exv10w6






EXHIBIT 10.6




AMENDMENT

TO

EMPLOYMENT AGREEMENT




     The EMPLOYMENT AGREEMENT entered into by and between Apollo Group, Inc. (the “Company”) and
Gregory Cappelli (the “Executive”), effective March 31 2007 (the “Agreement”), is hereby amended as
follows, effective as of January 1, 2009 except as otherwise specified below. The purpose of this
Amendment is to bring the Agreement into documentary compliance with the applicable requirements of
the Treasury Regulations issued under Section 409A of the Internal Revenue Code of 1986, as
amended.



     1. There is hereby added to the end of Section 3(b) of the Agreement the following sentence:




     The Annual Bonus for each fiscal year shall be paid in accordance with the
Company’s customary practices, but in no event later than the fifteenth day of the
third calendar month following the end of such fiscal year.



     2. Section 4(d) of the Agreement is hereby amended in its entirety to read as follows,
effective September 4, 2007:




     (d) Vesting. The Initial Option Grant and any Equalization Grant will vest and
become exercisable 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), and those grants will be subject to the vesting acceleration provisions set
forth 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 those vested shares
shall become issuable, in accordance with the terms of the September 4, 2007
Restricted Stock Unit Award Agreement between the Executive and the Company
evidencing that award, as such agreement may be amended or restated from time to
time (the “Initial RSU Award Agreement”), and such agreement shall incorporate the
special vesting acceleration provisions of Sections 8 and 11 of this Agreement.



     3. Section 6(a) of the Agreement is hereby amended in its entirety to read as follows:




     (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. Accordingly, the Executive shall submit



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appropriate evidence of each such expense within sixty (60) days after the
later or (i) his incurrence of that expense or (ii) his receipt of the invoice or
billing statement for such expense, and the Company shall provide the Executive with
the requisite reimbursement within ten (10) business days thereafter; provided,
however, that (i) no expense shall be reimbursed later than the close of the
calendar year following the calendar year in which that expense is incurred, (ii)
the amounts eligible for reimbursement in any one calendar year shall not affect the
amounts reimbursable in any other calendar year and (iii) the right to such
reimbursement may not be liquidated or exchanged for any other benefit.



     4. Section 7(d) of the Agreement is hereby amended in its entirety to read as follows:



          (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 until the earlier of (i) the date he first becomes eligible to receive benefits under
such program or (ii) the date he is deemed to have a Separation from Service (as defined below) by
reason of such disability. The termination of the Executive’s employment under such circumstances
shall, for purposes of this Agreement, constitute a termination for “Disability.”




     5. The following sentence is hereby added to the end of Section 8(a) of the Agreement:




     The shares underlying any restricted stock units or other equity-based awards
to which the Executive becomes entitled in accordance with the foregoing provisions
of this Section 8(a) shall be issued at the time or times set forth in the
applicable agreements evidencing those awards, subject to any required holdback
under Section 14(b).



     6. Section 8(b) of the Agreement is hereby amended in its entirety to read as follows:




          (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 (x) the Executive executes and
delivers to the Company a general release substantially in the form of attached
Exhibit B (the “Required Release”) within



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twenty-one (21) days (or forty-five (45) days if such longer period is required
under applicable law) after such termination of employment, (y) the Required Release
becomes effective and enforceable in accordance with applicable law and (z) the
Executive complies with the restrictive covenants set forth in Section 10:




          (i) an amount equal to sum of (A) two times the Executive’s Base Salary at the
time of the Notice of Termination and (B) two times the average of his actual Annual
Bonuses for the three fiscal years (or fewer number of fiscal years of employment
with the Company) immediately preceding the fiscal year in which such termination of
employment occurs (with any pro-rated bonus for any such year to be annualized),
with such amount to be paid in successive equal increments, in accordance with the
Company’s normal payroll practices for salaried employees, over the one-year period
measured from the date of the Executive’s Separation from Service due to such
termination of employment, beginning with the first pay day within the sixty (60)
day period following the date of such Separation from Service on which the Required
Release is effective following the expiration of any applicable revocation period,
but in no event later than the last day of such sixty (60)-day period on which the
Required Release is so effective;




