Exhibit 10.18
AMENDMENT AGREEMENT
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This Amendment Agreement is made and entered into as of the 28th day of
September, 1994, by and between Higher Education Group, Inc., a Colorado
corporation ("HEG"), and Jones Education Networks, Inc., a Colorado corporation
("Jones").
Recitals
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A. HEG and Jones are parties to that certain Representation Agreement,
dated July 15, 1994 (the "Representation Agreement"). HEG has proposed the
distribution of the Jones Programming through Space Vision, Inc. of Taipei,
Taiwan, a corporation formed and existing under the laws of the Republic of
China ("Space Vision")
B. Jones is, on this date, entering into a Programming Distribution
Agreement with Space Vision, a copy of which is attached hereto as Exhibit A
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(the "Space Vision Agreement"). Pursuant to the Space Vision Agreement, Jones
is granting to Space Vision the exclusive right to distribute the Jones
Programming in the Territory for a limited term.
C. In order to proceed with the Space Vision Agreement, Jones and HEG have
agreed to amend certain provisions of the Representation Agreement, as set forth
below.
D. All capitalized terms used in this Agreement and not otherwise defined
shall have the meanings ascribed in the Representation Agreement.
Agreements
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Therefore, in consideration of the foregoing and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, and
subject to the terms and conditions set forth below, the parties agree as
follows:
1. To permit Jones to enter into the Space Vision Agreement, HEG hereby
relinquishes its rights under the Representation Agreement to distribute the
Jones Programming in the Territory. If the Space Vision Agreement terminates,
expires, is amended by Space Vision and Jones without the prior approval of HEG,
or is otherwise nullified or set aside, HEG shall automatically be restored to
its full rights of exclusive distribution in the Territory as set forth
in the Representation Agreement, subject to the termination provisions set forth
in Section 7 of the Representation Agreement, as amended by this Agreement.
2. Subsection (a) of Section 4 of the Representation Agreement is hereby
deleted in its entirety and replaced with the following:
"(a) HEG shall use its best efforts to secure Programming Distribution
Agreements, in the form attached hereto as Exhibit B, from cable television
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operators or cable programming distributors in the Territory. HEG shall
have no authority to make or commit to make any changes to the form of
Programming Distribution Agreement attached hereto as Exhibit B without the
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prior written approval of Jones. Cable television operators or cable
programming distributors in the Territory which execute a Programming
Distribution Agreement are referred to in this Agreement as
"Distributors"."
3. Section 4 of the Representation Agreement is hereby further amended by
adding the following new subsection:
"(f) HEG shall reimburse Jones for 25% of its actual expenditures, on a
cash basis, for subtitling in Mandarin Chinese the Jones Programming as
required by the Space Vision Agreement; provided, however, that (i) HEG
shall only be obligated to pay the lesser of the actual costs incurred by
Jones or the cost of the equivalent subtitling services as available on a
commercially reasonable basis from outside sources, and (ii) HEG shall only
be obligated to pay for the subtitling of videotapes actually delivered
pursuant to the Space Vision Agreement. HEG acknowledges and agrees that
it will obtain no ownership or other interest in the subtitling or the
Jones Programming by reason of this reimbursement or any other provision of
this Agreement."
4. For as long, and only as long, as the Jones Programming is distributed
in the Territory by a cable programming distributor, including but not limited
to Space Vision,, the parties agree that Jones need not comply with the
obligations set forth in subsections (a) and (c) of Section 5 of the
Representation Agreement.
5. For as long, and only as long, as the Jones Programming is distributed
in the Territory by a cable programming distributor, including but not
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limited to Space Vision, subsection (a) of Section 6 of the Representation
Agreement is amended to read as follows:
"(a) Within 45 days after the end of each calendar month, HEG shall be
entitled to receive a fee from Jones equal to 46.679% of the Net Revenues
(as hereinafter defined) generated from the distribution of the Jones
Programming under this Agreement; provided, however, that (i) the fee shall
equal 41.679% of any Net Revenues generated in the 1996 calendar year, and
(ii) Jones shall pay to HEG $67,882.37 within 15 days of receiving from
Space Vision the advance payment required under the Space Vision Agreement,
which is due on or about October 15, 1994 (with final reconciliation of
HEG's fee with respect to such revenue to occur on or before May 15, 1995).
