Document:

amendment no2

    EXHIBIT
      10.1

     

    
 

    AMENDMENT
      NO. 2 TO ASSET PURCHASE AGREEMENT AND AMENDMENT TO CONFIDENTIALITY AND
      NON-COMPETITION AGREEMENTS (MCE)

     

    THIS
      AMENDMENT NO. 2 TO ASSET PURCHASE AGREEMENT AND AMENDMENT TO CONFIDENTIALITY
      AND
      NON-COMPETITION AGREEMENTS (this “Amendment”), dated as of April 17, 2006 and
      effective on and after the Effective Date (as defined below), is entered into
      by
      and among (i) Color Edge LLC, a Delaware limited liability company (f/k/a MCEI,
      LLC) (the “Purchaser”), (ii) Merisel, Inc., a Delaware corporation (the
“Acquiror Parent”), and (iii) PRJ 1, Inc. (f/k/a 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). This Amendment will be effective on and after the Effective Date (as
      defined in Section 12 below) and shall be null and void if the Effective Date
      does not occur.

     

    WHEREAS,
      the Purchaser, Acquiror Parent, Seller and Shareholders have entered into an
      Asset Purchase Agreement dated December 24, 2004, as amended on March 1, 2005
      (the “Agreement”);

     

    WHEREAS,
      the parties to the Agreement now desire to amend the Agreement as set forth
      in
      this Amendment;

     

    WHEREAS,
      certain of the parties hereto have made certain claims against each other
      concerning matters under the Agreement and certain other agreements contemplated
      thereby; 

     

    WHEREAS,
      the parties desire to settle the disputes relating to the claims set forth
      in
      the previous clause;

     

    WHEREAS,
      the parties hereto have agreed that Chia Chen (“Chen”) and Muthiah Saravanan
      (“Saravanan”) shall cease to be parties to the Agreement effective immediately
      following the execution of this Amendment by all parties hereto and shall
      thereafter have no further rights or obligations under the Agreement;

     

    WHEREAS,
      Prakash Sethuraman (“Sethuraman”) and the Purchaser and Acquiror Parent are
      simultaneously executing and delivering that certain Settlement Agreement and
      Mutual Release of even date herewith (the “Settlement Agreement”) and such other
      agreements contemplated thereunder; and

     

    WHEREAS,
      the Purchaser, Acquiror Parent, Chen and Saravanan have agreed to execute mutual
      releases in substantially the form attached hereto as Exhibit A.

     

    NOW,
      THEREFORE, in consideration of the foregoing premises, the mutual covenants
      and
      agreements set forth below and other good and valuable consideration, the
      receipt and sufficiency of which is hereby acknowledged by all parties to this
      Amendment, the parties to the Agreement agree as follows as of the Effective
      Date:

     

    1.  Purchaser,
      Acquiror Parent and each of the Shareholders and the Seller agree to have the
      entire Holdback Amount released to Purchaser, and to enter into the other
      agreements and amendments to the Agreement contemplated by this Amendment,
      in
      satisfaction in full of any obligations of Purchaser, Acquiror Parent,
      Shareholders and the Seller under Section 2.6(d) of the Agreement and the
      Related Purchase Agreement and for the Purchaser’s and Acquiror Parent’s claims
      with respect to certain matters related to the financial statements of the
      Seller and the sellers under the Related Purchase Agreement (the “Purchaser
      Claims”). Payment of the Holdback Amount to the Purchaser has been made prior to
      the execution of this Amendment. In addition, the parties agree that Section
      2.12 (A/R Payment) of the Agreement is hereby deleted in its entirety and no
      payments are due to or shall be made to Seller pursuant to such section. All
      parties agree that, except as provided by this Amendment, no further amounts
      are
      due hereunder from the Seller or any Shareholder in respect of the Purchaser
      Claims. 

     

    2.  The
      Purchaser and the Acquiror Parent agree that after the Effective Date neither
      Purchaser nor Acquiror Parent will have a claim under the Agreement against
      the
      Seller or any Shareholder for
      Losses relating to a breach of any of the Seller’s or Shareholders’
representations or warranties in the Agreement and all such representations
      and
      warranties shall terminate effective as of the date of this Amendment. The
      Purchaser and the Acquiror Parent further agree that from and after the
      Effective Date neither of them shall make any claim against Seller or any
      Shareholder under Section 9.2(a), Section 9.2(c) or Section 9.2(e) of the
      Agreement except for claims relating to the following Excluded
      Liabilities:

     

    
      	(i)  	
              all
                Liabilities for Taxes and deferred Tax Liabilities for which Seller
                is
                liable;

            

    

     

