R&P Logistics Inc
1748 Columbia Dr
Avon, IN 48123
9351 Jackson Road
Sacramento, CA 95825
This Earn-Out Agreement (this “Agreement”) is entered into as of this ________ day of ________________________ 2021, by and between the Seller and the Purchaser. (Seller and Purchaser are herein referred to individually as a “Party” and collectively as the “Parties.”)
- Purchaser has agreed to purchase from Seller, and Seller has agreed to sell to Purchaser, (i) all of the Transferred Shares, and (ii) all of the Purchased Assets (listed under Schedule B) (the “Sale”) for the agreed Purchase Price of $3,200,000;
- In addition to the consideration set forth, the Parties have agreed that the purchase price for the Sale is to be calculated and paid as an earn-out based upon achievement of certain targets during the Calculation Periods (the “Earn-Out”); and
- Seller and Purchaser have agreed that determination and payment of the Earn-Out is to be in accordance with the terms of this Agreement.
Now, Therefore, in consideration of the premises and mutual covenants contained herein and in the SAPA, the Parties agree as follows:
- EARN-OUT PAYMENTS
- Earn-Out Payments
Subject to the Closing having occurred, as additional consideration for the Transferred Shares and Purchased Assets, Purchaser shall pay to Seller Earn-Out Payments pursuant to the provisions of Schedule A annexed to this Agreement and executed by the Parties.
- Earn-Out Payments shall be:
- derived from the applicable Consolidated Financial Statements for the relevant Calculation Period;
- prepared in good faith in accordance with the requirements of all applicable Laws and the accounting policies, bases, methods, practices and procedures adopted in the preparation of the Reference Financial Statements, applied on a consistent basis;
- to the extent not inconsistent with the provisions of Schedule A;
- no deduction shall be made for any management or oversight fees or general overhead expenses, charged by Purchaser or its Affiliates to the Business; and
- the purchase and sales prices of products, goods and services sold by the Business to Purchaser or its Affiliates or purchased by the Business from Purchaser or its Affiliates shall be adjusted to reflect the amounts that the Business would have realized or paid in the applicable jurisdiction for the applicable period, in each case, between an independent party in an arm’s-length commercial transaction.
- Earn-Out Payments shall be distributed over a five (5) year period, when payment of the Purchase Price shall have been paid in full by the Purchaser to the Buyer.
- NOTICE; PAYMENT
- Purchaser shall provide written notice (each, an “Earn-Out Notice”) to Seller setting forth its good faith calculation (including reasonable supporting detail with respect to such calculation) of the amounts due.
- Unless Purchaser’s Earn-Out Notice provides for the maximum potential Earn-Out Payment with respect to the applicable Calculation Period, upon receipt from Purchaser of each Earn-Out Notice, Seller shall have thirty (30) calendar days to review the Earn-Out Notice. Seller and its accountants and financial and other advisors may make reasonable inquiries of Purchaser and/or Purchaser’s Representatives regarding questions concerning or disagreements with the applicable Earn-Out Notice arising in the course of Seller’s review. If Purchaser’s Earn-Out Notice provides for the maximum potential Earn-Out Payment with respect to the applicable Calculation Period, then no such thirty (30) day period shall be necessary and Purchaser shall pay such maximum potential Earn-Out Payment with respect to such Calculation Period within ten (10) Business Days of delivery of such Earn-Out Notice provided in Section 3.1.3. During such review period, Purchaser shall provide Seller and its Representatives reasonable access during normal business hours, upon reasonable advance notice, to the premises, books and records and Representatives of the Business and Purchaser to the extent such materials relate to the calculation of the applicable Earn-Out Notice for the purpose of completing Seller’s review of such Earn-Out Notice. Purchaser shall cooperate in good faith and promptly respond to reasonable requests in accordance with this Section 3.1.2. Promptly following completion of its review (but in no event later than the conclusion of the thirty (30) day period), Seller may submit to Purchaser a letter regarding its concurrence or disagreement with the accuracy of the applicable Earn-Out Notice; provided, however, that any such letter must specify: (i) the items of such Earn-Out Notice with which Seller disagrees; (ii) the adjustments that Seller proposes to be made such Earn-Out Notice (a “Disputed Earn-Out Item”); and (iii) the specific amount of such disagreement and reasonable supporting documentation and calculations thereof, in each case, to the extent known. If Seller does not deliver a letter disagreeing with the accuracy of an Earn-Out Notice before the conclusion of the applicable thirty (30) day period, such Earn-Out Notice shall be final, binding and conclusive upon the Parties, and Seller shall be deemed to have agreed with all items and amounts contained in such Earn-Out Notice. If Seller does deliver such a letter, following such delivery, Seller and Purchaser shall attempt in good faith to resolve promptly any disagreement as to the computation of any item in the applicable Earn-Out Notice. Any items as to which there is no disagreement shall be deemed agreed. If a resolution of such disagreement has not been effected within fifteen (15) days (or longer, as mutually agreed by the Parties) after delivery of such letter, then Seller and Purchaser shall submit any such remaining Disputed Earn-Out Item to the Independent Accountant for determination. The determination of the Independent Accountant, acting as an expert and not an arbitrator, with respect to any Disputed Earn-Out Item shall be completed within thirty (30) days of submission of such Disputed Earn-Out Item to the Independent Accountant (or longer, as mutually agreed by the Parties), shall be determined in accordance with this Agreement and shall be final, binding and conclusive upon Seller and Purchaser absent manifest error. The Independent Accountant shall adopt a position within the range of positions submitted by Seller and Purchaser with respect to any Disputed Earn-Out Item. The Independent Accountant shall not review any line items or make any determination with respect to any matter other than with respect to the remaining Disputed Earn-Out Items. Any fees and expenses relating to the engagement of the Independent Accountant shall be borne pro rata by Purchaser, on the one hand, and Seller, on the other hand, in proportion to the difference between the EBITDA and the EBITDA that would have resulted from the use of the proposed calculations of one of the Parties. The final determination of EBITDA in accordance with this Section 3.1.2 and as adjusted pursuant to this Agreement is each referred to as the “Final EBITDA”.
