Financial Operations Agreement

FINANCIAL OPERATIONS AGREEMENT


This Financial Operations Agreement is made and entered into this 1st day of October, 1995, between AMERICAN EUROPEAN MIDDLE EAST CORPORATION, LLC (hereinafter referred to as "AEMEC"), a limited liability company of the State of Georgia, United States of America, headquartered in Dubai, United Arab Emirates, and MIDDLE EAST COLLEGES, LTD (hereinafter referred to as "MEC"), a B.V.I. company headquartered in Dubai, United Arab Emirates.


WITNESSETH:


WHEREAS, AEMEC is a subsidiary of the American European Corporation, a corporation of the State of Georgia, United States of America, which owns and operates a degree granting institution of higher education in Atlanta known as The American College (hereinafter referred to as "TAC") with branch campuses in Los Angeles and London; and


WHEREAS, AEMEC desires to establish an institution of higher education in Dubai, UAE, known as The American University in Dubai (hereinafter referred to as "AUD"); and


WHEREAS, AEMEC and MEC have established a contractual relationship for the purpose of establishing and mutually supporting AUD as specified in the Agreement of the parties of even date herewith (hereinafter referred to as the "Agreement", the Agreement being appropriately incorporated herein by reference and this document being specifically established in part to facilitate the implementation of the Agreement; and


WHEREAS, the geographical and time differences involved in the regular operations of AUD as an institution of higher education in Dubai, UAE, may occasionally make it difficult to confer and consult with all appropriate parties concerning various issues and concerns, and it is deemed advisable to agree to and establish certain specific operational guidelines, principles and concepts for the financial operation of AUD; and


WHEREAS, the representatives and personnel of AEMEC, AUD, and MEC represent differing corporate entities, professional interests, and nationalities, all of whom also represent a variety of cultural environments and professional backgrounds, and will of necessity on occasion function in one or more national states with differing legal, governmental and corporate systems with differing business climates, customs and operational understandings; therefore, it is to the mutual advantage of all parties and their respective officers, representatives and employees to adopt the herein identified and agreed to operational concepts and understandings so as to facilitate the operation of AUD to the mutual benefit of all concerned.


NOW THEREFORE, in consideration of Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the parties agree:


1 Effective Date. The effective date for this Financial Operations Agreement is February 1, 1995. This agreement is intended to represent what has been and will be the working relationship between the parties; however, to the extent that any of the procedures of the parties have not been in accord with the provisions of this document, such procedures


1 2 shall be modified retroactive to February 1, 1995; and this agreement supersedes all prior agreements, whether written or oral, heretofore governing the relationship of the parties relative to the subject matter of this document.


2 Accreditation. This agreement is drafted in part with the intention to ensure compliance with the applicable Criteria and Guidelines of the Commission on Colleges, Southern Association of Colleges and Schools, the appropriate American regional accrediting agency with jurisdiction over The American University in Dubai. In the event that any element of this document is found by the Commission not to be in compliance with the above identified documents, the parties agree to effect such modifications or enter into such new agreements as may be necessary to remedy the non-compliance provision so as to operate in compliance with applicable accreditation standards.


3 Bank Accounts. AEMEC and MEC shall establish a bank account or accounts in the name of AUD for its operations and fiscal affairs in a bank or banks approved by AEMEC and MEC. All revenues, receipts and advances received and deposited in such accounts shall be used solely for AUD and shall be disbursed in accordance with the provisions of this document or as otherwise specified in the Agreement.


4 Signature Authority for the Bank Accounts. The appropriate institutional officers possessing signature authority for AUD will be the President, Mark A Barnette, or a successor appointed by AEMEC; Elias Bou-Saab, Vice President, or an appropriate successor appointed by MEC and approved by AEMEC; both of these identified AUD officers having been appropriately appointed as specified in the Agreement and approved by the Governing Board of TAC. In all cases, the above parties shall possess joint signature authority with respect to operating accounts and all withdrawals therefrom shall be in accordance with the terms of this document of the Agreement. All checks written on an operating account in excess of five hundred dollars ($500.00 - US) or the equivalent in UAE currency must bear both signatures of the current occupants of the above identified institutional positions.


5 Excess Funds. In the event the bank account or accounts established pursuant to the above provision contain funds exceeding the immediate cash needs for the operation of AUD, subject to joint agreement of the parties, such excess funds or a portion thereof may be invested in savings accounts, certificates of deposit, government obligations, commercial paper "money market" funds or the like, provided however that the form of any such investment shall be consistent with the need to liquidate any such investment so as to meet the cash needs for the operation of AUD.


6 Advance Tuition Account. The parties acknowledge that tuition funds and other appropriate fees collected from students will often be collected in advance of their being earned by AUD. Such funds will be deposited in a special account designated as "Advance Tuition Account" and may only be withdrawn and used for AUD operating expenses as the tuition to which they apply is earned by AUD on a weekly basis.


7 Accounting and Financial Records. AEMEC and AUD shall maintain books of accounts for AUD in accordance with generally accepted accounting principles consistently applies. Such books shall be maintained on a monthly basis and shall be kept in UAE currency (Dirhams) and converted to U.S. Dollars ($) at month end using the rate of exchange


2 3 in effect on the last day of the month. The books shall be maintained on a fiscal year beginning October 1 and ending on September 30 of the following year.


8 Audits and Reporting. AEMEC shall cause to be prepared and furnish to appropriate parties, including MEC, unaudited financial statements on a monthly basis ...