered and the anticipated per share price range for such offering. Within ten days after receipt of any such request, the Company shall give written notice of such requested registration to all other holders of Registrable Securities and, subject to paragraph 1(d) below, will include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 10 days after the receipt of the Company’s notice. Subject to paragraph 5(b), a Demand Registration shall not count as a request for registration pursuant to this paragraph 1 if at least 50% of the Registrable Securities that the holders initiating such Demand Registration have requested to be registered in such Demand Registration are not registered for reasons other than their voluntary decision not to do so. All registrations requested pursuant to this paragraph 1(a) are referred to herein as “Demand Registrations.”

     (b) Long-Form Registrations. The holders of a majority of the Apollo Registrable Securities will be entitled to request four Long-Form Registrations in which the Company will pay all Registration Expenses. The holders of a majority of the Carlyle Registrable Securities will be entitled to request two Long-Form Registrations in which the Company will pay all Registration Expenses. Subject to paragraph 5(b), a registration will not count as one of the permitted Long-Form Registrations until it has become effective unless a Shareholder requesting a Long-Form Registration that did not become effective elects to have its Registration Expenses paid by the Company in connection with such Long-Form Registration. Subject to paragraph 5(b), a Company will pay all Registration Expenses in connection with any registration initiated as a Long-Form Registration whether or not it becomes effective. All Long-Form Registrations shall be underwritten registrations.

     (c) Short-Form Registrations. In addition to the Long-Form Registrations provided pursuant to paragraph 1(b), the (i) holders of a majority of the Apollo Registrable Securities, and (ii) holders of a majority of the Carlyle Registrable Securities, will each be entitled, subject to the limitations set forth herein, to request an unlimited number of Short-Form Registrations in which the Company will pay all Registration Expenses; provided that the aggregate offering value of the Registrable Securities requested to be registered by Apollo or Carlyle in any Short-Form Registration must equal at least $[1,000,000] in the aggregate. Subject to paragraph 5(b), the Company will pay all Registration Expenses in connection with any registration initiated as a Short-Form Registration whether or not it becomes effective. Demand Registrations will be Short-Form Registrations whenever the Company is permitted to use any applicable short form. After the Company has become subject to the reporting requirements of the Securities Exchange Act, the Company will use its best efforts to make Short-Form Registrations available for the sale of Registrable Securities, including but not limited to compliance with paragraph 8 hereof.

     (d) Priority on Demand Registrations. The Company will not include in any Demand Registration any securities which are not Registrable Securities without the prior written consent of the holders of a majority of the Registrable Securities included in such Demand Registration. If a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing (with a copy to each party hereto requesting registration of Registrable Securities) that in their opinion the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in such offering exceeds the number of Registrable Securities and other securities, if any, which can be sold therein without adversely affecting the marketability of the offering, the Company will include in such registration prior to the inclusion of any securities which are not Registrable Securities the number of Registrable Securities requested to be included which in the opinion of such underwriters can be sold without adversely affecting the marketability of the offering, pro rata among the respective holders thereof on the basis of the number of shares of Registrable Securities owned by such Shareholder.

     (e) Restrictions on Demand Registrations. The Company will not be obligated to effect any Demand Registration within three months after the effective date of a previous Demand Registration. The Company may postpone for up to three months the filing or the effectiveness of a registration statement for a Demand Registration if the Company’s board of directors determines in its reasonable good faith judgment that such Demand Registration would

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reasonably be expected to have a material adverse effect on any proposal or plan by the Company or any of its subsidiaries to engage in any acquisition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer or similar transaction; provided that in such event, the holders of a majority of Registrable Securities initially requesting such Demand Registration will be entitled to withdraw such request and, if such request is withdrawn, such Demand Registration will not count as one of the permitted Demand Registrations hereunder and the Company will pay all Registration Expenses in connection with such registration; provided, that the Company may delay a Demand Registration hereunder only once in any twelve-month period.

