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
1
(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).”
2
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