- Within ten (10) Business Days after the determination of the Final EBITDA for a Calculation Period (or simultaneously with the delivery of Purchaser’s Earn-Out Notice if such Earn-Out Notice provides for the maximum potential Earn-Out Payment with respect to the applicable Calculation Period), if Purchaser is required to pay any amounts pursuant to Section 2.1 (each an “Earn-Out Payment”), then Purchaser shall pay to Seller such Earn-Out Payment in cash by wire transfer of immediately available funds to the bank account of Seller set forth on Schedule 1 or such other bank account specified by Seller.
- ORDINARY COURSE OPERATIONS
Prior to Closing, Seller shall not, directly or indirectly, take any actions with the purpose of making more likely any Earn-Out Payment to be required to be paid hereunder where such Earn-Out Payment would not otherwise be required to be paid in the ordinary course of business. Following Closing, Purchaser shall not, directly or indirectly, take any actions with the purpose of making less likely any Earn-Out Payment to be required to be paid hereunder where such Earn-Out Payment would otherwise be required to be paid in the ordinary course of business. Subject to the terms of this Agreement (including the preceding sentence) and the other Transaction Documents, following the Closing, Purchaser shall have sole discretion with regard to all matters relating to the operation of the Business and has no obligation to operate the Business in order to achieve any Earn-Out Payment.
- Either Party shall be entitled to terminate this Agreement immediately upon occurrence of illegal activity by the other Party, including but not limited to preparation of, supply of or reliance on, falsified financial statements .
- Either Party may Terminate this agreement upon giving the other party no less than 30 days’ notice in writing.
- LIMITATION OF LIABILITY
Each party shall be responsible for their own tax obligations with regard to this Agreement. The Purchase shall not be liable for any tax obligations of the Seller accrued or deemed to have accrued prior to the execution of this Agreement.
- GENERAL PROVISIONS
- Right of Set-off
Purchaser shall have the right, upon prior notice to Seller, to set off any unpaid obligation of Seller due and owing to Purchaser or any Affiliate of Purchaser against any obligations of Purchaser or any Affiliate of Purchaser owing to Seller hereunder in each case, to the extent (a) such obligation of Seller has been agreed in writing by Seller or (b) such obligation of Seller has been finally determined by a court of competent jurisdiction to be owed by Seller; provided, however, that in such event the obligation shall be set off against any amounts owing. The provisions of this Section 5.1 are not exclusive and shall be in addition to and shall not limit in any way the rights of setoff Purchaser may have as a matter of law or otherwise.
- No Security
The Parties understand and agree that (a) the contingent rights to receive any Earn-Out Payment shall not be represented by any form of certificate or other instrument, are not transferable, except by operation of Laws, pursuant to financing agreement collateral requirements, or in connection with a sale or transfer of all or substantially all of Seller’s assets, and do not constitute an equity or ownership interest in Purchaser or the Business, (b) Seller shall not have any rights as a securityholder of Purchaser or the Business as a result of Seller’s contingent right to receive any Earn-Out Payment hereunder, and (c) no interest is payable with respect to any Earn-Out Payment.
- Successors of Purchaser
In the event of any (i) consolidation or merger of the Business with or into any other Person, sale of substantially all of the assets of the Business to any other Person or (iii) other similar transaction, the provisions of this Agreement shall similarly apply to such successor Persons consolidating, merging, acquiring or otherwise entering into a similar transaction with the Business. Purchaser shall not effect any such consolidation, merger, sale or similar transaction unless, prior to the consummation thereof, such successor Person (if other than the Purchaser) resulting from such consolidation, merger, sale or similar transaction, shall assume, by operation of Law or written instrument substantially similar in form and substance to this Agreement and satisfactory to Seller, the obligation to deliver to Seller the Earn-Out Payments, which, in accordance with this Agreement, Seller shall continue to be entitled to receive.
