Exhibit 10.19
[Jones Education Networks Letterhead]
February 24, 1995
Higher Education Group, Inc.
29713 Troutdale Scenic Drive
Suite C-2
Evergreen, CO 80439-7738
Attn: Mr. David Figuli, President
Re: Educational Services Center/Advertising - Taiwan
Dear Mr. Figuli:
This letter is intended to supplement and amend that certain Representation
Agreement, dated as of July 15, 1994 (the "Representation Agreement"), by and
between Jones Education Networks, Inc. ("JEN") and Higher Education Group, Inc.
("HEG"), as amended by an Amendment Agreement, dated as of September 28, 1994
(the "Amendment Agreement"). In particular, this letter will confirm our
agreement with respect to (1) certain performance and operational standards for
the Taiwan Educational Services Center to be operated by HEG, and (2) JEN's
appointment of HEG in the Representation Agreement as its exclusive agent for
the sale of advertising in connection with the Jones Programming distributed in
the Republic of China (Taiwan). All capitalized terms used in this letter and
not otherwise defined will have the meanings given to such terms in the
Representation Agreement and/or Amendment Agreement.
1. Taiwan Educational Services Center. With respect to the Taiwan
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Educational Services Center, we agree as follows:
a. As used in this letter, "Home Office" refers to the Jones
Educational Services Center in Englewood, Colorado, and "Taiwan Educational
Services Center" refers to the educational services center to be operated by HEG
in Taipei, Taiwan, in connection with the Jones Programming.
b. We agree that the success of this relationship will depend on
communication, coordination, cooperation and collaboration between us. The
Taiwan Educational Services Center will function as an order taking and program
coordination facility with respect to the Jones Programming distributed in
Taiwan.
Higher Education Group, Inc.
February 24, 1995
Page 2
The Taiwan Educational Services Center will maintain, at its sole cost
and expense, adequate personnel, facilities and systems as necessary (i) to
provide for all required in-person services, (ii) to handle all calls from and
to students and prospective students, and (iii) to obtain, warehouse and
distribute all required learning materials and supplies. Adequate personnel,
facilities and systems will be based on reasonably expected student demand and
that which is necessary to operate an effective and productive student
acquisition system.
c. The Taiwan Educational Services Center will follow the processes and
procedures established by the Home Office, its affiliates and the participating
universities and colleges (the "Participating Institutions") for all
application, admission, registration, and enrollment functions. The Taiwan
Educational Services Center will obtain accurate information from each
prospective student and electronically transfer it, at its sole cost and expense
and in a specified format, to the Home Office within one Taiwan business day of
the transaction. Acceptable transfer methodology will include the use of the
Internet and/or CompuServe and any other methods approved by the Home Office.
d. If the Participating Institutions require a system to facilitate
communication between prospective and enrolled students, on the one hand, and
academic advisors and/or faculty members on the other, then the Home Office will
work with the Taiwan Educational Services Center to design the required system.
The Taiwan Educational Services Center will implement the required system at its
sole cost and expense. The Taiwan Educational Services Center may charge
students a reasonable fee for the use of and the cost of administering any
required electronic communications system.
e. The Taiwan Educational Services Center will purchase from the Home
Office student educational/informational packets to provide to prospective and
enrolled students. The Home Office will sell, and the Taiwan Educational
Services Center will purchase, these packets pursuant to the terms of an
Agreement for Distribution and Sale of Products of even date herewith between
HEG and Mind Extension University Bookstore, Inc. (the "Distribution
Agreement"). The Taiwan Educational Services Center may implement a
supplementary application fee to be charged to each student applying for
enrollment in any program or course offered in connection with the Jones
Programming distributed in Taiwan in an amount sufficient to cover the cost of
such packets.
Higher Education Group, Inc.
February 24, 1995
Page 3
f. Pursuant to the Distribution Agreement, the Taiwan Educational Services
Center will also purchase all instructional material, including audio-visual,
cassette and print material, that is required by the Home Office and the
Participating Institutions to be used by students for each course offered
through the Jones Programming. The Taiwan Educational Services Center may
establish and charge a reasonable fee for the instructional material.
g. The parties acknowledge that the Home Office and the Participating
Institutions will set the tuition, fees and other charges for each educational
course offered through the Jones Programming. The Home Office will consult with
the Taiwan Educational Services Center from time to time with respect to market
factors in Taiwan and use this information in setting such charges. The
methodology employed to establish tuition fees and other charges will include a
profit factor. The Taiwan Educational Services Center will collect all tuition,
fees, and other course charges from students and deposit all such amounts in a
Taipei bank account to be established by JEN, less a percentage to be agreed
upon by the parties, which shall be retained by HEG to cover any refunds of such
fees and charges to students. Deposits will be made within one Taiwan business
day of receipt of funds.
h. Within 45 days after the end of each calendar month, the Home Office
will remit to HEG a fee equal to 50% of the Net Course Revenues. "Net Course
Revenues" will equal the actual receipts, less any refunds, generated from
tuition, fees and other charges paid by students in connection with courses
delivered in Taiwan through the Jones Programming, less the amount required to
be paid to the Participating Institution sponsoring or providing such courses or
the credit for such courses, provided that if the Participating Institution is
an affiliate of JEN, the amount to be paid will not exceed the amount that is
typically paid to unaffiliated institutions of the same type for the same type
of courses or credit.
i. The Taiwan Educational Services Center will administer or implement, at
its sole cost and expense, all assessment, evaluation and testing procedures
supplied and prescribed by the Home Office and Participating Institutions. The
Taiwan Educational Services Center will transmit, at its sole cost and expense,
the results from all such evaluation and testing procedures to the Home Office
in a manner specified by the Home Office. The Taiwan Educational Services
Center may charge a reasonable fee to students to cover the cost and expense of
all assessment, evaluation and testing procedures prescribed by the Home Office
and Participating Institutions and provided to students.
