FIRST AMENDMENT TO
ASSET PURCHASE AGREEMENT
This First Amendment to Asset Purchase Agreement is made as of the 24th
day of July, 1998, by and between THE SOURCE INFORMATION MANAGEMENT COMPANY, a
Missouri corporation ("The Source"), and PERIODICAL CONCEPTS, a Texas general
partnership doing business as PC2 ("Seller").
WHEREAS, The Source, under the name of "The Source Information
Management Company, Inc.," and Seller entered into an Asset Purchase Agreement
on July 10, 1998 (the "Agreement");
WHEREAS, the correct name of The Source is "The Source Information
Management Company";
WHEREAS, The Source will assign its interest in the Agreement to
PC-Sub, Inc., a Missouri corporation and wholly-owned subsidiary of The Source
but will remain liable for all of its obligations under the Agreement as hereby
amended; and
WHEREAS, the parties believe that amending the Agreement is in the best
interests of both parties hereto and necessary to clarify the terms of the
Agreement;
THEREFORE, it is agreed as follows:
1. Every reference in the Agreement to "The Source Information
Management Company, Inc." shall be replaced with and mean "The Source
Information Management Company."
2. The Source may assign its interest in the Agreement, as amended, to
PC-Sub, Inc., and The Source will remain liable for all of its obligations under
the Agreement, as amended.
3. The definition of Assets as contained in Section I of the Agreement
is hereby amended as follows:
"Assets" means all of the right, title and interest in and to
the property, real, personal and mixed, tangible or intangible, of
every kind or character and wherever located, of Seller and comprising
the Business in its entirety, including (but not limited to) the
following:
(a) All merchandise, inventory, goods, supplies and
other products owned by Seller, committed to be purchased by
Seller, or otherwise under the control of Seller as of the
Closing Date, but not including any commitment of Seller to
purchase any item not set forth in the Assigned Contracts;
(b) The Closing Accounts Receivable;
(c) The furniture and equipment listed in Schedule
1.01;
(d) All trade secrets, know-how and other
intellectual property and intangible property rights used by
Seller in the Business, including the name PC2;
(e) All contract rights, privileges, claims of Seller
under the Assigned Contracts; and
(f) All records, files, books of account, customer
and supplier lists and other books and records of Seller
relating to the Business and the Assets.
Notwithstanding any other provision of this Agreement, the
defined term "Assets" does not include cash, cash equivalents,
furniture and fixtures not listed on Schedule 1.01, and the contract
between Seller and AAFES as renewed as of October 30, 1997 (the "AAFES
Contract").
4. Section 2.01 of the Agreement is hereby amended to provide as
follows:
2.01. Transfer of Assets. At the Closing, subject to the terms
and conditions of this Agreement, and in reliance on the
representations, warranties and covenants of The Source contained
herein and in exchange for the Purchase Price, Seller shall (i)
transfer, convey and assign the Assets to The Source and (ii) enter
into a subcontract agreement with The Source or its assigns whereby
Seller grants the exclusive right to such subcontractor to provide all
services under the AAFES Contract and to collect and retain all
compensation due and owing as a result of the provision of such
services.
5. Section 2.02(a) of the Agreement is hereby amended to provide as
follows:
(a) At the Closing, subject to the terms and conditions of
this Agreement, and in reliance on the representations, warranties and
covenants of Seller contained herein, The Source shall acquire the
Assets and pay the Purchase Price to Seller by wire transferring all
such funds pursuant to the following wire transfer instructions for
application to the indebtedness of Xxxxxx News Agency, Inc., to
NationsBank, N.A.:
Routing No. 000000000
Account No. 187253271
For the account of Xxxxxx News Agency, Inc.
Attn: Xxxx Xxxxx
6. Section 4.04 of the Agreement is hereby amended to provide as
follows:
4.04. Books and Records; Financial Statements; Customer
Revenues.
(a) The books of account of Seller fully and fairly
reflect the transactions, assets and liabilities of Seller.
Seller has provided The Source with the Balance Sheet of
Seller at December 31, 1997 (the "December 31 Balance Sheet")
and the Statements of Operations of Seller for the year then
ended (the "Financial Statements"). Seller has provided The
Source with comparable financial statements for each of the
six months from January 1998 through June 1998 (the "Interim
Financial Statements") and will provide The Source with
comparable financial statements for each succeeding month, if
any, preceding the Closing Date (the "Subsequent Financial
Statements") as promptly as practicable following the end of
each such month. The Financial Statements and the Interim
Financial Statements have been, and the Subsequent Financial
Statements will be, accurate and complete, and fairly
represent, and will fairly represent, the financial condition
of Seller and the income, expenses and results of operation of
Seller, for the time periods covered thereby, and do not, and
will not, omit to state or reflect any material fact
concerning Seller, the Assets or the Business required to be
stated or reflected therein or necessary to make the
statements therein not misleading. The Financial Statements
and the Interim Financial Statements are attached hereto as
Schedule 4.04(a).