          (ii) accelerated vesting of the Initial Option Grant and any Equalization Grant
to the extent of the greater of (A) fifty percent of the then unvested portion of
each such grant or (B) the portion of each 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, and one hundred percent vesting of the
Initial RSU Award if such termination of employment occurs either prior to the
completion of the performance period specified in the Initial RSU Award Agreement or
on or after the completion of that performance period in which the designated
performance goal is attained, with any shares which so vest under the Initial RSU
Award to be issued at the time or times set forth in the Initial RSU Award
Agreement, subject to any required holdback under Section 14(b);




          (iii) provided the Executive and/or his dependents are eligible and timely
elect to continue their health care coverage under the Company’s group health plan
pursuant to their rights under COBRA, the Company will reimburse the Executive for
the costs he incurs to obtain such continued coverage for himself and his spouse and
eligible dependents (collectively, the “Coverage Costs”) until the earliest of (A)
the end of the eighteen (18)-month period measured from the Termination Date, (B)
the date that the Executive and/or his spouse and 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). In order to obtain reimbursement for such Coverage Costs, Executive must
submit appropriate



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evidence to the Company of each periodic payment within sixty (60) days after
the required payment date for those Coverage Costs, and the Company shall within
thirty (30) days after such submission reimburse the Executive for that payment.
During the period such medical care coverage remains in effect hereunder, the
following provisions shall govern the arrangement: (a) the amount of Coverage Costs
eligible for reimbursement in any one calendar year of such coverage shall not
affect the amount of Coverage Costs eligible for reimbursement in any other calendar
year for which such reimbursement is to be provided hereunder; (ii) no Coverage
Costs shall be reimbursed after the close of the calendar year following the
calendar year in which those Coverage Costs were incurred; and (iii) the Executive’s
right to the reimbursement of such Coverage Costs cannot be liquidated or exchanged
for any other benefit. To the extent the reimbursed Coverage Costs constitute
taxable income to the Executive, the Company shall report the reimbursement as
taxable W-2 wages and collect the applicable withholding taxes, and any remaining
tax liability shall be the Executive’s sole responsibility; and




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



     7. Section 8(c) of the Agreement is hereby amended in its entirety to read as follows:




     (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 the satisfaction of each of the following
requirements: (i) the Executive executes and delivers to the Company the Required
Release within twenty-one (21) days (or forty-five (45) days if such longer period
is required under applicable law) after such resignation, (ii) the Required Release
becomes effective and enforceable in accordance with applicable law and (iii) the
Executive complies with the restrictive covenants set forth in Section 10 of this
Agreement.



     8. There is hereby added to Section 8 of the Agreement new Section 8(d), and existing Section
8 (d) is hereby re-designated Section 8(e):




     (d) All payments and benefits under this Section 8 shall be subject to the
applicable holdback provisions of Section 14(b).



     9. Section 12(b) of the Agreement is hereby deleted in its entirety and replaced with the
following new Sections 12(b), 12(c), 12d) and 12(e):



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     (b) All determinations as to whether any of the Total Payments are “parachute
payments” (within the meaning of Section 280G of the Code), whether a Gross-Up
Payment is required, the amount of such Gross-Up Payment, and any amounts relevant
to the last sentence of the paragraph above, will be made by an independent
registered public accounting firm selected by the Company from among the largest
four such accounting firms in the United States (the “Accounting Firm”). The
Accounting Firm selected by the Company will not have an ongoing audit or consulting
relationship with the Company at the time it is selected. The Accounting Firm will
provide all applicable determinations with respect to any of the Total Payments that
become due and payable at the time of the Change in Control Event (the “Change in
Control Determination”), together with detailed supporting calculations regarding
the amount of the Excise Tax, any required Gross-Up Payment and any other relevant
matter, both to the Company and the Executive within ten (10) business days after
the effective date of the Change in Control Event or such earlier time as is
requested by the Company or the Executive (if the Executive reasonably believes that
any of the Total Payments may be subject to the Excise Tax). In addition, the
Accounting Firm will provide all applicable determinations with respect to any of
the Total Payments that become due and payable at the time of the Executive’s
Separation from Service (the “Separation from Service Determination”), together with
detailed supporting calculations regarding the amount of the Excise Tax, any
required Gross-Up Payment and any other relevant matter, both to the Company and the
Executive within ten (10) business days after the date of the Executive’s Separation
from Service. The Change in Control and Separation from Service Determinations made
by the Accounting Firm will be binding upon the Company and the Executive. The
Gross-Up Payment (if any) determined on the basis of the Change in Control
Determination shall be paid to or on behalf of Executive within five (5) business
days after the completion of such Determination or (if later) at the time the
related Excise Tax is remitted to the appropriate tax authorities. The Gross-Up
Payment (if any) determined on the basis of the Separation from Service
Determination shall be paid to or on behalf of Executive within five (5) business
days after the completion of such Determination or (if later) at the time the
related Excise Tax is remitted to the appropriate tax authorities.




