<PAGE>   1
                                                                 EXHIBIT 10.16


                                October 19, 1999



The Board of Directors
Advantage Learning Systems, Inc.
2911 Peach Street
Wisconsin Rapids, WI  54495-8036

Ladies and Gentlemen:

          As you are aware, we have in the past several months considered the
sale of some of our shares of Common Stock of Advantage Learning Systems, Inc.
in a public offering (a "secondary offering"). One of our primary reasons for
considering a secondary offering was the advice we have received that a
secondary offering would be beneficial to the market for ALSI Common Stock.
While we have determined not to go forward with a secondary offering at this
time, we believe it would be beneficial to ALSI and to us to set forth the
expense allocation with respect to a secondary offering if we should determine
to proceed with such a transaction in the future.

          Based upon our mutual expectation that a secondary offering will be
beneficial both to us and to ALSI, we and ALSI hereby agree that the expenses of
any secondary offering of our ALSI Common Stock will be allocated as follows:

          ALSI will bear the following expenses:

          -        registration and filing fees, and fees and expenses of
                   compliance with securities or blue sky laws,

          -        printing and printing related expenses,

          -        fees and disbursements of counsel for ALSI,

          -        fees and disbursements of accountants,

          -        travel costs (to the extent not paid or reimbursed by third
                   parties),

          -        the expenses and fees for listing or admitting the ALSI
                   Common Stock to be sold on The Nasdaq Stock Market, and

          -        other incidental costs.


<PAGE>   2


          We (Terrance D. Paul and Judith A. Paul) will bear the following
          expenses:

          -        underwriting discounts and commissions relating to the sale
                   of our shares of ALSI Common Stock, and

          -        the fees and expenses of separate counsel, if any, that we
                   retain to represent us.

          All parties acknowledge that this letter agreement does not obligate
ALSI or the Pauls to proceed with any secondary offering. This letter agreement
only sets forth the expense allocation if the parties determine to proceed with
a secondary offering. This agreement shall be governed and construed in
accordance with the laws of Wisconsin.

          If you are in agreement with the foregoing, please sign and return one
copy of this letter which will constitute an agreement with respect to the
subject matter of this letter.

                                                   Very truly yours,


                                                   /s/ Judith A. Paul
                                                   -----------------------
                                                   Judith A. Paul


                                                   /s/ Terrance D. Paul
                                                   -----------------------
                                                   Terrance D. Paul

Agreed:

ADVANTAGE LEARNING SYSTEMS, INC.


By:  /s/ Michael H. Baum
     ---------------------------
         Michael H. Baum
         Chief Executive Officer