EXHIBIT 10.17
PROGRAMMING DISTRIBUTION AGREEMENT
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THIS PROGRAMMING DISTRIBUTION AGREEMENT ("Agreement") is made as of the 28th day
of September, 1994, by and between Jones Education Networks, Inc., a Colorado
corporation ("Jones"), and Space Vision, Inc., a corporation organized under the
laws of the Republic of China ("Distributor"), whose address is 9F, A2, No.97,
Section 2, Tun Haw S. Rd., Taipei, Taiwan.
IN CONSIDERATION OF THE MUTUAL COVENANTS, STIPULATIONS AND REPRESENTATIONS
CONTAINED HEREIN, THE PARTIES TO THIS AGREEMENT AGREE AS FOLLOWS:
1. GRANT OF EXCLUSIVE LICENSE
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(a) Subject to the limitations, terms and conditions of this Agreement,
Jones hereby grants to Distributor the exclusive license to Distribute (as
defined below) the programming identified on Exhibit A attached to this
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Agreement, as such Exhibit may be amended from time to time in accordance
with Section 3(a) hereof (the "Programming"), to cable television system(s)
located in Taiwan, the Republic of China (each a "System" and collectively
the "Systems").
(b) For purposes of this Agreement, the "Operating Area" of any System
shall mean the geographical area where the operator of the System is
authorized to construct, operate, manage or maintain a cable television
system by the appropriate governmental authority of the Republic of China.
(c) For purposes of this Agreement, "Distribute" shall mean the delivery
of the Programming to Systems by video tape, or by satellite or microwave
signal, and the subsequent delivery to subscribers through the Systems'
cable distribution plant.
2. TERM AND TERMINATION
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(a) Unless earlier terminated as provided in this Agreement, the term of
this Agreement shall commence on September 28, 1994, and terminate three
(3) years from and after the data when Programming is available for
distribution by Distributor. This Agreement shall automatically renew for
successive one (1) year terms unless either party gives written notice of
termination at least forty-five (45) days prior to the expiration of the
then current term.
(b) Except as otherwise provided herein, neither Distributor nor Jones
may terminate this Agreement except upon sixty (60) days prior written
notice and then only if the other has made a material misrepresentation in
this Agreement or breaches any of its material obligations in this
Agreement and such misrepresentation or breach
(which shall be specified in such notice) is not or cannot be cured within
sixty (60) days of such notice.
3. CONTENT OF PROGRAMMING
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(a) Jones shall have the exclusive authority to determine from time to
time the content, selection and format of the programming that will
constitute the Programming, and shall have the right to amend Exhibit A
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from time to time during the term of this Agreement to change, substitute
or alter the description of the Programming. Jones agrees to consult with
Distributor from time to time in order to obtain the advice of the
Distributor as to the type of Programming that will be most attractive to
the local market.
(b) Jones shall make available for transfer to Distributor, FOB Englewood,
Colorado or such other no more distant shipping point selected by Jones,
master video tapes of the Programming in BETACAM NTSC format for initial
channel launch on January 1, 1995 and thereafter monthly throughout the
term of this Agreement. The tapes provided shall be subtitled in Mandarin
Chinese unless, in the exercise of Jones' reasonable judgment, such
subtitling is unnecessary or the content of the program is not suited for
subtitling; provided, however, that Jones shall consult with Distributor
prior to the initial launch of the Programming in Taiwan, and from time to
time thereafter, regarding the general standards that Jones will use to
determine whether the content of any program is not suited for subtitling.
The Programming shall initially consist of forty-two (42) hours of
Programming per week, which shall be in six (6) hour daily blocks (each, a
"Programming Block"). Jones shall make the tapes available to Distributor
at least thirty (30) days prior to the anticipated airing of the
Programming by Distributor. Distributor's right to distribute the
Programming contained on the video tapes or any copies made therefrom shall
expire ten (10) days after the date on which such Programming was scheduled
to be cablecast unless otherwise approved by Jones. Jones will make
available to Distributor the Programming schedule for each month no less
than forty-five (45) days prior to the first day of the scheduled month.