     (f) Selection of Underwriters. The holders of a majority of the Apollo Registrable Securities included in any Demand Registration will have the right to select the investment banker(s) and manager(s) to administer the offering, subject to the (x) approval of the Board of Directors of the Company, which approval will not be unreasonably withheld or delayed and (y) Carlyle’s right to name a co-manager for the offering if Carlyle Registrable Securities are to be included in the offering. In the event that none of the Apollo Registrable Securities are included in such Demand Registration, Carlyle will have the right to make such selection, subject to the approval of the Board of Directors of the Company, which approval will not be unreasonably withheld or delayed.

     (g) Other Registration Rights. The Company will not grant to any Persons the right to request the Company to register any equity securities of the Company, or any securities convertible or exchangeable into or exercisable for such securities (whether as a demand registration or a piggyback registration), without the prior written consent of the holders of a majority of the Apollo Registrable Securities and of a majority of the Carlyle Registrable Securities.

     2. Piggyback Registrations.

     (a) Right to Piggyback. Upon completion by the Company of an Initial Public Offering (and any Initial Public Offering that is not a Qualified IPO shall be undertaken only with the prior written consent of Carlyle), whenever the Company proposes to register any of its securities (including any proposed registration of the Company’s securities by any third party) under the Securities Act (other than pursuant to a registration on Form S-4 or S-8 or any successor or similar forms) and the registration form to be used may be used for the registration of Registrable Securities (a “Piggyback Registration”), whether or not for sale for its own account, the Company will give prompt written notice to all holders of Registrable Securities of its intention to effect such a registration and will include in such registration all Registrable Securities of the same class or series of securities that the Company proposes to register with respect to which the Company has received written requests for inclusion therein within 30 days after the receipt of the Company’s notice.

     (b) Piggyback Expenses. The Registration Expenses of the holders of Registrable Securities will be paid by the Company in all Piggyback Registrations whether or not such registration is consummated.

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     (c) Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing (with a copy to each party hereto requesting registration of Registrable Securities) that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of such offering, the Company will include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the Registrable Securities requested to be included in such registration, pro rata among the holders of such Registrable Securities on the basis of the number of Registrable Securities owned by each such holder and (iii) third, any other securities requested to be included in such registration pro rata among the holders thereof on the basis of the number of such securities owned by each such holder.

     (d) Priority on Secondary Registrations. If a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company’s securities, and the managing underwriters advise the Company in writing (with a copy to each party hereto requesting registration of Registrable Securities) that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of the offering, the Company will include in such registration (i) first, the securities requested to be included therein by the holders requesting such registration and the Registrable Securities requested to be included in such registration, pro rata among the holders of such securities on the basis of the number of Registrable Securities owned by each such holder and (ii) second, any other securities requested to be included in such registration.

     (e) Other Registrations. If the Company has previously filed a registration statement with respect to Registrable Securities pursuant to paragraph 1 or pursuant to this paragraph 2, and if such previous registration has not been withdrawn or abandoned, the Company will not file or cause to be effected any other registration of any of its equity securities or securities convertible or exchangeable into or exercisable for its equity securities under the Securities Act (except on Form S-4 or S-8 or any successor form), whether on its own behalf or at the request of any holder or holders of such securities, until a period of at least three months has elapsed from the effective date of such previous registration.

     3. Holdback Agreements.

     (a) To the extent not inconsistent with applicable law, each holder of Registrable Securities agrees not to effect any public sale or distribution (including sales pursuant to Rule 144) of equity securities of the Company, or any securities, options or rights convertible into or exchangeable or exercisable for such securities, during the seven days prior to and the 180-day period beginning on the effective date of the Company’s Initial Public Offering of Common Stock under the Securities Act or during the seven days prior to and the 90-day period beginning on the effective date of any other underwritten registration filed under the Securities Act (in each case, except as part of such underwritten registration and except for such shorter period as the underwriters managing the registered public offering and the holders of a majority of the Registrable Securities otherwise agree in writing with respect to all holders of Registrable Securities).