For purposes of this Section 6(a), the term "Net Revenues" shall mean all
cash or other property directly or indirectly received from a cable
programming distributor for distribution of the Jones Programming in the
Territory, less the sum of (i) the direct costs of providing any marketing,
pre-launch or launch support required under the terms of the Space Vision
Agreement or approved in writing by HEG (including $5,380 in support
provided by Jones prior to the date of this Amendment Agreement), and (ii)
the direct costs incurred by Jones in connection with the production of the
Jones Programming, including but not limited to the materials and labor
costs of preparing the master videotapes of the Jones Programming and
shipping the master videotapes to the point of delivery (but excluding
subtitling costs, which are covered by Section 4(f)), provided that, with
respect to the Space Vision Agreement, the deduction for all such
production costs (excluding subtitling costs) shall not exceed an amount
equal to the following percentages of the cash or other property received
from Space Vision under the Space Vision Agreement during the designated
period: in 1994 and 1995, 13.2% of the amount paid or payable in 1994 and
1995; in 1996, 8% of the amount paid or payable in 1996; in 1997, 8% of the
amount paid or payable in 1997; in 1998, 7.5% of the amount paid or payable
in 1998; and in 1999, 7.5% of the amount paid or payable in 1999."
6. Subsection (b) of Section 6 of the Representation Agreement is hereby
deleted in its entirety and replaced with the following:
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"(b) Except as otherwise provided in this Agreement, all expenses incurred
by HEG or Jones in connection with the performance of their respective
obligations under this Agreement shall be and remain the sole
responsibility of the party incurring such expenses."
7. The parties hereby waive any right they may have to terminate the
Representation Agreement pursuant to subsection (b) of Section 7.
8. Section 7 is hereby amended by adding new subsections (d) and (e), as
follows:
"(d) On or before December 31, 1994, the parties will agree upon
mutually acceptable, semi-annual performance standards with respect to the
activities described in Section 8 of this Agreement. Notwithstanding
anything to the contrary in this Agreement, either Jones or HEG may
terminate this Agreement upon at least 60 days written notice to the other
if (i) the parties are unable to agree upon mutually acceptable performance
standards by December 31, 1994, or (ii) any agreed-upon performance
standard is not achieved notwithstanding the reasonable and good faith
efforts of the party wishing to terminate this Agreement, and provided that
there is also a reasonable expectation that the ensuing performance
standard cannot be achieved. If this Agreement is terminated pursuant to
this subsection (d), the compensation provisions of Section 6(a) shall
nonetheless survive.
(e) Notwithstanding anything to the contrary in this Agreement, Jones may
terminate this Agreement immediately upon written notice to HEG if at any
time during the term of this Agreement (i) Space Vision is no longer
distributing the Jones Programming in the Territory pursuant to the Space
Vision Agreement or any replacement or successor agreement between Jones
and Space Vision relating to the distribution of the Jones Programming in
the Territory (a "New Space Vision Agreement"), and (ii) within 120 days of
the expiration or termination of the Space Vision Agreement or a New Space
Vision Agreement, HEG is unable to secure (A) an executed Programming
Distribution Agreement, in the form attached hereto as Exhibit B, from one
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or more cable television operators in the Territory, and/or (B) an
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executed distribution agreement in the form of the Space Vision Agreement
from one or more cable programming distributors in the Territory (other
than Space Vision), providing aggregate distribution of the Jones
Programming to the following minimum number of subscribers in the Territory
at a minimum monthly fee of USD 0.37 per subscriber:
Applicable Calendar Year Minimum Number
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of Subscribers
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1995 200,000
1996 300,000
1997 350,000
1998 425,000
1999 500,000
In the event this Agreement is terminated pursuant to this subsection (e),
Jones shall not enter into any agreement with Space Vision regarding the
distribution of the Jones Programming in the Territory for a period of one
year."
9. Section 8 of the Representation Agreement is hereby deleted in its
entirety and replaced with the following:
"8. Additional Activities in the Territory.