    
      	(ii)  	
              all
                Liabilities arising in connection with any Action, private or public,
                whether instituted or threatened prior to or after the Closing, arising
                out of the conduct of the Business or any facts or circumstances
                existing
                prior to and including the Closing Date, including without limitation,
                those matters set forth on Schedule 4.11 of the
                Agreement;

            

    

     

    
      	(iii)  	
              Liabilities
                relating to any Indebtedness or to any Trade Payables and Accruals
                that
                are not Assumed Liabilities (not including Liabilities relating to
                the
                real estate Leases set forth on Schedule 4.16 of the
                Agreement);

            

    

     

    
      	(iv)  	
              Liabilities
                of Seller to Affiliates of Seller;

            

    

     

    
      	(v)  	
              Liabilities
                of Seller arising after the Closing other than Assumed Liabilities;
                and

            

    

     

    
      	(vi)  	
              Liabilities
                relating to those matters set forth on Item 2 of Exhibit E of the
                Agreement.

            

    

     

    3.  The
      Purchaser and the Acquiror Parent agree that from and after the Effective Date
      neither Purchaser nor Acquiror Parent will make any claim against any
      Shareholder under Section 9.2(b) of the Agreement for Losses for a breach of
      any
      of his agreements, covenants or obligations in the Agreement or any Related
      Document which occurred prior to the date of this Amendment; provided that
      this
      provision shall not prevent the Purchaser and the Acquiror Parent from making
      claims against any Shareholder relating to Taxes. For avoidance of doubt, the
      Purchaser and the Acquiror Parent may make claims for Losses under Section
      9.2(b) (i) against any Shareholder for breaches after the date of this Amendment
      of agreements, covenants or obligations under the Agreement or any Related
      Document as provided in Section 9.2(b) and (ii) against Seller without regard
      to
      the limitations in this Section 3.

     

    4.  Purchaser
      and Acquiror Parent each represent and warrant to the Seller and the
      Shareholders that , as of the date of this Amendment, they have no Knowledge
      (as
      defined below) of any claims of Purchaser for any Losses relating to any
      Excluded Liability, other than with respect to Excluded Liabilities related
      to
      Taxes, as to which no representation or warranty is made by Purchaser or
      Acquiror Parent. “Knowledge” means the actual knowledge of Donald Uzzi and
      Allyson Vanderford, without duty of inquiry. 

     

    5.  Purchaser,
      Acquiror Parent, Chen and Saravanan hereby agree to enter into the releases
      attached as Exhibit A. No other Shareholder shall have any obligation or benefit
      with respect to such releases or shall otherwise be effected by such releases.
      

     

    6.  Notwithstanding
      any other provision of the Agreement or any schedule thereto upon the Effective
      Date, as among Purchaser, Acquiror Parent, Chen and Saravanan, Chen and
      Saravanan shall cease to be parties to the Agreement and shall not be included
      in the term “Shareholders” for any purpose under the Agreement. Chen and
      Saravanan agree that, as of the Effective Date, they shall have no further
      rights under the Agreement, including any claims against Purchaser, Acquiror
      Parent or Sellers for Contingent Payments, Tax Reimbursement Amounts or any
      other amounts under the Agreement. The parties agree that Exhibit H to the
      Agreement is herey amended by deleting the references to Sethuraman, Chen and
      Saravanan therein. 

     

    7.  Notwithstanding
      any provision of the Agreement to the contrary, each Shareholder shall be liable
      only for his “pro rata” share (as defined in the Agreement) of any Losses under
      the Agreement. For avoidance of doubt, on and after the Effective Date ,
      Sethuraman shall not have joint and several liability with the Seller and/or
      the
      Shareholders, but shall only be severally liable for his pro rata share of
      any
      Losses.

     

    8.  

     

