AMENDMENT NO. 2 TO MEMBERSHIP INTEREST PURCHASE AGREEMENT
Exhibit
2.1
AMENDMENT
NO. 2 TO MEMBERSHIP INTEREST PURCHASE AGREEMENT
THIS
AMENDMENT NO. 2 TO MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Amendment”)
is made and effective as of December 28, 2010 among Titanium Asset Management
Corp., a Delaware corporation (the “Purchaser”),
Xxxx Xxxxxxxxx Asset Management, LLC, an Ohio limited liability company (the
“Company”),
and Xx. Xxxxxxx X. Bee (“Members’
Representative”), acting in his capacity as the agent and attorney in
fact with the authority to act on behalf of BWAM Holdings, LLC, an Ohio limited
liability company (the “Seller”),
the members of the Seller who hold common membership interests of the Seller
(the “Members”
and together with the Seller, the “Seller
Parties” and each, a “Seller
Party”) and, for the limited purposes of Article IV-A, Section 6.6 and
the applicable provisions of Article X of the Purchase Agreement (as defined
below), the members of the Seller who hold preferred membership interests of the
Seller (the “Preferred
Members”).
WHEREAS, the Purchaser, the
Company, the Seller Parties and the Preferred Members have entered into that
certain Membership Interest Purchase Agreement, dated as of November 7, 2008
(the “Purchase
Agreement”), pursuant to which the Purchaser purchased all of the issued
and outstanding membership interests of the Company from the Seller Parties and
the Preferred Members.
WHEREAS, under the terms of
the Purchase Agreement, Members’ Representative has been appointed to serve as
the agent and attorney in fact of the Seller Parties and the Preferred Members,
with full power and authority to act on behalf of each Seller Party and
Preferred Member according to the terms of the Purchase Agreement, including, as
described in Section 10.11 of the Purchase Agreement, the power to amend the
Purchase Agreement.
WHEREAS, the Purchaser, the
Company, the Seller Parties and the Preferred Members have entered into that
certain Amendment No. 1 to Membership Interest Purchase Agreement, dated as of
December 30, 2008, pursuant to which parties agreed that the payment of the
Closing Payment be made on January 2, 2009, but that, for all purposes, the
transactions contemplated by the Purchase Agreement be deemed closed as of
December 31, 2008.
WHEREAS, the parties desire to
further amend the Purchase Agreement to provide that the Deferred Payment be
determined based on a Final Revenue Run Rate calculated as of November 30, 2010
and be paid to the Seller 100% in cash.
NOW, THEREFORE, the Purchaser,
the Company and Members’ Representative hereby agree as follows:
1.
Section 2.2(b) of the Purchase Agreement is hereby amended and restated in
its entirety to read as follows:
“(b) Deferred
Payment. On the date of the final determination of the
Deferred Payment pursuant to Sections 2.7(a)
and (b), but no
earlier than December 28, 2010 (the “Deferred Payment
Date”), the Purchaser shall pay to the Seller the Deferred
Payment. The Deferred Payment shall be paid to the Seller 100% in
cash to the account designated in writing by the Seller at least two (2)
Business Days prior to the Deferred Payment Date.”
2.
Section 2.2(e) of the Purchase Agreement is hereby amended and
restated in its entirety to read as follows:
“(e) Deferred Stock
Grant. The Purchaser shall provide 192,000 shares of common
stock, par value $0.0001 per share (“Purchaser Common
Stock”), of the Purchaser to the Seller on date of the execution of the
Amendment.
3.
Section 2.7 of the Purchase Agreement is hereby amended and restated
in its entirety to read as follows:
“2.7 Deferred
Payment.
(a) Preparation of Run Rate
Statement.
