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Exhibit 2.5
AMENDMENT AND WAIVER TO
ASSET PURCHASE AGREEMENT
THIS AMENDMENT AND WAIVER TO
ASSET PURCHASE AGREEMENT (this “ Amendment ”),
dated as of the 1 st day of March 2005 is entered into by and
among MCEV, LLC, a Delaware limited liability company (the “
Purchaser ”), Merisel, Inc,. a Delaware corporation
(the “ Acquiror Parent ”), Color Edge Visual,
Inc., a New York corporation, and Photobition New York, Inc, a
Delaware corporation (collectively, the “ Sellers
”) and the direct and indirect shareholders of the Sellers
set forth on the signature pages attached hereto (each a “
Shareholder ” and collectively, the “
Shareholders ”). Capitalized terms used but not
defined in this Amendment have the meaning given such terms in the
Agreement (defined below).
BACKGROUND
The Purchaser, Acquiror
Parent, Sellers and Shareholders have entered into an Asset
Purchase Agreement dated December 24, 2004 (the “
Agreement ”). The parties to the Agreement now desire
to amend the Agreement as set forth in this Amendment. In
consideration of the mutual covenants and agreements set forth
below, the parties to the Agreement agree as follows:
1. The definition of
“Contingent Payment” in Article 1 of the Agreement is
hereby amended in its entirety as follows:
“ Contingent
Payment ” shall mean, for any fiscal year during the
Earnout Period, an amount equal to the product of (i) thirty-three
percent (33%) times (ii) 3.5 times the amount by which EBITDA less
Capital Expenditures incurred in the ordinary course of (A) the
Sellers and Color Edge for the period between January 1, 2005 and
the Closing Date and (B) the Acquired Group collectively from the
Closing Date through the Earnout Period, for such year exceeds
$9,300,000; provided , however , that the maximum
amount of the Contingent Payments paid under this Agreement and the
Related Purchase Agreement (x) in each of the first two years in
the Earnout Period shall not exceed $2,648,484 per year and (y)
shall not exceed $7,945,452 in the aggregate for all years in the
Earnout Period.
2. A new defined term shall
be added to Article 1 of the Agreement as follows:
“Estimated Closing
Balance Sheet Adjustment” shall mean $2,126,698.
3. The definition of
“Excluded Assets” in Article 1 of the Agreement is
hereby amended by adding the following paragraphs to the end
thereto:
“(h) any amounts
receivable which are part of the accounts receivable of the Sellers
existing at the Closing that were outstanding 120 days or more at
November 30, 2004. The parties agree that the amount of these
receivables will not be included in the Closing Balance
Sheet;
(i) the personal items set
forth on Exhibit Y; and
(j) the bank accounts of the
Sellers.”
4. The definition of
“Holdback Amount” in Article 1 of the Agreement is
hereby amended in its entirety as follows:
“ Holdback
Amount ” shall mean $3,075,609 in the aggregate under
this Agreement and the Related Purchase Agreement.
5. The first three sentences
in Section 2.5(c) of the Agreement are hereby deleted in their
entirety and replaced with the following:
“Purchaser shall
deposit in escrow pursuant to an escrow agreement in form and
substance reasonably satisfactory to Purchaser and Seller (the
“Escrow Agreement) $2,725,372. This amount shall be combined
with the portion of the Holdback Amount delivered into escrow
pursuant to the Escrow Agreement under the Related Purchase
Agreement. The following disbursements shall be made from the
Escrow Agreement:
(i) The Advance NWC Payment
to Purchaser on the tenth day after delivery of the Closing Date
Balance Sheet to Sellers if the same is due to Purchaser pursuant
to Section 2.6(d)(i);
(ii) any undisputed amounts
payable to any party pursuant to Section 2.6(d)(v) shall be paid to
such party;
(iii) $1,025,203 less (i) the
full amount of the final purchase price adjustment owed to
Purchaser under Section 2.6(d), if any, and less (ii) any Refund
(as defined below) amount paid to Sellers and Color Edge and less
(iii) any amount paid under clause (ii) above to Sellers and Color
Edge shall be released to Sellers and Color Edge upon completion of
the purchase price adjustment under Section 2.6(d)(iv); if this
number is negative, there shall be no disbursement to Sellers or
Color Edge;
(iv) any balance thereafter
held pursuant to the Escrow Agreement (including any interest
earned on escrowed funds and any amounts deposited pursuant to
Section 2.6(d)(i)) less unpaid pending claims of the Purchaser
under the Escrow Agreement shall be released to Sellers upon the
earlier of May 15, 2006 and the completion of the 2005 fiscal year
audit of the Purchaser.