    (a)  With
      respect to any Contingent Payment for any fiscal year during the Earnout Period,
      Sethuraman and his accountants shall have the right to review the Purchaser’s
      calculation of the amount of such Contingent Payment, by giving written notice
      to the Purchaser within 15 days after receipt of the Purchaser’s calculation of
      his intent to review. Sethuraman shall have a 60 day period from the time that
      the Purchaser delivers notice of its calculation of the amount of the Contingent
      Payment to conduct such review. The Purchaser shall make available its records
      to Sethuraman and his accountants in connection with such review on reasonable
      notice and at reasonable times during normal business hours of the Purchaser.
      Sethuraman shall notify the Purchaser of any dispute of the Purchaser’s
      calculation of a Contingent Payment within such 60 day period. Any dispute
      as to
      the amount of the Contingent Payment shall be resolved by the Arbitration Firm
      in accordance with the procedures set forth in Section 2.6(d)(ii) of the
      Agreement. The decision of the Arbitration Firm shall be final and binding
      on
      the parties to the Agreement. If it is finally determined (whether by mutual
      agreement or decision of the Arbitration Firm) that amount of the Contingent
      Payment is greater than that calculated by Purchaser, the unpaid amount shall
      be
      paid promptly after such final determination to the Seller and the sellers
      under
      the Related Purchase Agreement, with interest at the rate of 8% from the date
      such payment was due. If as a result of Sethuraman’s dispute of the amount of
      any Contingent Payment, it is finally determined that such Contingent Payment
      is
      in excess of Purchaser’s calculation of such Contingent Payment by 10% or more,
      Purchaser shall pay the reasonable fees of Sethuraman’s accountants, up to a
      maximum of $25,000. As a condition to receipt of any information under this
      provision, Sethuraman and his accountants shall enter into a reasonable
      confidentiality agreement, with provisions substantially similar to those set
      forth in the Sethuraman Confidentiality and Noncompetition Agreement (as defined
      below).

     

    (b)  Under
      the
      Settlement Agreement, Sethuraman’s employment is terminated as of March 7, 2006,
      which such termination is neither “by the Purchaser for cause” nor “by the
      Shareholder not for good reason” as those: (i) terms are defined in the
      Sethuraman’s Employment Agreement; and (ii) phrases are used in §2.10 of the
      Color Edge APA and CEV APA; and that, as such, the amount of any Contingent
      Payment (as defined in the Color Edge APA and CEV APA) shall be unaffected
      by
      Sethuraman’s termination. 

     

    9.  Each
      of
      Chen’s and Saravanan’s obligations under their respective Confidentiality and
      Non-Competition Agreements dated as of March 1, 2005 shall continue in full
      force and effect provided that Purchaser agrees that the definition the Covenant
      Period in each of the Noncompetition Agreements of Chen and Saravanan shall
      be
      amended in its entirety as follows:

     

    ““Covenant
      Period”
shall
      mean a period of three (3) years from and after the Closing Date.”

     

    10.  Prakash
      Sethuraman’s obligations under his Confidentiality and Non-Competition Agreement
      dated as of March 1, 2005 (the “Sethuraman Confidentiality and
      Noncompetition Agreement”) shall continue in full force and effect provided that
      Purchaser agrees that the definition the Covenant Period in such agreement
      shall
      be amended in its entirety as follows:

     

    ““Covenant
      Period”
shall
      mean a period of three (3) years from and after the Closing Date.”

     

    11.  The
      parties hereto agree that the cash Purchase Price under the Agreement shall
      be
      reduced by $450,425 and that the cash Purchase Price under the Related Purchase
      Agreement shall be reduced by $4,053,826. 

     

    12.  Notwithstanding
      any other provision of this Amendment or the Agreement, in the event that
      Sethuraman has not revoked the Settlement Agreement and a payment is due
      thereunder (the “Settlement Payment”) and the Acquiror Parent has not made such
      payment in accordance with the provisions of the Settlement Agreement, this
      Amendment, the Settlement Agreement and all releases shall be null and void
      and
      of no force or effect and Sethuraman shall have the right to pursue any claims
      and seek available remedies under applicable law or in equity. Notwithstanding
      any other provision of this Amendment or the Agreement, in the event that
      Sethuraman revokes the Settlement Agreement, this Amendment, the Settlement
      Agreement and all releases shall be null and void and of no force or effect
      and
      the Purchaser and Acquiror Parent shall have the right to pursue any claims,
      and
      seek available remedies under applicable law or in equity. The date the
      Settlement Payment is made is the “Effective Date” for purposes of this
      Amendment. It is understood by each of the undersigned parties that the right
      of
      revocation described in this Section 12 shall terminate seven days after April
      17, 2006.

     

    13.  Except
      as
      affected by this Amendment, the Agreement is unchanged and continues in full
      force and effect. This Amendment shall be binding upon and inure to the benefit
      of each of the undersigned and their respective successors and permitted
      assigns.

     

    14.  In
      the
      event of a conflict between this Amendment on the one hand, and the Agreement
      on
      the other hand, the terms and provisions of this Amendment shall be deemed
      to
      set forth the true intentions and obligations of the parties to each
      other.

     

    15.  Each
      party hereto represents that in their individual capacity or on behalf of a
      corporation, each respective individual or entity has the individual, limited
      liability company or corporate power and authority to make, deliver and perform
      its obligations under this Amendment, and has taken all necessary corporate
      or
      limited liability company action to authorize its execution, delivery and
      performance of this Amendment.