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     (b) The Company agrees (i) not to effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the seven days prior to and during the 180-day period beginning on the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration (except as part of such underwritten registration or pursuant to registrations on Form S-4 or S-8 or any successor form), unless the underwriters managing the registered public offering otherwise agree, and (ii) to cause each holder of its Common Stock, or any securities convertible into or exchangeable or exercisable for Common Stock, purchased from the Company at any time after the date of this Agreement (other than in a registered public offering) to agree not to effect any public sale or distribution (including sales pursuant to Rule 144) of any such securities during such period (except as part of such underwritten registration, if otherwise permitted), unless the underwriters managing the registered public offering otherwise agree in writing.

     4. Registration Procedures. Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, the Company will use its best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company will as expeditiously as possible:

     (a) prepare and (within 60 days after the end of the period within which requests for registration may be given to the Company) file with the Securities and Exchange Commission a registration statement with respect to such Registrable Securities and thereafter use its best efforts to cause such registration statement to become effective (provided that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company will furnish to the holders of a majority of the Registrable Securities covered by such registration statement and their counsel and if Carlyle Registrable Securities are covered by such registration statement to Carlyle and its counsel copies of all such documents proposed to be filed, which documents will be subject to the review of such counsel);

     (b) notify each holder of Registrable Securities of the effectiveness of each registration statement filed hereunder and prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of either (i) not less than the number of days until all such securities have been disposed of (subject to extension pursuant to paragraph 7(b)) or, if such registration statement relates to an underwritten offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer or (ii) such shorter period as will terminate when all of the securities covered by such registration statement have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement (but in any event not before the expiration of any longer period required under the Securities Act), and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement;

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     (c) furnish to each seller of Registrable Securities such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller;

     (d) use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph (d), (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction);

     (e) notify each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the discovery of the happening of any event as a result of which, the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made, and, at the request of any such seller, the Company will prepare and furnish to such seller a reasonable number of copies of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made;

     (f) cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed or quoted;

     (g) provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement;

     (h) enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold and, if Carlyle Registrable Securities are being sold, Carlyle, or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, effecting a stock split or a combination of shares);

     (i) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement;

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     (j) otherwise use its best efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Company’s first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

     (k) notify each seller of such Registrable Securities in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any securities included in such registration statement for sale in any jurisdiction, and use its best efforts promptly to obtain the withdrawal of such order;

     (l) obtain one or more comfort letters, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), signed by the Company’s independent public accountants in customary form and covering such matters of the type customarily covered by comfort letters as the holders of a majority of the Registrable Securities being sold reasonably request and Carlyle, if Carlyle Registrable Securities are also being sold;

     (m) permit any holder of Registrable Securities which holder, in its reasonable judgment, might be deemed to be an underwriter or a controlling Person of the Company, to participate in the preparation of such registration or comparable statement and to require the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included; and

     (n) provide a legal opinion of the Company’s outside counsel, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), with respect to the registration statement, each amendment and supplement thereto, the prospectus included therein (including the preliminary prospectus) and such other documents relating thereto in customary form and covering such matters of the type customarily covered by legal opinions of such nature.

The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish the Company such information regarding such seller and the distribution of such securities as the Company may from time to time reasonably request in writing.

     5. Registration Expenses.

     (a) All expenses incident to the Company’s performance of or compliance with this Agreement, including, without limitation, all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding discounts and commissions) and other Persons retained by the Company (all such expenses being herein called “Registration

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Expenses”), will be borne as provided in this Agreement, except that the Company will, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed.