(c) If any of the BETACAM master tapes delivered by Jones to Distributor
are defective, Jones shall deliver new master tapes without defects to the
point of entry in Taipei, Taiwan, within seven days after receiving written
notice from the Distributor.
4. TAPE FEES AND PAYMENTS
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(a) On or before the thirtieth (30th) day following the conclusion of
each calendar month throughout the term of this Agreement, Distributor
shall pay to Jones' designated payment agent, Higher Education Group,
Inc., doing business as American Higher Education Centers, Inc. ("AHEC"),
tape fees in an amount calculated in accordance with the provisions of
Exhibit B attached hereto and payable in NTD equivalent. For the two years
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beginning January 1, 1995, the NTD equivalent shall be
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determined using the U.S. Dollar to NTD exchange rate in effect at the
time of payment, as quoted by Citibank or its successor financial
institution. Beginning January 1, 1997, and each year thereafter during the
term of this Agreement, the equivalent for such year shall be determined by
using the average end of month U.S. Dollar to NTD exchange rate during the
previous two-year period, as quoted by Citibank or its successor financial
institution. Jones may designate a different payment agent by giving
written notice to Distributor. Distributor unconditionally guarantees the
payment of the Minimum Guaranteed Tape Fees set forth on Exhibit B
regardless of the actual number of subscribers that receive the
Programming. The payment of the Minimum Guaranteed Tape Fee for the first
three months of 1995 will be paid to Jones' designated payment agent in
advance no later than the close of business on October 15, 1994 in the
amount of USD 155,700.
(b) Jones' payment agent shall invoice Distributor for monthly tape fees.
Failure, for any reason, to receive an invoice for a particular monthly
payment shall not relieve Distributor of its obligation to make any payment
in a timely manner consistent with the terms of this Agreement. If
Distributor is in default with respect to any payment required by Section
4(a), in addition to Distributor's liability for the amount in default,
Distributor shall pay interest of one and one-half percent (1-1/2%) per
month, prorated for partial months, of the amount in default, and in
addition, Distributor shall be liable for all reasonable costs and expenses
(including court costs and attorneys' fees) incurred by Jones or AHEC in
collecting any past due payments. If Distributor is in default with respect
to any payment required by Section 4(a) and such default remains uncured
for more than sixty (60) calendar days, or, if Distributor defaults in its
payment obligations under Section 4(a) two or more times in any twelve
month period, then, at the option of Jones, the exclusive right to
distribute granted in Section l(a) may be terminated; provided that the
termination of such rights shall not terminate this agreement or relieve
Distributor of any of its obligations hereunder.
(c) Accompanying each payment during the term of this Agreement,
Distributor shall provide a true and complete monthly report, signed and
certified by the chief financial officer of Distributor or his/her
authorized designee, in a form satisfactory to Jones, identifying each
System on which the Programming is carried and the chargeable number of
subscribers of each System, as agreed upon by the System and Distributor,
during the subject payment period, and specifying the gross revenues
received, directly or indirectly, by Distributor from each System during
the subject payment period for the Programming, and containing such other
information as may be reasonably required by Jones for accurate billing
purposes.
(d) Distributor shall keep true and accurate books and records directly
relating to this Agreement in accordance with generally accepted accounting
principles. All such books and records shall be maintained by Distributor
for a period of three (3) years following the year to which such books and
records relate. Jones, AHEC or their authorized representatives shall have
the right, at their own cost, to inspect, audit and copy any such books and
records of Distributor. Such inspection, auditing and
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copying shall be limited to two times per year. Further, Jones shall
provide at least 10 days prior written notice before such inspection,
auditing or copying. Jones and AHEC agree that the books and records of
Distributor shall be subject to the confidentiality provisions of Article
10 of this Agreement. Acceptance by Jones or its agents of any payment by
Distributor shall not be construed as acceptance of any calculation thereof
or any aforementioned subscriber count supplied in the monthly report, or
as a waiver of any rights of Jones hereunder.
5. DISTRIBUTION OF PROGRAMMING
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(a) Distributor shall distribute the Programming, and shall require each
System operator to distribute the Programming, in its entirety without
addition, deletion, alteration, editing or amendment, including any
copyright notices, credits and similar notices, trademarks or tradenames
included in the Programming unless otherwise approved in writing by Jones.