     

    16.  Each
      party hereto represents that this Amendment has been duly and validly executed
      and delivered by he/it and constitutes his/its legal, valid and binding
      obligation, enforceable against him/it in accordance with its
      terms.

     

    17.  This
      Amendment may be executed in one or more counterparts, each of which shall
      be
      deemed an original but all of which together will constitute one and the same
      instrument. Delivery of an executed counterpart of a signature page to this
      Amendment by facsimile shall be as effective as delivery of a manually executed
      counterpart of this Amendment (and the parties shall follow such delivery by
      prompt delivery of originals of such pages).

     

    18.  This
      Amendment shall be governed by and construed in accordance with the domestic
      laws of the State of New York (without giving effect to any choice or conflict
      of law provision).

     

    19.  The
      rights, duties, obligations set forth among the parties described in this
      Amendment are conditioned upon execution and delivery to the appropriate parties
      of the documents described in Exhibit A attached hereto, the Settlement
      Agreement and Mutual Release and all related agreements contemplated by the
      Settlement Agreement and the Amendment No .2 to the Asset Purchase
      Agreement(MCEV).

     

    20.  Within
      ten (10) business days following the Effective Date, on a mutually agreed dates
      and times, Sethuraman may remove, at his cost and expense, the personal items
      set forth on Exhibit Y to the Agreement; and Purchaser and the Acquiror Parent
      shall permit such removal.

     

    21.  Should
      any part, term or provision of this Amendment, or the application thereof in
      any
      circumstances, be declared or be determined by a final or unappealable order,
      decree or judgment of any court to be illegal, invalid or unenforceable, the
      provision in question shall be deemed replaced with a valid and enforceable
      provision most closely reflecting the intent and purpose of the original
      provision within the jurisdiction of such court and this Amendment shall
      otherwise remain in full force and effect in such jurisdiction and in its
      entirety in other jurisdictions. 

     

    [Remainder
      of this page left intentionally blank]

     

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    IN
      WITNESS WHEREOF, the parties have executed this Amendment No. 2 to Asset
      Purchase Agreement as of the date first above written.

     

    
      	 SELLER:	 	 
	 	PRJ
              1, INC., a New
              York corporation
	 
 	 
 	 
 
	 	By:  	Naveen
              Shah
	 	
              

              Naveen Shah
	 	 

    

     

    
      	 SHAREHOLDERS:	 	 
	 	 
	 	     	Prakash
              Sethuraman
	 	
              

              Prakash Sethuraman
	 	 

    

     

    
      	 	 	 Rajiv
              Garg
	 	
              

              Rajiv Garg

    

    
       

      
        	 	 	 Chia
                Chen
	 	
                

                Chia Chen

      

      
         

        
          	 	 	 Muthiah
                  Saravanan
	 	
                  

                  Muthiah Saravanan

        

         

        
          
            	PURCHASER:	 	 
	 	COLOR
                    EDGE
                    LLC,  a Delaware limited liability company
	 
 	 
 	 
 
	 	By:  	Donald
                    R. Uzzi
	 	
                    

                    Donald R. Uzzi
	 	Title: 
                    Manager

          

        

      

    

     

    
      	 ACQUIROR
              PARENT:	 	 
	 	MERISEL,
              INC.
	 
 	 
 	 
 
	 	By:  	Donald
              R. Uzzi
	 	
              

              Donald R. Uzzi
	 	Title: 
              Chairman of the Board, Chief Executive Officer and
              President

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

    

    Form
      of
      Mutual General Waiver and Releaseamendment no2

    EXHIBIT
      10.2

    
 

    AMENDMENT
      NO. 2 TO ASSET PURCHASE AGREEMENT AND AMENDMENT TO CONFIDENTIALITY AND
      NON-COMPETITION AGREEMENTS (MCEV)

     

    THIS
      AMENDMENT NO. 2 TO ASSET PURCHASE AGREEMENT AND AMENDMENT TO CONFIDENTIALITY
      AND
      NON-COMPETITION AGREEMENTS (this “Amendment”), dated as of April 17, 2006 and
      effective on and after the Effective Date (as defined below), is entered into
      by
      and among (i) Color Edge Visual, LLC, a Delaware limited liability company
      (f/k/a MCEV, LLC) (the “Purchaser”), (ii) Merisel, Inc., a Delaware corporation
      (the “Acquiror Parent”), and (iii) PRJ 2, Inc. (f/k/a Color Edge Visual, Inc.),
      a New York corporation, and PRJ 3, Inc. (f/k/a Photobition New York, Inc.),
      a
      Delaware corporation (both 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). This Amendment will be effective on and after
      the Effective Date (as defined in Section 15 below) and shall be null and void
      if the Effective Date does not occur.