     (b) Notwithstanding anything in this Agreement to the contrary, the Company shall not be required to pay for any Registration Expenses in connection with a registration proceeding begun pursuant to paragraph 1(a) if the registration request is subsequently withdrawn at the request of the initiating holders, unless such initiating holders agree to forfeit their right to one Demand Registration pursuant to paragraph 1(b) (in which case such right shall be forfeited by the holders initiating such request and all holders exercising their Piggyback Registration rights with respect to such request); provided, however, that if at or prior to the time of such withdrawal, such holders have learned of a material adverse change in the condition, business, or prospects of the Company not known to such holders at the time of their request for such registration (it being understood that a change in the Company’s stock price shall not constitute in and of itself a material adverse change) and withdrawn their request for registration with reasonable promptness after learning of such material adverse change, then such holders shall not be required to pay any of such expenses and shall retain their rights pursuant to paragraph 1.

     (c) In connection with each Demand Registration and each Piggyback Registration, the Company will reimburse (i) the holders of Registrable Securities covered by such registration for the reasonable fees and disbursements of (A) one counsel chosen by the holders of a majority of the Registrable Securities included in such registration and (B) any such other counsel retained for the purpose of rendering opinions and reviewing documents on behalf of one or more holders of Registrable Securities on behalf of whom such first counsel does not act and (ii) Carlyle for the reasonable fees and disbursements of counsel to Carlyle in the event that Carlyle Registrable Securities are covered by such registration.

     (d) To the extent Registration Expenses are not required to be paid by the Company, each holder of securities included in any registration hereunder will pay those Registration Expenses allocable to the registration of such holder’s securities so included, and any Registration Expenses not so allocable will be borne by all sellers of securities included in such registration in proportion to the aggregate selling price of the securities to be so registered for each seller.

     6. Indemnification.

     (a) The Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, each holder of Registrable Securities, its officers and directors and each Person that controls such holder (within the meaning of the Securities Act) against any losses, claims, damages, liabilities, joint or several, to which such holder or any such director or officer or controlling Person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (i) any untrue or alleged untrue

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statement of material fact contained (A) in any registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or (B) in any application or other document or communication (in this paragraph 6 collectively called an “application”) executed by or on behalf of the Company or based upon written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify any securities covered by such registration statement under the “blue sky” or securities laws thereof, or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein under the circumstances which such statements have been made not misleading, and the Company will reimburse such holder and each such director, officer and controlling Person for any legal or any other expenses incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement, or omission or alleged omission, made in such registration statement, any such prospectus or preliminary prospectus or any amendment or supplement thereto, or in any application, in reliance upon, and in conformity with, written information prepared and furnished to the Company by such holder expressly for use therein or by such holder’s failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has timely furnished such holder with a sufficient number of copies of the same. In connection with an underwritten offering, the Company will indemnify such underwriters, their officers and directors and each Person that controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities.

     (b) In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder will furnish to the Company in writing such information as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the extent permitted by law, will indemnify and hold harmless the Company, its directors and officers and each other Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities, joint or several, to which the Company or any such director or officer or controlling Person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (i) any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or in any application or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is made in such registration statement, any such prospectus or preliminary prospectus or any amendment or supplement thereto, or in any application, in reliance upon and in conformity with written information prepared and furnished to the Company by such holder expressly for use therein, and such holder will reimburse the Company and each such director, officer and controlling Person for any legal or any other expenses incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided that the obligation to indemnify will be individual, not joint and several, to each holder and will be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement.

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     (c) Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give such prompt notice shall not impair any Person’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim.

     (d) The indemnification provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and will survive the transfer of securities. If the indemnification provided for in paragraph 6(a) from the Company is unavailable to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses referred to herein, then the Company, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the Company and the indemnified party, as well as any other relevant equitable considerations. The relative faults of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by, the Company or such indemnified party, and the Company’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities or expenses referred to above shall be deemed to include any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this paragraph 6(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the preceding sentences. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this paragraph 6(d).