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(a) Jones shall immediately commence good faith efforts to identify and
enter into agreements with educational institutions to offer student
certificate and degree programs in the Territory in connection with the
Jones Programming; provided, however, that Jones shall have no obligation
to enter into any agreement that would require Jones to expend or commit to
expend any of its own funds or resources to develop or produce any new
programming or to revise or modify any existing programming (except for the
subtitling of such programming as provided herein). In connection
therewith, HEG, through its affiliated company, American Higher Education
Centers, Inc. ("AHEC") or its successor, shall operate, at its own expense
and under license from Jones, an educational student service center in
Taipei, Taiwan. The Taiwan student center shall be reflective of, in
concept and function, the Jones student center in Englewood, Colorado (the
"Jones Student Center"), to the extent reasonably necessary under the
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circumstances; provided, however that AHEC shall have no obligation to
provide hardware, software or equipment that is not readily available or is
proprietary to Jones. HEG acknowledges and agrees that the Jones Student
Center was developed and refined by Jones at considerable expense over a
significant period of time. Accordingly, Jones is granting to HEG hereby
only a license to operate a Jones Student Center in Taiwan during the term
of this Agreement, and no ownership or control over the materials, ideas,
formats, concepts, computer software or other rights of whatever nature
related to the Jones Student Center are conveyed hereby. Upon the
termination or expiration of this Agreement, HEG shall immediately deliver
to Jones all copies, in whatever written or electronic form or format, of
all Mind Extension University student lists, records and other data and
documents related to the operation of the Jones Taiwan Student Center, in
addition to any equipment, materials, or intellectual property conveyed by
Jones to HEG during the term of this Agreement.
Within 45 days after the end of each calendar month, HEG shall be entitled
to receive a fee from Jones equal to 50% of the Net Revenues (as
hereinafter defined) generated from certificate and degree programs and any
services ancillary thereto. For purposes of this Section 8(a), the term
"Net Revenues" shall mean all revenues directly or indirectly received for
tuition and fees from enrollment of students in courses delivered by means
of the Jones Programming and products and services derived from the Jones
Programming (including videotapes), less the amount required, if any, to be
paid to the educational institution sponsoring or providing such courses or
the credit for such courses, provided that if the educational institution
is an affiliate of Jones, the amount to be paid shall not exceed the amount
that is typically paid to unaffiliated institutions of the same type for
the same type of courses, credit, services or products.
(b) "Jones hereby appoints HEG as its exclusive agent for the sale of
advertising avails in connection with the distribution of the Jones
Programming in the Territory; provided, however, that Jones shall retain
the right to sell any unsold advertising avails. The foregoing appointment
shall expire upon the expiration or termination of the Space Vision
Agreement. Jones shall advise HEG of advertising production standards,
advertising rates and
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discounts, the advertising inventory and the production schedule for the
Jones Programming from time to time as soon as such information is
available. HEG shall provide a video tape of any commercial sold in BETACAM
NTSC format to Jones at its offices in Englewood, Colorado, in accordance
with the production schedule provided by Jones. Jones shall pay HEG a
commission of 37.5% of the gross revenues derived and collected from the
sale of advertising in connection with the Jones Programming distributed in
the Territory. Jones shall pay advertising commissions to HEG on a monthly
basis. HEG shall be responsible for the payment of any advertising agency
commissions or fees. The parties agree that all advertising-related
activities shall be conducted in accordance with applicable Taiwanese law.
10. The Representation Agreement, as amended by this Amendment Agreement,
may be assigned by HEG to a subsidiary of HEG or a company that is controlled by
David J. Figuli, so long as (i) the assignee agrees in writing to assume the
obligations of HEG under the Representation Agreement, and (ii) HEG
unconditionally guarantees the performance of such subsidiary or company.
11. Except as provided in this Amendment Agreement, the terms of the
Representation Agreement shall remain unmodified, unamended and in full force
and effect.
The parties hereto have executed this Amendment Agreement effective as of
the date first set forth above.
HIGHER EDUCATION GROUP, INC.
By: /s/ David J. Figuli
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David J. Figuli
President
JONES EDUCATION NETWORKS, INC.
By: /s/ Gregory J. Liptak
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Gregory J. Liptak
Group President/Global Distribution
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