(i) As
soon as practicable, but in any event no later than December 28, 2010, the
Purchaser shall cause to be prepared and delivered to the Members’
Representative a statement setting forth the computation of the
following:
(1) for
each management fee that is a fixed amount for any current customer account, the
amount of such fixed amounts (on an annualized basis) in effect as of November
30, 2010; and
(2) for
all other current customer accounts, the total amount of assets in each such
account as of November 30, 2010,
multiplied by the Company’s per annum management fee for each such account in
effect as of November 30, 2010; and
(3) for
all fee-sharing arrangement revenues of the Company with respect to its Business
earned or payable as of November 30, 2010 (collectively, (1), (2) and (3) shall
be referred to herein an the “Post-Closing
Revenue Run
Rate Statement”). The “Post-Closing
Revenue Run
Rate” shall be the sum of the amounts determined pursuant to the previous
sentence and also shall be set forth in the Post-Closing Revenue Run Rate
Statement.
(ii) If
the Members’ Representative disagrees with the Post-Closing Revenue Run Rate
Statement or any of the calculations set forth therein, the Members’
Representative may within five (5) Business Days after delivery of such
statement deliver a notice to the Purchaser disagreeing therewith, setting forth
the Members’ Representative’s calculations and specifying those items or amounts
as to which the Members’ Representative disagrees, and the Members’
Representative shall be deemed to have agreed with all other items and amounts
contained in the Post-Closing Revenue Run Rate Statement.
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(iii) If
the Members’ Representative duly delivers to the Purchaser a notice of
disagreement pursuant to Section 2.7(a)(ii),
the Purchaser and the Members’ Representative shall, during the five (5)
Business Days following such delivery, use commercially reasonable efforts to
reach agreement on the disputed items or amounts in order to determine, as may
be required, the amount of the Post-Closing Revenue Run Rate, which amount shall
not be less than the amount thereof shown in the Purchaser’s calculation
delivered pursuant to Section 2.7(a)(i) nor
more than the amount thereof shown in the Members’ Representative’s calculation
delivered pursuant to Section 2.7(a)(ii). If
during such period, the Purchaser and the Members’ Representative are unable to
reach such agreement, they shall within five (5) Business Days thereafter cause
the Accounting Referee to review this Agreement and the disputed items or
amounts for the purpose of calculating Company Revenue (it being understood that
in making such calculation, the Accounting Referee shall be functioning as an
expert and not as an arbitrator). In making such calculation, the
Accounting Referee shall consider only those items or amounts in the
Post-Closing Revenue Run Rate Statement as to which the Members’ Representative
has disagreed. The Accounting Referee shall deliver to the Purchaser
and the Members’ Representative, as promptly as practicable (but in any case no
later than December 31, 2010), a report setting forth such
calculation. Such report shall be final and binding upon the
Purchaser and the Seller. The cost of such review and report shall be
borne equally by the Purchaser and the Seller.
(b) Determination of Deferred
Payment. The Purchaser shall pay the Seller in cash the
applicable amount set forth in the table below (a “Deferred
Payment”):
Period ending November 30,
2010
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Final Revenue Run Rate
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Deferred Payment
|
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Less
than $6,250,001
|
$ | 0 | ||
|
$6,250,001
to $6,500,000
|
$ | 1,000,000 | ||
|
$6,501,001
to $6,750,000
|
$ | 2,000,000 | ||
|
$6,750,001
to $7,000,000
|
$ | 3,000,000 | ||
|
$7,000,001
to $7,250,000
|
$ | 4,000,000 | ||
|
$7,250,001
to $7,500,000
|
$ | 5,000,000 | ||
|
$7,500,001
to $7,750,000
|
$ | 6,000,000 | ||
|
$7,750,001
to $8,000,000
|
$ | 7,000,000 | ||
|
$8,000,001
or above
|
$ | 8,000,000 | ||
By way of
example, if the Final Revenue Run Rate during the period ending November 30,
2010 is equal to $7,800,000, the Deferred Payment would be equal to
$7,000,000. Preparation of the calculation setting forth the amounts
set forth in the table above as to the Final Revenue Run Rate shall be prepared
by Purchaser with reasonable input from the Seller and shall be equitably
adjusted pursuant to such calculations by the Purchaser and Seller to reflect
any divestiture or discontinuation of products by the Company following Closing
(which shall not include any accounts remandated Purchaser or its Affiliates
(other than the Company)).”