During the term of this Agreement, Distributor shall require that the
Programming appear on each System on the "basic" tier of service, which for
purposes of this Agreement means the tier of service with the highest
Penetration (as hereinafter defined). For the purposes of this Section, the
term "Penetration" means the ratio of the number of subscribers in any
System receiving and paying for the level or tier of cable television
service to the total number of subscribers of the System.
(b) Distributor shall distribute the Programming throughout the entire
term of this Agreement, and require in writing that each System operator
use the Programming, only in accordance with the limitations, terms and
conditions of this Agreement, and will not replace, delete, terminate or
otherwise disrupt, discontinue or cease transmission of the Programming, or
by agreement or contract permit or allow any System operator to do any of
the foregoing. The Programming Block for a particular day shall be repeated
on each System such that the Programming shall constitute a full twenty-
four (24) hour per day channel on each System.
(c) Distributor shall designate or cause to be designated one (1) channel
on each System for the delivery of the Programming and the Programming
shall not be wrapped with or exhibited on any shared channel basis with any
other programming.
(d) The Programming shall be aired in accordance with the schedule
provided by Jones. In the event that such an airing schedule is not met due
to causes beyond the control of Distributor, the Programming shall be aired
as immediately as possible after the correction of the problem causing the
original failure to deliver the Programming.
(e) Distributor is authorized to and shall copy the BetaCam master
provided by Jones in sufficient quantities as shall be necessary for each
System and shall timely deliver the tapes to the System operators.
Distributor shall take reasonable and practical security measures to
prevent the unauthorized copying or taping by others. Jones represents and
warrants that Distributor shall have the right to Distribute, and
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System operators shall have the right to cablecast, the Programming without
any claims of infringement or other third party claims, and that the
Programming shall be free from restrictions or limitations imposed by
third parties, affecting the distribution of the Programing. Jones shall be
solely responsible to remove any such limitations or restrictions.
Distributor shall not distribute or exhibit, and shall not authorize,
license or permit the distribution or exhibition of, the Programming by any
means or device, whether now known or hereafter devised, other than through
Systems which hold all necessary licenses and permits to operate in Taiwan.
6. OTHER COST
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In addition to the tape fees payable by Distributor pursuant to Section 4
of this Agreement, and any other costs payable by Distributor pursuant to
this Agreement, Distributor shall pay all customs, VAT or other taxes, fees
or charges related to the distribution of the copies of the tapes and
Programming to the Systems and airing of the Programming or the use of the
tapes and Programming in Taiwan. Distributor shall be responsibie for the
payment of all customs, VAT or other taxes, fees or charges related to the
importation or use of the BetaCam master tapes and any promotional
materials.
7. PROMOTION AND MARKETING OF THE PROGRAMMING
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(a) Distributor shall use its best effort, to promote, market and sell
the Programming to Systems in Taiwan. Distributor shall promote and market
the Programming on a basis and to an extent equal to the marketing and
promotion efforts devoted to the other channels included in any package of
service in which the Programming is included.
(b) Jones, at no additional cost to Distributor, may from time to time
during the term of this Agreement supply Distributor with promotional
material related to the Programming. The promotional materials may include
but not necessarily be limited to course catalogs, program schedules and
advertising slicks. Distributor shall use good faith efforts to distribute
any such promotional material to System operators and persons receiving the
Programming and in connection with its efforts to gain subscribers.
(c) At Jones' request, Distributor shall provide Jones with all
available data regarding the viewership, marketing and promotion of the
Programming by Distributor. Subject to applicable federal, state and local
law (including, the franchises pursuant to which the Systems are
operated), Distributor shall also render such other reasonable assistance
to Jones as Jones may request in connection with any marketing test,
survey, poll or other research which Jones may undertake in connection with
the Programming.
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(d) Jones shall obtain the agreement of AHEC to maintain in Taiwan an
educational service center to support the students who enroll in counts of
study offered in conjunction with the Programming.