     7. Participation in Underwritten Registrations.

     (a) No Person may participate in any registration hereunder which is underwritten unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements (including, without limitation, pursuant to the terms of any over-allotment or “green shoe” option requested by the managing underwriter(s), provided that

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no holder of Registrable Securities will be required to sell more than the number of Registrable Securities that such holder has requested the Company to include in any registration) and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements; provided that no holder of Registrable Securities included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding such holder and such holder’s intended method of distribution) or to undertake any indemnification or “holdback” obligations to the Company or the underwriters with respect thereto, except as otherwise provided in paragraphs 3 and 6 hereof.

     (b) Each Person that is participating in any registration hereunder agrees that, upon receipt of any written notice from the Company of the happening of any event of the kind described in paragraph 4(e) and 4(k) above, such Person will forthwith discontinue the disposition of its Registrable Securities pursuant to the registration statement until such Person’s receipt of the copies of a supplemented or amended prospectus as contemplated by such paragraph 4(e). If the Company gives any such written notice, the applicable time period mentioned in paragraph 4(b) during which a registration statement is to remain effective will be extended by the number of days during the period from and including the date of the giving of such written notice pursuant to this paragraph to and including the date when each seller of a Registrable Security covered by such registration statement has received the copies of the supplemented or amended prospectus contemplated by paragraph 4(e).

     8. Current Public Information. At all times after the Company has filed a registration statement with the Securities and Exchange Commission pursuant to the requirements of either the Securities Act or the Securities Exchange Act, the Company will file in a timely manner all reports and other documents required to be filed by it under the Securities Act and the Securities Exchange Act and the rules and regulations adopted by the Securities and Exchange Commission thereunder, and will take such further action as any holder or holders of Registrable Securities may reasonably request, all to the extent required to enable such holders to sell Registrable Securities pursuant to Rule 144 adopted by the Securities and Exchange Commission under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the Securities and Exchange Commission. Without limiting the foregoing, the Company covenants that, at its own expense, it will promptly take such action as any Shareholder may reasonably request, all to the extent required from time to time to enable such Shareholder to transfer its Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rules 144, 144A or Regulation S under the Securities Act or (ii) any similar rule or regulation hereafter adopted by the Securities and Exchange Commission. Upon the request of a Shareholder, the Company, at its own expense, will promptly deliver to such Shareholder (i) a written statement as to whether it has complied with such requirements (and such Shareholder shall be entitled to rely upon the accuracy of such written statement), (ii) a copy of the most recent annual or quarterly report of the Company and (iii) such other reports and documents as such Shareholder may reasonably request in order to avail itself of any rule or regulation of the Securities and Exchange Commission allowing it to transfer its shares without registration.

     9. Definitions.

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     “Affiliate” of a Shareholder means any other Person, entity or investment or co-investment fund directly or indirectly controlling, controlled by or under common control with the Shareholder and, in the case of a Shareholder which is an entity, any shareholder, member, partner or other equity holder of such Shareholder, which, in each case, beneficially owns at least 10% of the outstanding voting interests of the Shareholder. Each fund managed by Carlyle or an Affiliate of Carlyle shall be an Affiliate of Carlyle for purposes of this Agreement and no portfolio company of Carlyle or its Affiliates shall be considered an Affiliate of Carlyle or such Affiliate for purposes of this Agreement.

     “Common Stock” means the common stock of the Company, par value $.001 per share.

     “Apollo Registrable Securities” means (i) any shares of Common Stock issued to Apollo pursuant to the Joint Venture Agreement; (ii) any equity securities issued or issuable directly or indirectly with respect to the securities referred to in clause (i) by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization, including a recapitalization or exchange and (iii) any other shares of Common Stock now held or hereafter acquired by Apollo; provided, that in the event that pursuant to such recapitalization or exchange, equity securities are issued which do not participate in the residual equity of the Company (“Non-Participating Securities”), such Non-Participating Securities will not be Registrable Securities. As to any particular shares constituting Apollo Registrable Securities, such shares will cease to be Apollo Registrable Securities when they have (x)  been effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, or (y)  been sold to the public through a broker, dealer or market maker pursuant to Rule 144 (or by similar provision then in force) under the Securities Act or (z) have become eligible for sale under Rule 144(k).

