Franchise Program Agreement

EXHIBIT 10.10


PROGRAM AGREEMENT
-----------------


THIS AGREEMENT is made and entered into this 27th day of January, 2000 by and between SYLVAN LEARNING SYSTEMS, INC., a Maryland corporation ("Sylvan"), and SLC FRANCHISE OWNERS ASSOCIATION, INC., a Delaware corporation ("FOA").


R E C I T A L S:
----------------


A. Sylvan is the franchisor of a franchise system pursuant to which it licenses to each franchisee (individually a "Franchisee" and collectively, the "Franchisees") the right to offer the Sylvan-proprietary system of programs, systems, teaching and management techniques, individualized diagnostic tests and academic and educational courses and programs designed to be personally taught, supervised or administered to students who come to the Franchisees' locations (individually a "Franchisee Center" and collectively the "Franchisees Centers") for in-person instruction, and such other rights as are specifically described in the various license agreements between Sylvan and the Franchisees (such system of licensed centers, Sylvan-owned Centers ("Sylvan Centers") and the services Franchisees Centers and Sylvan Centers (collectively, the "Centers") offer being sometimes referred to herein as the "Sylvan Learning Center System", and the license agreements between Sylvan and the Franchisees being herein sometimes referred to individually as a "License Agreement" and collectively as the "License Agreements").


B. Sylvan has determined that to respond to the actual and anticipated actions of its competitors and take advantage of new means of making educational services available to the public, Sylvan must and should develop, in addition to the Sylvan Learning Center System, an internet version of Sylvan's proprietary programs, systems and teaching and management techniques (the "Sylvan On-line System").


C. Sylvan has concluded that the most effective way to develop and roll- out the Sylvan On-line System is to establish a separate entity ("eSylvan"). In that connection, Sylvan and eSylvan intend to enter into a license agreement (the "eSylvan License Agreement") pursuant to which Sylvan will license to eSylvan the exclusive right to develop and offer the Sylvan On-line System.


D. Sylvan desires that Franchisees support the development of the Sylvan On-line System and desires to facilitate the support of the Franchisees, and to do so, will be offering Franchisees certain rights and benefits, to be set forth in a document known as a "Participation Agreement," a form of which is attached hereto as Exhibit A.


E. The FOA is a non-profit trade association heretofore established whose members include Franchisees and which was established for, among other reasons, to represent its Franchisees in discussions with Sylvan of issues pertinent to their relationships with Sylvan.


F. Sylvan has asked the FOA to support the development and marketing of the eSylvan On-Line System and have developed a program therefor, as set forth in the Participation Agreement (the "eSylvan Program").


G. Sylvan and representatives of the FOA, as listed on Exhibit B hereto, which is hereby incorporated herein by reference (the "FOA Negotiating Team") have had extensive negotiations concerning the eSylvan Program, including without limitation the terms of the Participation Agreement.


H. Sylvan and the FOA believe that there are additional covenants and agreements relating to the establishment of eSylvan and the eSylvan Program that need to be set forth in writing and that such covenants and agreements would be best set forth in a separate agreement between Sylvan and the FOA.


NOW, THEREFORE, for and in consideration of the covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Sylvan and the FOA hereby agree as follows:


1. Franchisee Director. During the term of the eSylvan License Agreement
------------------- and any renewals thereof, the FOA shall have the right to designate one member for election to the board of directors of eSylvan. Sylvan shall take all necessary steps to cause such designee to be elected to the eSylvan board. The designee shall be subject to Sylvan's approval, which shall not be unreasonably withheld.


2. eSylvan Committee. (a) Sylvan agrees to create a committee, to be
----------------- known as the "eSylvan Committee," to be comprised of two officers of Sylvan, at the level of vice president or higher, and two representatives of the FOA Board. Each representative of the FOA Board shall be a Franchisee, or the President of a Franchisee, in good standing (i.e., such nominee is not in default under any of its License Agreements with Sylvan).


(b) The purposes of the eSylvan Committee shall be:


(1) To negotiate with eSylvan on service fees and other
modifications to the eSylvan Program benefits;


(2) To review with Sylvan the exploitation of technology and
contents developed by eSylvan and which are now or hereafter licensed to
Sylvan, pursuant to the eSylvan License Agreement, and to review schedule
and priorities for internet technology transfer to Franchisees, either
through direct marketing by eSylvan (i.e., wholesaling) or through
acquisition from eSylvan and distribution of technology products;


(3) To review and approve proposed modifications to the eSylvan
License Agreement which may have a material effect on Franchisees;


(4) To review methodology for population analysis by territory for
purposes of distributing eSylvan stock, as contemplated in the
Participation Agreements,


-2-


or for payments of Reverse Royalties, also as contemplated in the
Participation Agreements;


(5) To analyze Franchisee participation levels in the eSylvan
Program and to develop strategies for increasing participation and benefits
to Franchisees;


(6) To analyze efficacy data on eSylvan programs and determine
ar ...