     

    WHEREAS,
      the Purchaser, Acquiror Parent, Sellers and Shareholders have entered into
      an
      Asset Purchase Agreement dated December 24, 2004, as amended on March 1, 2005
      (the “Agreement”);

     

    WHEREAS,
      the parties to the Agreement now desire to amend the Agreement as set forth
      in
      this Amendment;

     

    WHEREAS,
      certain of the parties hereto have made certain claims against each other
      concerning matters under the Agreement and certain other agreements contemplated
      thereby; 

     

    WHEREAS,
      the parties desire to settle the disputes relating to the claims set forth
      in
      the previous clause;

     

    WHEREAS,
      the parties hereto have agreed that Chia Chen (“Chen”) and Muthiah Saravanan
      (“Saravanan”) shall cease to be parties to the Agreement effective immediately
      following the execution of this Amendment by all parties hereto and shall
      thereafter have no further rights or obligations under the Agreement;

     

    WHEREAS,
      Prakash Sethuraman (“Sethuraman”) and the Purchaser and Acquiror Parent are
      simultaneously executing and delivering that certain Settlement Agreement and
      Mutual Release of even date herewith (the “Settlement Agreement”) and such other
      agreements contemplated thereunder; and

     

    WHEREAS,
      the Purchaser, Acquiror Parent, Chen and Saravanan have agreed to execute mutual
      releases in substantially the form attached hereto as Exhibit A.

     

    NOW,
      THEREFORE, in consideration of the foregoing premises, the mutual covenants
      and
      agreements set forth below and other good and valuable consideration, the
      receipt and sufficiency of which is hereby acknowledged by all parties to this
      Amendment, the parties to the Agreement agree as follows as of the Effective
      Date:

     

    1.  Purchaser,
      Acquiror Parent and each of the Shareholders and the Sellers agree to have
      the
      entire Holdback Amount released to Purchaser, and to enter into the other
      agreements and amendments to the Agreement contemplated by this Amendment,
      in
      satisfaction in full of any obligations of Purchaser, Acquiror Parent,
      Shareholders and the Sellers under Section 2.6(d) of the Agreement and the
      Related Purchase Agreement and for the Purchaser’s and Acquiror Parent’s claims
      with respect to certain matters related to the financial statements of the
      Sellers and the seller under the Related Purchase Agreement (the “Purchaser
      Claims”). Payment of the Holdback Amount to the Purchaser has been made prior to
      the execution of this Amendment. In addition, the parties agree that Section
      2.12 (A/R Payment) of the Agreement is hereby deleted in its entirety and no
      payments are due to or shall be made to Sellers pursuant to such section. All
      parties agree that, except as provided by this Amendment, no further amounts
      are
      due hereunder from the Sellers or any Shareholder in respect of the Purchaser
      Claims. 

     

    2.  The
      Sellers hereby agree, in connection with the resolution of the Purchaser Claims,
      to pay Purchaser $395,414, representing a portion of the net amount of customer
      payments received in and vendor payments made out of the bank account of the
      Sellers, which amount is an asset of the Purchaser under the Agreement. All
      parties agree and acknowledge that payment of this amount in full has been
      made
      prior to the execution of this Amendment from certain bank accounts of Sellers
      and no further sums are due hereunder from Sellers or any Shareholder in
      connection with the aforesaid portion of the net amount of customer payments.
      .

     

    3.  The
      Purchaser and the Acquiror Parent agree that after the Effective Date neither
      Purchaser nor Acquiror Parent will have a claim under the Agreement against
      the
      Sellers or any Shareholder for
      Losses relating to a breach of any of the Sellers’ or Shareholders’
representations or warranties in the Agreement and all such representations
      and
      warranties shall terminate effective as of the date of this Amendment. The
      Purchaser and the Acquiror Parent further agree that from and after the
      Effective Date neither of them shall make any claim against any Seller or
      Shareholder under Section 9.2(a), Section 9.2(c) or Section 9.2(e) of the
      Agreement except for claims relating to the following Excluded
      Liabilities:

     

    
      	(i)  	
              all
                Liabilities for Taxes and deferred Tax Liabilities for which any
                Seller is
                liable;

            

    

     

    
      	(ii)  	
              all
                Liabilities arising in connection with any Action, private or public,
                whether instituted or threatened prior to or after the Closing, arising
                out of the conduct of the Business or any facts or circumstances
                existing
                prior to and including the Closing Date, including without limitation,
                those matters set forth on Schedule 4.11 of the
                Agreement;

            

    

     

    
      	(iii)  	
              Liabilities
                relating to any Indebtedness or to any Trade Payables and Accruals
                that
                are not Assumed Liabilities (not including Liabilities relating to
                the
                real estate Leases set forth on Schedule 4.16 of the
                Agreement);

            

    

     

    
      	(iv)  	
              Liabilities
                of any Seller to Affiliates of any
                Seller;

            

    

     

    
      	(v)  	
              Liabilities
                of any Seller arising after the Closing other than Assumed Liabilities;
                and

            

    

     

    
      	(vi)  	
              Liabilities
                relating to those matters set forth on Items 2 or 4 of Exhibit E
                of the
                Agreement.