(b) For the 12 months ended June 30, 1998, the
revenues of Seller from fees from the customers of the
Business for RDA and RDP claims (the "Customer Revenues") were
not less than $450,000.
7. Section 4.07 of the Agreement is hereby amended to provide as
follows:
4.07. No Conflicting Agreements or Orders . Except for the
security interest of NationsBank, N.A., in the Assets, there is no: (a)
provision of the partnership agreement of Seller, or of any mortgage,
indenture, lease, contract, security agreement, document, instrument,
license or agreement binding on Seller or affecting the Assets, or of
any federal, state or local law, rule or regulation, or (b) order,
writ, injunction, decree, judgment, award, determination, direction or
demand of any court, arbitrator, or federal, state, municipal or other
governmental department, bureau, agency or instrumentality to which
Seller is subject, which conflicts with or in any way prevents or will
be violated by the execution, delivery or carrying out of the terms of
this Agreement or the consummation of the Transaction, nor will such
execution, delivery or consummation constitute a default, or an event
which, with the giving of notice or the passage of time, or both, would
constitute a default, under any of the foregoing, nor be the grounds
for the suspension, revocation, impairment, forfeiture, nonrenewal or
termination of any license, permit, franchise, certificate, consent or
authorization.
8. Section 4.15 of the Agreement is hereby amended to provide as
follows:
4.15. Personal Property, Leases . No personal property used by
Seller in the operation of the Business is held under any lease or
rental arrangement, except for the leases set forth in Schedule 4.15.
The Source is not assuming any lease liability of the Seller under this
Agreement.
9. Section 4.16(a) of the Agreement is hereby amended to provide as
follows:
(a) Seller has provided The Source with a list of the
customers of Seller (the "Customer List"). Attached hereto as Schedule
4.16(a) is an updated Customer List as of July 24, 1998, showing all
billed but unpaid claims made on behalf of such customers by Seller and
Seller's claim against such customers for Seller's fees attributable to
such claims.
10. Section 4.17 of the Agreement is hereby amended to provide as
follows:
4.17. Other Contracts . Except for the Assigned Contracts
listed on Schedule 4.17, the AAFES Contract, and Seller's lease of its
Sharp SF2035 copier, Seller is not a party to, nor are the Assets bound
by, any commitment, agreement, indenture, mortgage, deed of trust,
lease or any other agreement between Seller and any third party related
to the operation of the Business. There is no default of Seller or
event that with notice or lapse of time, or both, would constitute a
default, nor, to the knowledge of Seller and without notice to the
contrary, any default or threatened default by any other party thereto,
existing with respect to any of the Assigned Contracts. Seller has not
received notice that any party to any of the Assigned Contracts intends
to cancel or terminate any of the Assigned Contracts or to exercise or
not exercise any options under any of the Assigned Contracts. Seller is
not a party to, nor are the Assets bound by, any agreement that is
materially adverse to the Assets or the Business.
11. Section 8.09 of the Agreement is hereby amended to: (i) renumber
the section as 6.09 and to restate the reference therein from "Section 8.09" to
"Section 6.09" and (ii) replace the reference therein to "1% non-collection
factor" with "a 1% to 2% non-collection factor based on the collection history
of each account at issue."
12. Article VI of the Agreement is hereby amended to add the following
section:
6.10 Change of Name by Seller. As soon as practicable after the earlier
to occur of Closing or October 30, 1998, the partners of Seller shall
cause the filing of documents with the office of Dallas County Clerk
abandoning their use of the assumed names "Periodical Concepts" and
"PC2," and, if such assumed names were filed of record, they shall
cause such documents to be filed with the Secretary of State of Texas.
13. Section 12.17 of the Agreement is hereby amended to read as
follows:
12.17. Allocation of Purchase Price. The parties agree to
allocate the Purchase Price for tax purposes by allocating that portion
of the Purchase Price which is equal to the book value of the tangible
assets included within the Assets, as carried on the books of the
Seller, to such tangible assets, and the remainder to goodwill.
14. Except as modified herein, all terms of the Agreement shall remain
in full force and effect.
THE SOURCE INFORMATION PERIODICAL CONCEPTS
MANAGEMENT COMPANY
By:___________________________ By:________________________________
W. Xxxxx Xxxxxxx Xxx Xxxxxx
Chief Financial Officer General Partner
Partners of Seller (who are executing this Agreement solely for the
purposes of Section 12.01 and, with respect to Seller Executives, Section 6.09).
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Xxx Xxxxxx Xxxxx Xxxxx
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Xxxxx X. Xxxxxx Xxxxxxxx Xxxxxx Xxxxxx