- Dispute Resolution
The Parties agree to attempt initially to solve all claims, disputes or controversies arising under, out of or in connection with this Agreement by conducting good faith negotiations. If the Parties are unable to settle the matter between themselves, the matter shall thereafter be resolved by a final and binding arbitration. Whenever a Party shall decide to institute arbitration proceedings, it shall give written notice to that effect to the other Party. The Party giving such notice shall refrain from instituting the arbitration proceedings for a period of sixty (60) days following such notice. During such period, the Parties shall make good faith efforts to amicably resolve the dispute without arbitration. Any arbitration hereunder shall be conducted under the rules of the American Arbitration Association. Each such arbitration shall be conducted by an arbitrator agreed upon by the Parties. Any such arbitration shall be held in Florida. The arbitrators shall have the authority to grant specific performance. Judgment upon the award so rendered may be entered in any court having jurisdiction or application may be made to such court for judicial acceptance of any award and an order of enforcement, as the case may be. In no event shall a demand for arbitration be made after the date when institution of a legal or equitable proceeding based on such claim, dispute or other matter in question would be barred under this Agreement or by the applicable statute of limitation. The prevailing Party in any such arbitration shall be entitled to recover from the other Party, in addition to any other remedies, all reasonable costs, attorneys’ fees and other expenses incurred by such prevailing Party.
Either party may request variations to the Agreement. The Parties shall enter into discussions to agree on any required changes, revised pricing and time for performance. Such variations will only be effective if agreed in writing by the Parties and recorded.
- FORCE MAJEURE
For the purposes of this Agreement, “Force Majeure” means an event which could not reasonably have been avoided by a diligent party in the circumstances, which is beyond the reasonable control of a party and which makes a party’s performance of its responsibilities hereunder impossible or so impractical as reasonably to be considered impossible in the circumstances and includes, but is not limited to, war, riots, civil disorder, earthquake, storm, flood or adverse weather conditions, strikes, lockouts or other industrial action, terrorist acts, confiscation or any other action by government agencies.
- Force Majeure shall not include any event which is caused by the negligence or intentional action of a Party or such Party’s subcontractors or agents or employees, or by a failure to observe good professional practice.
- Force Majeure shall not include insufficiency of funds or failure to make any payment required hereunder.
- The failure of a Party to fulfil any of its obligations hereunder shall not be considered to be a breach of, or default under, this Agreement insofar as such inability arises from an event of Force Majeure, provided that the Party affected by such an event has taken all reasonable precautions, due care and reasonable alternative measures, all with the objective of carrying out the terms of this Agreement.
- A Party affected by an event of Force Majeure shall take all reasonable measures to remove such Party’s inability to fulfil its obligations hereunder with a minimum of delay. The Parties shall take all reasonable measures to minimize the consequence of any event of Force Majeure.
- A Party affected by an event of Force Majeure shall notify in writing the other Party of such event as soon as possible, and in any event not later than five (5) days following the occurrence of such event, providing evidence of the nature and cause of such event, and shall similarly give notice of the restoration of normal conditions as soon as possible.
- Not later than fourteen (14) days after the Contractor, as a result of an event of Force Majeure, has become unable to discharge a material portion of its obligations, the Parties shall consult with each other with a view to agreeing on appropriate measures to be taken in the circumstances.
Parties shall not at any time disclose, directly or indirectly to any other person whatsoever (including to the public or any section of the public) any information concerning this Agreement or any other information of any nature whatsoever concerning the other Party, whether such information or matter is stated to be confidential or not, without the express written permission of the Company. This covenant is given by the Contractor on its own behalf.
- NO WAIVER
Except where this Agreement provides otherwise, the rights and remedies contained in it are cumulative and not exclusive to rights or remedies provided by law. The failure by either Party to enforce at any time or for any period any one or more of the terms or conditions of this Agreement shall not be a waiver of them or of the right at any time subsequently to enforce all terms and conditions of this Agreement.
If any provision of this Agreement is declared by any judicial or other competent to be void, voidable, illegal or otherwise unenforceable, the Parties shall amend that provision in such reasonable manner as achieves the intention of the Parties without illegality or at the discretion of the Contractor, it may be severed from this Agreement and the remaining provisions of this Agreement shall remain in full force and effect.
Save for the provisions of section 3, the Parties select as their respective addresses, the addresses (including email) set out below for all purposes arising out of or in connection with this Agreement at which addresses only all processes and notices arising out of or in connection with this Agreement may validly be served upon or delivered by the Parties.
THE COMPANY: ___________________________________________
THE CONTRACTOR: ___________________________________________
- CHANGE OF ADDRESS
Either Party may provide changes in the above addressees by notice in writing given to the other Party as aforesaid.
Each party shall bear its own costs incurred in the negotiation, preparation and execution of this Agreement.
- GOVERNING LAW
The construction, validity and performance of this Agreement shall be governed in all respects by the Laws of the state of Singapore.
IN WITNESS WHEREOF, each of the Parties has executed this Consulting Agreement, both Parties by its duly authorized officer, as of the day and year set forth below.
Earn-Out Payment Plan
- Parties agree on the Earn-Out value of US $3,200,000
- The Earn-Out shall be payable over a period of five years commencing the year 2022.
- The Purchaser shall not be liable for any tax obligations on the part of the Seller with regard to Earn-Out payments.
Assets forming part of the purchase
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