     (c) In the event that the Executive’s actual Excise Tax liability is determined
by a Final Determination to be greater than the Excise Tax liability taken into
account for purposes of any Gross-Up Payment or Payments initially made to the
Executive pursuant to the provisions of Section 12(b), then within thirty (30) days
following that Final Determination, the Executive shall notify the Company of such
determination, and the Accounting Firm shall, within thirty (30) days thereafter,
make a new Excise Tax calculation based upon that Final Determination and provide
the Company and the Executive with the supporting calculations for any supplemental
Gross-Up Payment attributable to that excess Excise Tax liability. The Company shall
make the supplemental Gross-Up



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payment to the Executive within five (5) business days following the completion
of the applicable calculations or (if later) at the time such excess tax liability
is remitted to the appropriate tax authorities. In the event that the Executive’s
actual Excise Tax liability is determined by a Final Determination to be less than
the Excise Tax liability taken into account for purposes of any Gross-Up Payment or
Payments initially made to the Executive pursuant to the provisions of Section
12(b), then the Executive shall refund to the Company, within five (5) business days
following receipt, any federal or state tax refund attributable to the Excise Tax
overpayment. For purposes of this Section 12(c), a “Final Determination” means an
audit adjustment by the Internal Revenue Service that is either (i) agreed to by
both the Executive and the Company (such agreement by the Company to be not
unreasonably withheld) or (ii) sustained by a court of competent jurisdiction in a
decision with which the Executive and the Company concur or with respect to which
the period within which an appeal may be filed has lapsed without a notice of appeal
being filed.




     (d) Should the Accounting Firm determine that any Gross-Up Payment made to the
Executive was in fact more than the amount actually required to be paid to him in
accordance with the provisions of Section 12(b) or 12(c), then the Executive will,
at the direction and expense of the Company, take such steps as are reasonably
necessary (including the filing of returns and claims for refund), follow reasonable
instructions from, and procedures established by, the Company, and otherwise
reasonably cooperate with the Company to correct such overpayment. In addition,
should the Company decide to contest any assessment by the Internal Revenue Service
of an Excise Tax on one or more items comprising the Total Payments, the Executive
will comply with all reasonable actions requested by the Company in connection with
such proceedings, but shall not be required to incur any out-of-pocket costs in so
doing.




     (e) Notwithstanding anything to the contrary in the foregoing, any Gross-Up
Payments due the Executive under this Section 12 shall be subject to the hold-back
provisions of Section 14(b), to the extent those payments relate to any amounts and
benefits provided to the Executive that constitute parachute payments attributable
to his Separation from Service. In addition, no Gross-Up Payment shall be made
later than the end of the calendar year following the calendar year in which the
related taxes are remitted to the appropriate tax authorities, or such other
specified time or schedule that may be permitted under Section 409A of the Code. To
the extent the Executive may become entitled to any reimbursement of expenses
incurred by him at the direction of the Company in connection with any tax audit or
litigation addressing the existence or amount of the Excise Tax, such reimbursement
shall be paid to the Executive no later than the later of (i) the close of the
calendar year in which the Excise Tax that is the subject of such audit or
litigation is paid by or on behalf of the Executive or (ii) the end of the sixty
(60)-day period measured from such payment date. If no Excise Tax liability is found
to be due as a result of such audit or litigation, the



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reimbursement shall be paid to the Executive no later than the later of (i) the
close of the calendar year in which the audit is completed or there is a final and
non-appealable settlement or other resolution of the litigation or (ii) the end of
the sixty (60)-day period measured from the date the audit is completed or the date
the litigation is so settled or resolved.