     “Carlyle Registrable Securities” means (i) any shares of Common Stock issued to Carlyle or Carlyle Affiliates pursuant to the Joint Venture Agreement; (ii) any equity securities issued or issuable directly or indirectly with respect to the securities referred to in clause (i) by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization, including a recapitalization or exchange and (iii) any other shares of Common Stock now held or hereafter acquired by Carlyle or any of Carlyle’s Affiliates; provided, that in the event that pursuant to such recapitalization or exchange, equity securities are issued which do not participate in the residual equity of the Company (“Non-Participating Securities”), such Non-Participating Securities will not be Registrable Securities. As to any particular shares constituting Carlyle Registrable Securities, such shares will cease to be Carlyle Registrable Securities when they have (x)  been effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, or (y) been sold to the public through a broker, dealer or market maker pursuant to Rule 144 (or by similar provision then in force) under the Securities Act or (z) have become eligible for sale under Rule 144(k).

     “Initial Public Offering” means an initial public offering by the Company of its Common Stock to the public effected pursuant to an effective registration statement under the Securities Act of 1933, as amended, or any comparable statement under any similar United States federal statute then in effect.

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     “Person” means an individual, a limited liability company, an association, a joint stock company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department, agency or political subdivision thereof.

     “Qualified IPO” means the closing of the sale of shares of Common Stock in a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act, in which the gross aggregate cash proceeds to the Company (before deduction of underwriting discount, commissions and expenses of sale) are at least $50,000,000.

     “Registrable Securities” means the Apollo Registrable Securities and the Carlyle Registrable Securities, including such shares of Common Stock hereafter acquired by transferees of the Apollo Registrable Securities and the Carlyle Registrable, provided that such transfers are effected in accordance with the terms and conditions the Shareholders’ Agreement of even date herewith with respect to transfers of Common Stock.

     “Securities Act” means the Securities Act of 1933, as amended, or any similar federal law then in force.

     “Securities and Exchange Commission” includes any governmental body or agency succeeding to the functions thereof.

     “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal law then in force.

     10. Miscellaneous.

     (a) No Inconsistent Agreements. The Company will not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement.

     (b) Adjustments Affecting Registrable Securities. The Company will not take any action, or permit any change to occur, with respect to its securities which would materially and adversely affect the ability of the holders of Registrable Securities to include such Registrable Securities in a registration undertaken pursuant to this Agreement or which would adversely affect the marketability of such Registrable Securities in any such registration (including, without limitation, effecting a stock split or a combination of shares).

     (c) Remedies. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party hereto will have the right to injunctive relief, in addition to all of its other rights and remedies at law or in equity, to enforce the provisions of this Agreement.

     (d) Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may be amended or waived only upon the prior written consent of each of the Company, Carlyle and the holders of a majority of the Registrable Securities; provided, that if such amendment or waiver would treat a holder or group of holders of Registrable Securities in a manner different from any other holders of Registrable Securities (other than as already provided herein), then such amendment or waiver will require the consent

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of such holder or the holders of a majority of the Registrable Securities of such group adversely treated. The Company will give prompt written notice to the parties hereto of any amendments, modifications, or waivers of the provisions of this Agreement.

     (e) Successors and Assigns. This Agreement will be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. In addition, and whether or not any express assignment has been made, the provisions of this Agreement that are for the benefit of the holders of Registrable Securities (or any portion thereof) as such will be for the benefit of and enforceable by any subsequent holder of any Registrable Securities (or of such portion thereof), subject to the provisions respecting the minimum numbers or percentages of shares of Registrable Securities (or of such portion thereof) required in order to be entitled to certain rights, or take certain actions, contained herein.

     (f) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

     (g) Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same Agreement.

     (h) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

     (i) Governing Law. This Agreement shall be construed according to and governed by the laws of the State of Delaware, without reference to conflicts of laws principles.