Higher Education Group, Inc.
February 24, 1995
Page 4
j. When agreed upon by the Home Office, Participating Institutions and
HEG, the Taiwan Educational Services Center may provide other services to ME/U
students, including without limitation assessment of prior learning,
international degree equivalency services, non-credit/non-educational
institution training conversion services, credit bank services, and
reference/resume file (electronic) services. In providing these services to
ME/U students, the Taiwan Educational Services Center will follow the procedures
prescribed by the Home Office. For purposes of this Agreement, "ME/U student"
means any student who has, at any time prior to the provision of any such
service, applied to enroll or enrolled in any course or program offered in
Taiwan through the Jones Programming or has or is conducting course work in
connection with the Jones Programming. Fees will be charged for these services,
as mutually determined by the Home Office and HEG. The Taiwan Educational
Services Center will collect any such fees and deposit all such amounts in a
Taipei bank account to be established by JEN. Deposits will be made within one
Taiwan business day of receipt of funds. Within 45 days after the end of each
calendar month, the Home Office will remit to HEG a fee equal to 50% of the
gross revenues generated from such additional services.
k. The parties expect that the Taiwan Educational Services Center will be
successful in terms of the number of student enrollments as well as profitable
for both JEN and HEG. The parties agree to evaluate the success of the Taiwan
Educational Services Center once each year, during the month of May, commencing
in May 1996. If either party, in the exercise of its reasonable judgment,
determines in the course of this annual evaluation that the operation of the
Taiwan Educational Services Center is unsuccessful or unprofitable to such
party, or likely to become so, and cannot reasonably be modified so as to become
successful or profitable, then the rights and obligations of HEG under the
Representation Agreement, as amended and supplemented by this letter, with
respect to the Taiwan Educational Services Center may be terminated upon at
least 90 days written notice to the other party. Any such termination will not
affect the agreements, rights and obligations of JEN and HEG set forth in this
letter or in the Representation Agreement (as amended by the Amendment
Agreement) relating to matters other than the Taiwan Educational Services
Center. Furthermore, in such event, the parties acknowledge that JEN, by itself
or through others, will have the right to operate a student services center in
Taiwan without restriction and without obligation to HEG.
2. Advertising Avails. With respect to HEG acting as JEN's exclusive
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advertising agent in Taiwan, we agree as follows:
Higher Education Group, Inc.
February 24, 1995
Page 5
a. HEG will sell advertising avails with respect to the Jones Programming
at a rate no less than US$2.00 per second. HEG will be entitled to a commission
of 37.5% of the gross revenues derived and collected from its sale of such
advertising. HEG will remit to JEN all revenues collected from its sale of such
advertising, less HEG's commission, within one Taiwan business day of receipt.
HEG will be responsible for the payment of any advertising agency commissions or
fees in connection with any advertising it sells.
b. The Jones Programming will, on average, include at least six minutes of
advertising avails per hour.
c. HEG will submit all advertising to JEN at a location to be designated
by JEN, at least 45 days prior to the first day of the month in which such
advertising is scheduled to air in Taiwan. All advertising submitted by HEG
will be in BETACAM NTSC format.
d. Jones retains the right to sell any unsold advertising avails with
respect to the Jones Programming.
3. Preparation of Amended and Restated Representation Agreement. The
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parties acknowledge that many details relating to the relationship between the
Home Office and the Taiwan Educational Services Center will require
clarification or further definition in the ensuing weeks. In that regard, and
in order to bring together in a single document all of the agreements and
understandings between HEG and JEN with respect to the Taiwan project, the
parties agree to use their respective best efforts to prepare an Amended and
Restated Representation Agreement, which will contain in definitive form all of
the respective rights and obligations of the parties with respect to their
relationship in Taiwan, but which shall not be inconsistent with the
Representation Agreement, as amended and supplemented by the Amendment Agreement
and this letter, unless the parties shall mutually agree in their sole
discretion. Until the execution of such an agreement, the Representation
Agreement, as amended and supplemented by the Amendment Agreement and this
letter, will govern the relationship of the parties.
4. Acknowledgment of Assignment JEN hereby acknowledges that HEG has
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assigned all of its rights and obligations under the Representation Agreement
(as amended by the Amendment Agreement), to Meridian Gate Holdings
Higher Education Group, Inc.
February 24, 1995
Page 6
Ltd.("Meridian"), which is a company that is controlled by David J. Figuli.
Meridian hereby acknowledges that it has agreed in writing to assume the
obligations of HEG under the Representation Agreement (as amended by the
Amendment Agreement), and HEG, by its signature below, acknowledges and confirms
that it unconditionally guarantees the performance of Meridian thereunder.
If there is a conflict between the provisions of this letter and the
provisions of the Representation Agreement (as amended by the Amendment
Agreement), the provisions of this letter will prevail. Otherwise, the
Representation Agreement (as amended by the Amendment Agreement) remains in full
force and effect and JEN and Meridian hereby ratify the terms and provisions
thereof.
If the foregoing accurately states our agreement, please sign below and
return one copy of this letter to us.
Sincerely,
JONES EDUCATION NETOWRKS, INC.
By: /s/ Bernard J. Luskin
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Bernard J. Luskin
Group President/Global Operations
AGREED TO:
MERIDIAN GATE HOLDINGS LTD.:
By: /s/ David J. Figuli
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David J. Figuli, President
HIGHER EDUCATION GROUP, INC.
By: /s/ David J. Figuli
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David J. Figuli, President