     10. The final paragraph of Section 13(a) is hereby amended to read as follows:




     All determinations under this Section 13 shall be made by 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 be
reduced by the value of those restrictive covenants to the extent consistent with
Code Section 280G and the regulations thereunder. To the extent a reduction to the
Total Payments is required to be made in accordance with this Section 13, the Total
Payments attributable to any cash severance payments otherwise due the Executive
under Section 8 of this Agreement shall be reduced first (with such reduction to be
applied pro-rata to each such severance payment and without any change in the
payment dates), then the accelerated vesting of his Initial RSU Award shall be
reduced, then the accelerated vesting of any other restricted stock unit awards made
to him by the Company shall be reduced in the same chronological order in which
granted, and finally the accelerated vesting of the Executive’s stock options shall
be reduced (based on the amount of the parachute payment calculated for each such
option in accordance with the Treasury Regulations under Code Section 280G), with
such reduction to occur in the same chronological order in which those options
were granted.



     11. There is hereby added to the end of Section 14(a) of the Agreement the following sentence:




     To the extent there is any ambiguity as to whether any provision of this
Agreement would otherwise contravene one or more requirements or limitations of Code
Section 409A, such provisions shall be interpreted and applied in a manner that does
not result in a violation of the applicable requirements or limitations of Code
Section 409A and the Treasury Regulations thereunder.



     12. Section 14(b) of the Agreement is hereby amended in its entirety to read as follows:




     (b) Notwithstanding any provision to the contrary in this Agreement, no
payments or benefits to which the Executive becomes entitled under this Agreement in
connection with his termination of employment with the Company (other than the
reimbursement of Coverage Costs during the applicable period of COBRA coverage)
shall be made or paid to the Executive prior to the earlier of



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(i) the first day of the seventh (7th) month following the date of his
Separation from Service due to such termination of employment or (ii) the date of
his death, if the Executive is deemed, pursuant to the procedures established by the
Compensation Committee of the Company’s Board of Directors in accordance with the
applicable standards of Code Section 409A and the Treasury Regulations thereunder
and applied on a consistent basis for all for all non-qualified deferred
compensation plans of the Employer Group subject to Code Section 409A, to be a
“specified employee” at the time of such Separation from Service 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 deferral period, all
payments deferred pursuant to this Section 14(b) shall be paid to the Executive in a
lump sum, and any remaining payments due under this Agreement shall be paid in
accordance with the normal payment dates specified for them herein. The specified
employees subject to such a delayed commencement date shall be identified on
December 31 of each calendar year. If the Executive is so identified on any such
December 31, he shall have specified employee status for the twelve (12)-month
period beginning on April 1 of the following calendar year. For purposes of this
Agreement, including (without limitation) this Section 14(b), the following
definitions shall be in effect:




          (i) “Separation from Service” shall mean the date on which the level of the
Executive’s bona fide services as an Employee (or non-employee consultant)
permanently decreases to a level that is not more than twenty percent (20%) of the
average level of services the Executive rendered as an Employee during the
immediately preceding thirty-six (36) months (or any shorter period of such Employee
service). Any such determination, however, shall be made in accordance with the
applicable standards of the Treasury Regulations issued under Code Section 409A. In
addition to the foregoing, a Separation from Service will not be deemed to have
occurred while the Executive is on a sick leave or other bona fide leave of absence
if the period of such leave does not exceed six (6) months or any longer period for
which the Executive’s right to reemployment with the Company is provided either by
statute or contract; provided, however, that in the event of a leave of absence due
to any medically determinable physical or mental impairment that can be expected to
result in death or to last for a continuous period of not less than six (6) months
and that causes the Executive to be unable to perform his duties as an Employee, no
Separation from Service shall be deemed to occur during the first twenty-nine (29)
months of such leave. If the period of the leave exceeds six (6) months (or
twenty-nine (29) months in the event of disability as indicated above) and the
Executive’s right to reemployment is not provided either by statute or contract,
then the Executive will be deemed to have Separated from Service on the first day
immediately following the expiration of the applicable six (6)-month or twenty-nine
(29)-month period.




          (ii) The Executive shall be deemed to remain an “Employee” for so long he
remains in the employ of at least one member of the Employer Group, subject to the
control and direction of the employer entity as to both the work to be performed and
the manner and method of performance.



