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Exhibit 2.4
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 MCEI, LLC, a Delaware limited liability company (the “
Purchaser ”), Merisel, Inc,. a Delaware corporation
(the “ Acquiror Parent ”), and Color Edge, Inc.,
a New York corporation (the “ Seller ”) and the
direct and indirect shareholders of the Seller 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, Seller 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
Seller and Color Edge Visual 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
$273,302.”
3. The definition of
“Excluded Assets” in Article 1 of the Agreement is
hereby amended by adding the following paragraphs to the end
thereto:
“(g) any amounts
receivable which are part of the accounts receivable of the Seller
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;
(h) the personal items set
forth on Exhibit Y;
(i) the bank accounts of the
Sellers; and
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(j) the following Leases: (i)
Standard Form Office Lease by and between Color Edge, Inc. and Jack
Vogel Associates, dated 12/1/2002 for leased real property at 38 W
21st St, 8th Floor, New York, New York, (ii) Standard Form Office
Lease by and between Color Edge, Inc. and Jack Vogel Associates,
dated 12/1/2002 for leased real property at 38 W 21st St, 11th
Floor, New York, New York and (iii) Standard Form Office Lease by
and between Color Edge, Inc. and Jack Vogel Associates, dated
12/1/2002 for leased real property at 38 W 21st St, 9th Floor New
York, New York. The parties agree that these Leases shall be
included in the defined term “Excluded Contracts”
hereunder.”
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) $350,238. 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 Seller 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 Seller and Color Edge Visual and
less (iii) any amount paid under clause (ii) above to Seller and
Color Edge Visual shall be released to Seller and Color Edge Visual
upon completion of the purchase price adjustment under Section
2.6(d)(iv); if this number is negative, there shall be no
disbursement to Seller or Color Edge Visual;
(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 Seller and Color
Edge Visual 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 Seller and
Color Edge Visual 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).”
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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 Two Million
Six Hundred Eight Thousand Two Hundred Seventeen Dollars
($2,608,217) 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 this Agreement or the
corresponding exhibit of the Related Purchase Agreement paid by the
Seller or Color Edge Visual 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
Seller 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 Seller, 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 Seller and Color Edge Visual within ten (10) days after the
delivery of the Closing Date Balance Sheet by Purchaser to the
Seller and Color Edge Visual. 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 Seller and Color Edge Visual. 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 amoun
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