Any amounts remaining in
escrow thereafter shall be paid to Purchaser and/or Sellers and
Color Edge upon resolution of the unpaid pending claims of the
Purchaser all as set forth in the Escrow Agreement. The payment
described in clause (i) shall be made by the escrow agent under the
Escrow Agreement at the direction of Purchaser ten days after
notice to Sellers. Funds may be redeposited in the escrow pursuant
to the Escrow Agreement as provided in Section
2.6(d)(i).”
6. The first sentence in
Section 2.6(a) of the Agreement is hereby amended in its entirety
as follows:
“The amount of the
“Estimated Cash Purchase Price” shall be Twenty Million
Two Hundred Ninety Five Thousand Eight Hundred Forty Five Dollars
($20,295,845) as adjusted pursuant to this Section 2.6, and less
the Estimated Closing Balance Sheet Adjustment.”
7. Section 2.6(b) of the
Agreement is hereby amended in its entirety as follows:
“Lower Threshold Net
Working Capital” shall mean $9,000,000 reduced dollar for
dollar by the amount of Excluded Liabilities of the types set forth
on Exhibit X at the Closing under
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this Agreement or the corresponding
exhibit of the Related Purchase Agreement paid by the Sellers or
Color Edge at Closing up to a maximum of $500,000 (the
“Exhibit X Adjustment”). “Upper Threshold Net
Working Capital” shall mean $10,200,000 reduced dollar for
dollar by the Exhibit X Adjustment.
8. Section 2.6(d) (i) of the
Agreement is hereby amended by adding the following new sentences
after the first sentence:
“If Actual Net Working
Capital as shown on the Closing Date Balance Sheet delivered to
Sellers by Purchaser (the “Purchaser NWC Amount”) is
less than Lower Threshold Net Working Capital, an amount equal to
the shortfall will be released from the Holdback Amount to
Purchaser within ten (10) days after the delivery of the Closing
Date Balance Sheet to Sellers, up to a maximum of the Holdback
Amount (the “Advance NWC Payment”). The Advance NWC
Payment amount is an advance payment of the amounts that may be due
to Purchaser under this Section 2.6(d). If the Purchaser NWC Amount
is higher than the Upper Threshold Net Working Capital, an amount
equal to the amount by which the Purchaser NWC Amount exceeds the
Upper Threshold Net Working Capital, subject to a maximum of Five
Hundred Thousand Dollars ($500,000), shall be paid by the Purchaser
to the Sellers and Color Edge within ten (10) days after the
delivery of the Closing Date Balance Sheet by Purchaser to the
Sellers and Color Edge. If the final purchase price adjustment
under Section 2.6(d)(iv) results in an amount owed to Purchaser
that is less than the Advance NWC Payment, Purchaser shall retain
an amount of the Advance NWC Payment equal to the final purchase
price adjustment and pay the excess amount of the Advance NWC
Payment as follows (i) first into escrow as part of the Second
Distribution Amount under the Escrow Agreement until the Second
Distribution Amount equals $2,050,406 (not giving effect to any
income earned on escrowed funds) and (ii) any remainder (the
“Refund”) to Sellers and Color Edge. If the final
purchase price adjustment under Section 2.6(d)(iv) results in an
amount owed to Purchaser that is more than the Advance NWC Payment,
the Purchaser shall retain the full amount of the Advance NWC
Payment and any shortfall shall be paid by Seller and/or
Shareholders as provided in Section 2.6(d)(v).
9. Section 2.6(d)(iv) of the
Agreement is hereby amended in its entirety as follows:
After giving effect to this
Section 2.6(d), the Estimated Cash Purchase Price and the estimated
cash purchase price under the Related Purchase Agreement, treated
on a combined basis, shall be either increased by the amount by
which Actual Net Working Capital exceeded Upper Threshold Net
Working Capital or decreased by the amount by which Lower Threshold
Net Working Capital exceeds Actual Net Working Capital; provided
that the Estimated Cash Purchase Price and the estimated cash
purchase price under the Related Purchase Agreement, treated on a
combined basis, shall not be increased by any adjustments under
this Section 2.6(d)(iv) and the corresponding provisions in the
Related Purchase Agreement by more than an aggregate of $500,000
under both agreements. Any pa
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