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          (iii) “Employer Group” shall mean the Company and each member of the group of
commonly controlled corporations or other businesses that include the Company, as
determined in accordance with Sections 414(b) and (c) of the Code and the Treasury
Regulations thereunder, except that in applying Sections 1563(1), (2) and (3) of the
Code for purposes of determining the controlled group of corporations under Section
414(b), the phrase “at least 50 percent” shall be used instead of “at least 80
percent” each place the latter phrase appears in such sections and in applying
Section 1.414(c)-2 of the Treasury Regulations for purposes of determining trades or
businesses that are under common control for purposes of Section 414(c), the phrase
“at least 50 percent” shall be used instead of “at least 80 percent” each place the
latter phrase appears in Section 1.414(c)-2 of the Treasury Regulations.



     13. Section 14(c) of the Agreement is hereby amended in its entirety to read as follows:




     (c) Should the Executive comply with the provisions of subsections 14(a) and
14(b) above but nevertheless incur the 20% penalty tax imposed under Section 409A
(the “Section 409A Penalty Tax”) with respect to one or more payments or benefits
provided to him under this Agreement, then the Executive will be entitled to receive
an additional payment (the “409A Gross-Up Payment”) in an amount such that after
payment by the Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including any tax imposed upon the 409A Gross-Up
Payment, the Executive retains an amount of the 409A Gross-Up Payment equal to the
Section 409A Penalty Tax imposed upon the Executive’s deferred compensation. The
amount of the 409A Gross-Up Payment shall be calculated, by an Accounting Firm
mutually agreeable to the Company and the Executive, within ten (10) business days
after it is first determined that the Executive is subject to the Section 409A
Penalty Tax, and the 409A Gross-Up Payment so calculated shall be paid to or on
behalf of the Executive within five (5) business days after the completion of such
determination or (if later) at the time the related Section 409A Penalty Tax is
remitted to the appropriate tax authorities. In the event that the Executive’s
actual Section 409A Penalty Tax liability is determined by a Final Determination to
be greater than the Section 409A Penalty Tax liability taken into account for
purposes of the 409A Gross-Up Payment initially made to the Executive pursuant to
the provisions of this Section 14(c), then within thirty (30) days following that
Final Determination, the Executive shall notify the Company of such determination,
and the Accounting Firm shall, within thirty (30) days thereafter, make a new
calculation of the 409A Gross-Up Payment based upon that Final Determination and
provide the Company and the Executive with the supporting calculations for any
supplemental 409A Gross-Up Payment attributable to that excess Section 409A Penalty
Tax liability. The Company shall make the supplemental 409A Gross-Up payment to the
Executive within five (5) business days following the completion of the applicable
calculations or (if later) at the



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time such excess Section 409A Penalty Tax liability is remitted to the appropriate
tax authorities. In the event that the Executive’s actual Section 409A Penalty Tax
liability is determined by a Final Determination to be less than the Section 409A
Penalty Tax liability taken into account for purposes of the 409A Gross-Up Payment
initially made to the Executive pursuant to the provisions of this Section 14(c),
then the Executive shall refund to the Company, within five (5) business days after
receipt, any federal or state tax refund attributable to the overpayment of his
Section 409A Penalty Tax. In no event shall any 409A Gross-Up Payment to which the
Executive becomes entitled hereunder be made later than the later of (i) the end of
the calendar year in which the related Section 409A Penalty Tax is remitted to the
appropriate tax authorities or (ii) the end of the sixty (60)-day period measured
from the date such tax is so remitted.



     14. Except as modified by this Amendment, all the terms and provisions of the Agreement shall
continue in full force and effect.



     IN WITNESS WHEREOF, Apollo Group, Inc. has caused this Amendment to be executed on its behalf
by its duly-authorized officer on the date indicated below, and the Executive has executed this
Amendment on the date indicated below.



	 	 	 	 	 	 	 	 	 
	GREGORY CAPPELLI	 	 	 	APOLLO GROUP, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Gregory Cappelli
 


	 	 	 	By:
	 	/s/ Charles B. Edelstein
 

	 	 
	 
	 	 	 	 	 	 	 	 
	Dated: December 12, 2008	 	 	 	Title:	Chief Executive Officer 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Dated:
	 	December 12, 2008	 	 







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