            

    

     

    4.  The
      Purchaser and the Acquiror Parent agree that from and after the Effective Date
      neither Purchaser nor Acquiror Parent will make any claim against any
      Shareholder under Section 9.2(b) of the Agreement for Losses for a breach of
      any
      of his agreements, covenants or obligations in the Agreement or any Related
      Document which occurred prior to the date of this Amendment; provided that
      this
      provision shall not prevent the Purchaser and the Acquiror Parent from making
      claims against any Shareholder relating to Taxes, including without limitation
      under applicable provisions of Section 2.6(g). For avoidance of doubt, the
      Purchaser and the Acquiror Parent may make claims for Losses under Section
      9.2(b) (i) against any Shareholder for breaches after the date of this Amendment
      of agreements, covenants or obligations under the Agreement or any Related
      Document as provided in Section 9.2(b) and (ii) against any Seller without
      regard to the limitations in this Section 4.

     

    5.  Purchaser
      and Acquiror Parent each represent and warrant to the Sellers and the
      Shareholders that , as of the date of this Amendment, they have no Knowledge
      (as
      defined below) of any claims of Purchaser for any Losses relating to any
      Excluded Liability, other than with respect to Excluded Liabilities related
      to
      Taxes, as to which no representation or warranty is made by Purchaser or
      Acquiror Parent. “Knowledge” means the actual knowledge of Donald Uzzi and
      Allyson Vanderford, without duty of inquiry. 

     

    6.  Purchaser,
      Acquiror Parent, Chen and Saravanan hereby agree to enter into the releases
      attached as Exhibit A. No other Shareholder shall have any obligation or benefit
      with respect to such releases or shall otherwise be effected by such releases.
      

     

    7.  Notwithstanding
      any other provision of the Agreement or any schedule thereto upon the Effective
      Date, as among Purchaser, Acquiror Parent, Chen and Saravanan, Chen and
      Saravanan shall cease to be parties to the Agreement and shall not be included
      in the term “Shareholders” for any purpose under the Agreement. Chen and
      Saravanan agree that, as of the Effective Date, they shall have no further
      rights under the Agreement, including any claims against Purchaser, Acquiror
      Parent or Sellers for Contingent Payments, Tax Reimbursement Amounts or any
      other amounts under the Agreement. The parties agree that Exhibit H to the
      Agreement is hereby amended by deleting the references to Sethuraman, Chen
      and
      Saravanan therein. 

     

    8.  Notwithstanding
      any provision of the Agreement to the contrary, each Shareholder shall be liable
      only for his “pro rata” share (as defined in the Agreement) of any Losses under
      the Agreement. For avoidance of doubt, on and after the Effective Date,
      Sethuraman shall not have joint and several liability with the Sellers and/or
      the Shareholders, but shall only be severally liable for his pro rata share
      of
      any Losses.

     

    9.  

     

    (a)  With
      respect to any Contingent Payment for any fiscal year during the Earnout Period,
      Sethuraman and his accountants shall have the right to review the Purchaser’s
      calculation of the amount of such Contingent Payment, by giving written notice
      to the Purchaser within 15 days after receipt of the Purchaser’s calculation of
      his intent to review. Sethuraman shall have a 60 day period from the time that
      the Purchaser delivers notice of its calculation of the amount of the Contingent
      Payment to conduct such review. The Purchaser shall make available its records
      to Sethuraman and his accountants in connection with such review on reasonable
      notice and at reasonable times during normal business hours of the Purchaser.
      Sethuraman shall notify the Purchaser of any dispute of the Purchaser’s
      calculation of a Contingent Payment within such 60 day period. Any dispute
      as to
      the amount of the Contingent Payment shall be resolved by the Arbitration Firm
      in accordance with the procedures set forth in Section 2.6(d)(ii) of the
      Agreement. The decision of the Arbitration Firm shall be final and binding
      on
      the parties to the Agreement. If it is finally determined (whether by mutual
      agreement or decision of the Arbitration Firm) that amount of the Contingent
      Payment is greater than that calculated by Purchaser, the unpaid amount shall
      be
      paid promptly after such final determination to the Sellers and the seller
      under
      the Related Purchase Agreement, with interest at the rate of 8% from the date
      such payment was due. If as a result of Sethuraman’s dispute of the amount of
      any Contingent Payment, it is finally determined that such Contingent Payment
      is
      in excess of Purchaser’s calculation of such Contingent Payment by 10% or more,
      Purchaser shall pay the reasonable fees of Sethuraman’s accountants, up to a
      maximum of $25,000. As a condition to receipt of any information under this
      provision, Sethuraman and his accountants shall enter into a reasonable
      confidentiality agreement, with provisions substantially similar to those set
      forth in the Sethuraman Confidentiality and Noncompetition Agreement (as defined
      below).