8. TRADEMARKS
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All right, title and interest in and to the videotapes shall pass to
Distributor upon transfer, provided that all right, title and interest in
and to the Programming contained on the videotapes, and all materials,
ideas, formats and concepts, computer software or other rights of whatever
nature related thereto, shall remain the property of Jones and/or its
affiliates. Further, Distributor acknowledges and agrees that all names,
logos, marks, copyright notices or designations utilized by Jones and/or
its affiliates in connection with the Programming (the "Marks") are the
sole and exclusive property of Jones and/or its affiliates, and no rights
or ownership are intended to be or shall be transferred to Distributor
pursuant to this Agreement. Distributor may use the Marks to advertise and
promote the carriage of the Programming by Systems. Distributor may
authorize an operator of a System to use the Marks only (i) to advertise
and promote the Programming in a manner approved by Jones, and (ii) in the
carriage of the Programming on the operator's System. Distributor shall
notify Jones of any unauthorized use of the Marks of which it has
knowledge, and shall cooperate with all reasonable requests made by Jones
in seeking to prohibit or remediate such unauthorized use. Jones shall
provide Distributor with samples of the Marks, which Distributor shall use
in their entirety (including all service mark and trademark notices)
whenever the Marks are used by Distributor.
9. REPRESENTATIONS AND INDEMNIFICATION
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(a) Jones represents and warrants to Distributor that (i) it is a
corporation duly organized and validly existing, under the laws of the
State of Colorado; (ii) Jones has the corporate power and authority to
enter into this Agreement and to fully perform its obligations hereunder;
(iii) Jones is under no contractual or other legal obligation that in any
way interferes with its ability to fully, promptly and completely perform
hereunder; and (iv) nothing contained in the Programing shall violate the
civil or property rights, copyrights, trademark rights or right of privacy
of any person, firm or corporation.
(b) Distributor represents and warrants to Jones that (i) Distributor is a
corporation duly organized and validly existing under the laws of the
Republic of China; (ii) Distriburor has the requisite power and authority
to enter into this Agreement and to fully perform its obligations in this
Agreement; (iii) Distributor is under no contractual or other legal
obligation which in any way interferes with its ability to fully, promptly
and completely perform hereunder.
(c) Distributor and Jones shall each indemnify and forever hold
harmless the other, the other's affiliate companies and their respective
officers, directors, employees and
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agents from all liabilities, claims, costs, damages and expenses
(including, without limitation, reasonable counsel fees) arising out of any
breach or claimed breach by it of any representation or any of its
obligations pursuant to this Agreement. Jones's liability for damages
arising out of its inability or failure to deliver the Programming shall be
limited to tape fee credits for the period of any such failure.
(d) The party entitled to indemnification hereunder (the "Indemnified
Party") shall notify the other party hereto (the "Indemnifying Party") in
writing of the claim or action for which such indemnity allegedly applies.
The Indemnifying Party shall undertake the defense of any such claim or
action and permit the Indemnified Party to participate therein at the
Indemnified Party's own expense. The settlement of any such claim or action
by an Indemnified Party without the Indemnifying Party's prior written
consent shall release the Indemnifying Party from its obligations under
this Agreement with respect to such claim or action so settled.
(e) Neither party shall be liable to the other for the failure to fulfill
its obligations under this Agreement (other than the obligation to make all
payments when due) to the extent such failure is caused by or arises out of
an act of war, strike, riot, labor dispute, national disaster, technical
failure, or any other reason beyond the control of the party whose
obligation is prevented during the period of such occurrence.
(f) Distributor shall not be liable for any action or omission to act by
the Systems which results in an infringement of the copyright or any other
right of Jones or its affiliates, so long as Distributor is in compliance
with its obligations as set forth in this Agreement and provided that
Distributor has not authorized, and has used its best efforts to avoid, any
such action or omission.
10. CONFIDENTIALITY
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Neither Distributor nor Jones shall disclose to any third party (other than
its respective affiliates and employees), any information with respect to
the terms and provisions of this Agreement, including by way of press
release(s), except: (i) to the extent necessary to comply with law or legal
reporting or disclosure requirements or the valid order of a court of
competent jurisdiction, in which event the party making such disclosure
shall so notify the other as promptly as practicable and, if possible,
prior to making such disclosure shall seek confidential treatment of such
information; (ii) as part of its normal reporting or review procedure to
its parent company, its auditors and its attorneys; provided, however that
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such parent company, auditors and attorneys agree to be bound by the
provisions of this Section; (iii) in order to enforce its rights pursuant
to this Agreement; and (iv) if mutually agreed by Distributor and Jones in
writing.