     (j) Notices. Any notice provided for in this Agreement will be in writing and will be either (i) personally delivered, (ii) delivered by certified mail, return receipt requested, (iii) sent by a nationally recognized overnight courier service (charges prepaid), or (iv) faxed with a copy following by any method described in the foregoing clauses (i) to (iii), to each Shareholder that is a party hereto at the address indicated in the Shareholders Agreement and to the Company at the address indicated below, or at such address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder when delivered personally, five days after deposit in the U.S. mail and one day after deposit with a nationally recognized overnight courier service.

If to the Company:

Apollo Global, Inc.
c/o Apollo Group, Inc.
4615 East Elwood Street
Phoenix, AZ 85040

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Attention: Chief Financial Officer
Facsimile: (602) 383-5159

[Remainder of page intentionally left blank]

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     IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement on the day and year first above written.

APOLLO GLOBAL, INC.
By:	/s/ Jeff Langenbach
	Name:	Jeff Langenbach
	Title:	President
APOLLO GROUP, INC.
By:	/s/ Joseph L. D’Amico
	Name:	Joseph L. D’Amico
	Title:
CARLYLE VENTURE PARTNERS III, L.P.
By:	TCG VENTURES III, L.P.
	Its General Partner
By:	/s/ Brooke B. Coburn
	Name:	Brooke B. Coburn
	Title:	Managing Director

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-144129, 333-46834, 33-88984, 33-87638, 33-88482 and 33-63429 on Form S-8 of (i) our report dated October 29, 2007 relating to the consolidated financial statements of Apollo Group, Inc. and subsidiaries (which report expressed an unqualified opinion and included an explanatory paragraph relating to the Company’s adoption of Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment”, on September 1, 2005, as discussed in Note 2 to the consolidated financial statements), and (ii) our report dated October 29, 2007 on the effectiveness of internal control over financial reporting of Apollo Group, Inc. and subsidiaries, appearing in this Annual Report on Form 10-K of Apollo Group, Inc. and subsidiaries for the year ended August 31, 2007.

/s/ DELOITTE & TOUCHE LLP

Phoenix, Arizona
October 29, 2007

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EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Brian E. Mueller, certify that:

     1. I have reviewed this Form 10-K of Apollo Group, Inc. (the “registrant”);

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

          a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

          b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

          c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

          d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s independent registered public accounting firm and the audit committee of registrant’s Board of Directors (or persons performing the equivalent functions):

          a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

          b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 24, 2007

/s/ Brian E. Mueller  

Brian E. Mueller 

President
(Principal Executive Officer) 

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EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph L. D’Amico, certify that:

     1. I have reviewed this Form 10-K of Apollo Group, Inc. (the “registrant”);

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

          a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

          b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

          c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

          d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s independent registered public accounting firm and the audit committee of registrant’s Board of Directors (or persons performing the equivalent functions):

          a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

          b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 24, 2007

/s/ Joseph L. D’Amico  

Joseph L. D’Amico 

Executive Vice President and Chief
Financial Officer 

103

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350)

In connection with the Annual Report of Apollo Group, Inc. (the “Company”) on Form 10-K for the fiscal year ended August 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian E. Mueller, President of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to my knowledge:

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 24, 2007

/s/ Brian E. Mueller  

Brian E. Mueller 

President
(Principal Executive Officer) 

A signed original of this written statement required by Section 906 has been provided to Apollo Group, Inc. and will be retained by Apollo Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350)

In connection with the Annual Report of Apollo Group, Inc. (the “Company”) on Form 10-K for the fiscal year ended August 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph L. D’Amico, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to my knowledge:

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 24, 2007

/s/ Joseph L. D’Amico  

Joseph L. D’Amico 

Executive Vice President and
Chief Financial Officer 

A signed original of this written statement required by Section 906 has been provided to Apollo Group, Inc. and will be retained by Apollo Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

105