     

    (b)  Under
      the
      Settlement Agreement, Sethuraman’s employment is terminated as of March 7, 2006,
      which such termination is neither “by the Purchaser for cause” nor “by the
      Shareholder not for good reason” as those: (i) terms are defined in the
      Sethuraman’s Employment Agreement; and (ii) phrases are used in §2.10 of the
      Color Edge APA and CEV APA; and that, as such, the amount of any Contingent
      Payment (as defined in the Color Edge APA and CEV APA) shall be unaffected
      by
      Sethuraman’s termination. 

     

    10.  Each
      of
      Chen’s and Saravanan’s obligations under their respective Confidentiality and
      Non-Competition Agreements dated as of March 1, 2005 shall continue in full
      force and effect provided that Purchaser agrees that the definition the Covenant
      Period in each of the Noncompetition Agreements of Chen and Saravanan shall
      be
      amended in its entirety as follows:

     

    ““Covenant
      Period”
shall
      mean a period of three (3) years from and after the Closing Date.”

     

    11.  Prakash
      Sethuraman’s obligations under his Confidentiality and Non-Competition Agreement
      dated as of March 1, 2005 (the “Sethuraman Confidentiality and
      Noncompetition Agreement”) shall continue in full force and effect provided that
      Purchaser agrees that the definition the Covenant Period in such agreement
      shall
      be amended in its entirety as follows:

     

    ““Covenant
      Period”
shall
      mean a period of three (3) years from and after the Closing Date.”

     

    12.  Purchaser
      agrees to make a payment of $250,000 in the aggregate to Chen and Saravanan.
      Such payment shall be made on the Effective Date. 

     

    13.  The
      parties hereto agree to amend Section 2.6(g) of the Agreement to the effect
      that
      that the maximum Tax Reimbursement payment Purchaser shall be obligated to
      make
      under Section 2.6(g) shall be reduced from $2,000,000 to $716,795. For avoidance
      of doubt, the parties agree that (a) Chen and Saravanan shall not be included
      in
      the term “Shareholders” for purposes of computing the Tax Reimbursement Amount
      under Section 2.6(g) and (b) the payment of $250,000 to Chen and Saravanan
      under
      Section 10 of this Amendment shall not be subject to any adjustment (increase
      or
      decrease) regardless of the ultimate calculations of the Tax Reimbursement
      Amounts which would have otherwise been due to the Shareholders, absent this
      Amendment.

     

    14.  The
      parties hereto agree that the cash Purchase Price under the Agreement shall be
      reduced by $4,053,826 and that the cash Purchase Price under the Related
      Purchase Agreement shall be reduced by $450,425. 

     

    15.  Notwithstanding
      any other provision of this Amendment or the Agreement, in the event that
      Sethuraman has not revoked the Settlement Agreement and a payment is due
      thereunder (the “Settlement Payment”) and the Acquiror Parent has not made such
      payment in accordance with the provisions of the Settlement Agreement, this
      Amendment, the Settlement Agreement and all releases shall be null and void
      and
      of no force or effect and Sethuraman shall have the right to pursue any claims
      and seek available remedies under applicable law or in equity. Notwithstanding
      any other provision of this Amendment or the Agreement, in the event that
      Sethuraman revokes the Settlement Agreement, this Amendment, the Settlement
      Agreement and all releases shall be null and void and of no force or effect
      and
      the Purchaser and Acquiror Parent shall have the right to pursue any claims
      and
      seek available remedies under applicable law or in equity. The date the
      Settlement Payment is made is the “Effective Date” for purposes of this
      Amendment. It is understood by each of the undersigned parties that the right
      of
      revocation described in this Section 15 shall terminate seven days after April
      17, 2006.

     

    16.  Except
      as
      affected by this Amendment, the Agreement is unchanged and continues in full
      force and effect. This Amendment shall be binding upon and inure to the benefit
      of each of the undersigned and their respective successors and permitted
      assigns.