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11. GENERAL
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(a) This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. Notwithstandlng
the foregoing, this Agreement may not be assigned by Distributor without
the prior written consent of Jones.
(b) Nothing contained herein shall be deemed to create, and the parties do
not intend to create, any relationship of partners or joint venturers as
between Distributor and Jones. Neither Distributor nor Jones shall be or
hold itself out as the agent of the other under this Agreement. The
obligations of Distributor and Jones under this Agreement are subject to
all applicable federal, state and local laws, rules and regulations.
(c) A waiver by either party of any term or condition of this Agreement in
any one instance shall not be deemed or construed as a continuing waiver or
a waiver of any subsequent breach of this Agreement. This Agreement sets
forth the entire understanding of the parties with respect to the subject
matter hereof and supersedes all prior understandings and agreements, oral
or written between the parties. This Agreement may not be modified except
in a writing executed by both parties to this Agreement.
(d) This Agreement and all collateral matters shall be construed in
accordance with the internal laws of the Republic of China.
(e) The invalidity or unenforceability of any provision of this Agreement
shall in no way affect the validity or enforceability of any other
provision of this Agreement.
(f) All notices, statements and other communications given under this
Agreement shall be in writing and shall be delivered by facsimile transmission,
telegraph, personal delivery, certified mail, return receipt requested, or by
next day express delivery, addressed, if to Jones to AHEC at 5F-l, 32 Roosevelt
Road, Section 1, Taipei 100, Taiwan, Republic of China (Fax: 886-2-322-5323),
with a copy to Jones Education Networks, Inc. at 9697 East Mineral Avenue, P.O.
Box 3309, Englewood, Colorado 80155, Attn.: President (Fax: 303-799-1644); and
if to Distributor, at its address set forth in the first paragraph of this
Agreement, or by facsimile at 886-2-706-6340. The date of such facsimile
transmission, telegraphing or personal delivery or the next day if by express
delivery, or the date three (3) days after mailing, shall be deemed the date on
which such notice is given and effective.
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IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of
the date and year first written above.
SPACE VISION, INC.
/s/ Rudolph Lee
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Rudolph Lee
Chairman
JONES EDUCATION NETWORKS, INC.
/s/ Gregory J. Liptak
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Gregory J. Liptak
Group President/Global Distribution
AHEC HEREBY AGREES TO PERFORM ITS OBLIGATIONS AS SET FORTH IN THIS AGREEMENT.
HIGHER EDUCATION GROUP, INC.
By: /s/ David J. Figuli
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David J. Figuli
President
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Exhibit A
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to
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Programming Distribution Agreement
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Description of the Programming
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The daily Programming Blocks will generally consist of some combination, to be
determined by Jones, of educational programming that falls into one or more of
the following areas:
1. Academic Instruction - instruction on subjects such as basic accounting,
business writing, communications skills, math and science.
2. Computer Skills - instruction on basic computer skills, how to buy computer
products and use of computer software applications.
3. Pragmatic Skills - programming designed to allow the viewer access to new
skills immediately applicable to everyday life.
4. General Interest - programming that is designed to provide general
information concerning educational trends or interests or trends or interests
related to computer products and technology.
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Exhibit B
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to
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Programming Distribution Agreement
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Distributor shall pay Tape Fees as follows:
Minimum Monthly
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Calendar Qtr. Guaranteed Tape Fee (USD) Monthly Rate Per Subscriber (USD)
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Year One
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First $51,900/month Up to 150,000 0.346
Over 150,000 0.000
Second $69,200/month Up to 200,000 0.346
Over 200,000 0.000
Third $86,500/month Up to 250,000 0.346
Over 250,000 0.000
Fourth $103,800/month Up to 300,000 0.346
Over 300,000 0.000
Year Two
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First $112,450/month 0.346
Second $121,100/month 0.346
Third $129,750/month 0.346
Fourth $138,400/month 0.346
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