4. The
definition of Final Revenue Run Rate in Exhibit A to the Purchase Agreement is
hereby amended and restated in its entirety to read as follows:
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““Final Revenue Run
Rate” means the Post-Closing Revenue Run Rate (A) as shown in the
Purchaser’s calculation delivered pursuant to Section 2.7(a)(i) if
no notice of disagreement with respect thereto is duly delivered pursuant to
Section 2.7(a)(ii),
or (B) if such a notice of disagreement is delivered, (x) as agreed by the
Purchaser and the Members’ Representative pursuant to Section 2.7(a)(iii),
or (y) in the absence of such agreement, as shown in the Accounting Referee’s
calculation delivered pursuant to Section 2.7(a)(iii);
provided, however, that in no
event shall the Final Revenue Run Rate be more than the Members’
Representative’s calculation of the Post-Closing Revenue Run Rate delivered
pursuant to Section 2.7(a)(ii) or
less than the Purchaser’s calculation of the Post-Closing Revenue Run Rate
delivered pursuant to Section 2.7(a)(i).”
5.
Exhibit A of the Purchase Agreement is
hereby amended to include the following definition (in addition to all of the
other definitions contained in Exhibit A):
““Post-Closing
Revenue Run Rate Statement” shall have the meaning set forth in Section 2.7(a)(i)(3).”
6.
The definition of Purchaser Common Stock in Exhibit A to
the Purchase Agreement is hereby amended and restated in its entirety to read as
follows:
““Purchaser Common
Stock” shall have the meaning set forth in Section 2.2(e).”
7.
The Company and Members’ Representative (as the agent and
attorney in fact of the Seller Parties and the Preferred Members) each hereby
acknowledge and agree that neither the Purchaser nor any legal or financial
adviser to the Purchaser have made or hereby make any representation or warranty
regarding the tax consequences of this Amendment, including, without limitation,
the payment of the Deferred Payment and the Deferred Stock Grant, and the
Company and Members’ Representative (as the agent and attorney in fact of the
Seller Parties and the Preferred Members) have been advised and given the
opportunity to seek the advice of independent tax counsel.
8.
Notwithstanding anything to the
contrary in this Amendment or the Purchase Agreement, if any provision of this
Amendment contradicts or otherwise conflicts with any provision of the Purchase
Agreement, then the provisions of this Amendment shall
control. Except as otherwise expressly provided by this Amendment,
the Purchase Agreement shall remain in full force and effect in accordance with
its terms.
9.
Capitalized terms used but not defined herein shall have the
respective meanings assigned to such terms in the Purchase
Agreement.
10. This
Amendment supersedes all prior agreements, and constitutes a complete and
exclusive statement of the terms of the agreement, among the parties with
respect to its subject matter. There have been and are no agreements,
representations or warranties between the parties relating to the subject matter
of this Amendment other than those set forth or provided for in this
Amendment.
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IN WITNESS WHEREOF, the
parties have executed and delivered this Amendment No. 2 to Membership Interest
Purchase Agreement as of the day and year first written above.
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By:
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/s/ Xxxxxx
Xxxxxx
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Name: Xxxxxx
Xxxxxx
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Title: Chief
Executive Officer
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XXXX
XXXXXXXXX ASSET MANAGEMENT, LLC
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By:
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/s/ Xxxxx X. Xxxxx
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Name: Xxxxx
X. Xxxxx
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Title: Chief
Executive Officer
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/s/ Xxxxxxx X. Bee
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Xxxxxxx
X. Bee, acting as agent and attorney in fact of the Seller Parties and the
Preferred Members
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