     

    17.  In
      the
      event of a conflict between this Amendment on the one hand, and the Agreement
      on
      the other hand, the terms and provisions of this Amendment shall be deemed
      to
      set forth the true intentions and obligations of the parties to each
      other.

     

    18.  Each
      party hereto represents that in their individual capacity or on behalf of a
      corporation, each respective individual or entity has the individual, limited
      liability company or corporate power and authority to make, deliver and perform
      its obligations under this Amendment, and has taken all necessary corporate
      or
      limited liability company action to authorize its execution, delivery and
      performance of this Amendment.

     

    19.  Each
      party hereto represents that this Amendment has been duly and validly executed
      and delivered by he/it and constitutes his/its legal, valid and binding
      obligation, enforceable against him/it in accordance with its
      terms.

     

    20.  This
      Amendment may be executed in one or more counterparts, each of which shall
      be
      deemed an original but all of which together will constitute one and the same
      instrument. Delivery of an executed counterpart of a signature page to this
      Amendment by facsimile shall be as effective as delivery of a manually executed
      counterpart of this Amendment (and the parties shall follow such delivery by
      prompt delivery of originals of such pages).

     

    21.  This
      Amendment shall be governed by and construed in accordance with the domestic
      laws of the State of New York (without giving effect to any choice or conflict
      of law provision).

     

    22.  The
      rights, duties, obligations set forth among the parties described in this
      Amendment are conditioned upon execution and delivery to the appropriate parties
      of the documents described in Exhibit A attached hereto, the Settlement
      Agreement and Mutual Release and all related agreements contemplated by the
      Settlement Agreement and the Amendment No. 2 to the Asset Purchase
      Agreement(CE).

     

    23.  Within
      ten (10) business days following the Effective Date, on a mutually agreed dates
      and times, Sethuraman may remove, at his cost and expense, the personal items
      set forth on Exhibit Y to the Agreement; and Purchaser and the Acquiror Parent
      shall permit such removal.

     

    24.  Should
      any part, term or provision of this Amendment, or the application thereof in
      any
      circumstances, be declared or be determined by a final or unappealable order,
      decree or judgment of any court to be illegal, invalid or unenforceable, the
      provision in question shall be deemed replaced with a valid and enforceable
      provision most closely reflecting the intent and purpose of the original
      provision within the jurisdiction of such court and this Amendment shall
      otherwise remain in full force and effect in such jurisdiction and in its
      entirety in other jurisdictions. 

     

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      of this page left intentionally blank]

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    IN
      WITNESS WHEREOF, the parties have executed this Amendment No. 2 to Asset
      Purchase Agreement as of the date first above written.

     

    
      	 SELLERS:	 	 
	 	PRJ
              2, INC., a New
              York corporation
	 
 	 
 	 
 
	 	By:  	Naveen
              Shah
	 	
              

              Naveen Shah
	 	 

    

     

    
      	 	 	 
	 	PRJ
              3, INC., a
              Delaware corporation
	 
 	 
 	 
 
	 	By:  	Rajiv
              Garg
	 	
              

              Rajiv Garg
	 	 

    

     

     

    
      	 SHAREHOLDERS:	    
              	 Prakash
              Sethuraman
	 	
              

              Prakash Sethuraman

    

     

    
      	 	    
              	 Rajiv
              Garg
	 	
              

              Rajiv Garg

    

     

    
      	 	    
              	 Chia
              Chen
	 	
              

              Chia Chen

    

    
       

      
        	 	    
                	 Muthiah
                Saravanan
	 	
                

                Muthiah Saravanan

      

      
         

        
          	 	    
                  	 John
                  Sheehan
	 	
                  

                  John Sheehan

        

         

        
          	
                	 	 
	 	PRJ
                  2, INC., a New
                  York corporation
	 
 	 
 	 
 
	 	By:  	Rajiv
                  Garg
	 	
                  

                  Rajiv Garg
	 	 

        

      

    

     

    
      	PURCHASER:	 	 
	 	COLOR
              EDGE VISUAL
              LLC, a Delaware limited liability company
	 
 	 
 	 
 
	 	By:  	Donald
              R. Uzzi
	 	
              

              Donald R. Uzzi
	 	Title: 
              Manager

    

    
      
         

        
          	ACQUIROR
                  PARENT:	 	 
	 	MERISEL, a
                  Delaware corporation
	 
 	 
 	 
 
	 	By:  	Donald
                  R. Uzzi
	 	
                  

                  Donald R. Uzzi
	 	Title:
                  President & CEO

        

        
           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

        

      

       

    

    EXHIBIT
      A

     

    Form
      of
      Mutual General Waiver and Release

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