Exhibit 10.2
SUPPLEMENT
TO
ASSET PURCHASE AGREEMENT
THIS AMENDMENT TO ASSET PURCHASE AGREEMENT is made and entered into as of
the 25th day of February, 1997, by and among Advantage Learning Systems, Inc.
("ALS") as successor with respect to certain obligations of IPS Publishing, Inc.
(f/k/a IPS Acquisition, Inc.), a Washington corporation (the "Purchaser"), Xxxxx
Publishing, Inc. (f/k/a IPS Publishing, Inc.), a Washington corporation (the
"Seller"), and Xxxxxxx X. Xxxxx ("Xxxxx") individually and as sole trustee of
the XXXXXXX XXXXX XXXXX REVOCABLE TRUST dated September 4, 1992 (the "Trust").
BACKGROUND
The Purchaser, Seller, Xxxxx and the Trust are parties to a certain Asset
Purchase Agreement dated as of August 1, 1996 (the "Asset Purchase Agreement")
pursuant to which Seller sold substantially all of its assets and business to
Purchaser. The Purchaser and Seller are also parties to a certain Escrow
Agreement dated as of August 1, 1996 (the "Escrow Agreement") pursuant to which
Seller deposited with the Escrow Agent (as defined in the Escrow Agreement)
certain proceeds from such sale. Pursuant to an Assumption Agreement dated
February 24, 1997, Purchaser's obligations under the Asset Purchase and Escrow
Agreements to make certain purchase price payments were assumed by ALS and
Purchaser was released from any obligation therefor. Under the terms of the
Purchase Agreement, the Seller was given the right to defer payment of a portion
of the Purchase Price received in connection with the sale of its assets and
business to be held by the Escrow Agent and paid to the Seller in accordance
with the terms of the Escrow Agreement. Under the current terms of the Asset
Purchase Agreement and the Escrow Agreement, the Seller is to receive on January
2, 1998, all funds previously deposited with the Escrow Agent and not previously
withdrawn by Seller (the "Escrow Funds"). In addition, on such date, Seller is
entitled to certain additional payments as described in Section 3.3 of the
Escrow Agreement (the "Additional Payments"). The parties desire to amend the
Asset Purchase Agreement to provide that in the event of an Initial Public
Offering by ALS (as defined in the Escrow Agreement), the Seller shall withdraw
all Escrow Funds from the Escrow Agent and in lieu of receiving the Additional
Payments, the Seller shall receive shares of common stock of ALS, which shares
Seller may direct to be issued to certain individuals and/or the Trust. Terms
used in this Agreement with initial capital letters which are not otherwise
defined herein shall have the meanings assigned to such terms in the Escrow
Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Supplement to Asset Purchase Agreement. Subject to and conditioned
upon the closing by ALS of an Initial Public Offering (an "IPO") before December
1, 1997, the Seller shall withdraw the Escrow Funds and, in lieu of and as a
substitute for the Additional Payments and any other payments to be made by ALS
pursuant to the Escrow Agreement, the Seller agrees
to accept, and ALS agrees to issue, the number of shares of common stock of ALS
set forth in Paragraph (b) below (the "ALS Shares"). The Seller agrees that,
upon the issuance of the ALS Shares as provided herein, it shall have no further
rights to or claims for payments from ALS under the Escrow Agreement, including
any rights to or claims for payment of interest or the ALS Appreciation Factor.
In order to effect the withdrawal of the Escrow Funds and the issuance of the
ALS Shares, the parties agree as follows:
(a) As soon as practicable, but in no event later than ten (10) days
after the closing of the IPO, the Seller shall give a notice of withdrawal
to the Escrow Agent in the manner set forth in Section 3.2 of the Escrow
Agreement and the parties shall take such actions as may be reasonably
required to cause the Escrow Agent to pay and distribute the remaining
balance of the Escrow Funds to the Seller. Notwithstanding the provisions
of Section 3.2 of the Escrow Agreement, no interest payments shall be made
by ALS as successor to the Purchaser upon payment of the Escrow Funds to
the Seller.
(b) Upon the closing of the IPO (but subject to reduction as provided
in Section 2, below), ALS shall deliver to the Seller or its designees as
hereafter provided that number of shares of ALS common stock determined by
dividing $500,000 by the ALS IPO Price, rounded to the nearest whole share.
(c) At the Seller's request and as an accommodation to the Seller
(but conditioned upon execution of Acceptance Agreements as provided in
Section 3), the ALS shares shall be issued to the following shareholders
and/or former employees of the Seller in the following percentages (with
any fractional shares otherwise issuable being rounded to the nearest whole
share):
Recipient of ALS Shares Percentage of ALS Shares
----------------------- ------------------------
Trust 90.61%
Xxxx Xxxxxx 6.47%
Xxxx XxXxxxxxx 2.91%
If, for any reason any such shareholder or employee does not execute an
Acceptance Agreement as provided in Section 3 simultaneously with the execution
hereof by the Seller, the ALS shares otherwise issuable to such person(s) shall
be issued to and registered in the name of the Seller.
2. Adjustment for Withdrawal of Escrow Funds. If the Seller withdraws any
of the Escrow Funds prior to the Closing of the IPO, the number of ALS Shares to
be issued as described in Section 1, above, shall be reduced in proportion to
the amount of Escrow Funds so withdrawn by the Seller.
3. Condition to Receipt of ALS Shares. As a condition to receiving ALS
Shares pursuant hereto, each of the Trust, Xxxx Xxxxxx and Xxxx XxXxxxxxx must
execute and deliver to ALS, upon execution hereof by the Seller, an Acceptance
Agreement in the form attached hereto.
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4. Initial Public Offering or Termination. In the event ALS does not
close an IPO before December 1, 1997, this Supplemental Agreement shall be null
and void and of no effect.
5. No Other Supplement. Except as specifically provided herein, the
Purchase Agreement shall remain in full force and effect without additional
supplement.
IN WITNESS WHEREOF, the parties hereto have executed this Supplement as of
the date first above written.
ADVANTAGE LEARNING SYSTEMS, INC.
(as successor to IPS Publishing, Inc.
f/k/a IPS Acquisition, Inc.)
By: /s/ Xxxxxxx X. Xxxx
-----------------------------------------
Xxxxxxx X. Xxxx, Chief Executive Officer
XXXXX PUBLISHING, INC.
(f/k/a IPS Publishing, Inc.)
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Xxxxxxx X. Xxxxx, Chief Executive Officer
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Xxxxxxx X. Xxxxx
THE XXXXXXX X. XXXXX REVOCABLE
TRUST dated September 4, 1992
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Xxxxxxx X. Xxxxx, sole Trustee
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