PRICE ADJUSTMENT AGREEMENT
This is a Price Adjustment Agreement dated as of February 2, 2000,
between Xxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxxx, Xxxxxxx X. X'Xxxxxx, Xxxxxxx
X. X'Xxxxxx (the "Sellers") and U.S. Trucking, Inc. ("Buyer").
Recitals
The Buyer has agreed to combine Checkmate Brokerage Services, Inc. and
Maverick Brokerage Services, Inc. with Buyer's wholly-owned subsidiary,
Checkmate Acquisition Corp. ("Sub"), pursuant to the Merger Agreement and
Plan of Reorganization for each merged entity dated February 2, 2000
(collectively, the "Merger Agreement"). Buyer has agreed to pay an aggregate
of $1.0 million (the "Total Cash Consideration") and 385,000 shares of Buyer
common stock (the "Total Stock Consideration") in exchange for the outstanding
shares of Maverick and Checkmate in the mergers. The parties have agreed that
an aggregate of $500,000 cash consideration for the mergers shall be paid on a
deferred basis subject to reduction relating to certain conditions and that
the Stock Consideration shall be subject to reduction and partial forfeiture
under certain conditions. Any terms not defined herein shall have the same
definitions as in the Merger Agreement.
1. Cash Consideration Adjustment. The Total Cash Consideration shall
be reduced $1.00 for each $1.00 that Buyer's post-closing audit of Sub (to be
completed by Buyer's independent certified public accountant not later than 90
days after the Effective Time) determines that Sub's net worth (determined in
accordance with generally accepted accounting principles on an accrual basis
and taking into consideration solely the assets and liabilities of Checkmate
and Maverick) is less than a negative $345,000 at the Effective Time. No
reduction shall take place with respect to taxes which may become due upon the
acceleration of income and expenses of the merged entities into the Sub's
income and expenses due to the conversion to the accrual basis of accounting.
Not later than ten days after receipt of the auditors' report Buyer shall pay
to Sellers the balance of the Total Cash Consideration. If due to the
foregoing the Total Cash Consideration is reduced by more than $500,000, any
amount in excess of $500,000 shall be deducted from the Total Stock
Consideration, as provided below.
The reductions (if applicable) in the respective purchase prices for the
Maverick and Checkmate mergers resulting from the foregoing shall be allocated
according to the change in net worth of Checkmate from negative $231,000 and
Maverick from negative $114,000, and to each Seller pro rata in accordance
with their share ownership in each of Checkmate and Maverick.
In the event the Cash Consideration is reduced because Buyer's accountant
determines in the audit that accounts receivable are uncollectible or should
be subject to a reserve, then
(A) to the extent accounts receivable reflected on the combined
Checkmate and Maverick balance sheets at the Effective Time (excluding any
accounts assigned under subsection B below) are collected during calendar year
2000 and the amount collected is in excess of that determined in the audit
(i.e., accounts receivable are written off or reserved in audit are in fact
collected in year 2000), the Cash Consideration shall be readjusted upward to
reflect such excess and Sellers shall have the option of receiving their pro
rata portion of such additional Cash Consideration in cash or Buyer common
stock (valued in accordance with paragraph 2), and
(B) at any time, Sellers shall have the right (to be exercised by
Xxxxx Xxxxxxxx in consultation with the other Sellers) to receive an
assignment of any accounts receivable written off and deemed uncollectible by
Buyer's accountant in the audit which are still uncollected.
2. Stock Consideration Adjustment. There shall be deducted from the
Total Stock Consideration one dollar in value for each dollar by which the
gross margin of Sub (determined in accordance with generally accepted
accounting principles) is less than $2,760,000 for fiscal 2000, as determined
by Buyer's auditors in connection with their audit of Buyer for fiscal 2000.
For purposes hereof, gross margin shall equal gross revenues, minus cost of
sales (including carrier expenses, refunds, sales rebates and claims). Such
reduction shall be effected by Sellers forfeiting Buyer shares included in the
Total Stock Consideration, and for purposes hereof valuing the shares at the
average closing sale price (if available) or average closing bid price (if no
closing sale prices are available)of the Buyer shares on the principal market
in which such shares are traded for the fifteen trading days immediately
preceding the date the Buyer's auditors deliver their audit report to Buyer in
connection with the 2000 fiscal year (which date shall be not later than March
20, 2001), provided that the value per share for return shall be not less than
$1.50 per share (subject to appropriate adjustments in the event of any stock
split, reverse stock split, reclassification, merger, stock dividend, or other
similar event affecting Buyer's common stock). Notwithstanding the foregoing,
Sellers shall have the option (to be made jointly by each Seller in writing)
of paying cash to Buyer in lieu of Buyers Shares to effect the foregoing
reduction. The reduction of the Total Stock Consideration payable under this
paragraph shall not exceed $750,000 in value, subject to further reduction in
accordance with the immediately preceding paragraph providing for reductions
in the event the Total Cash Consideration is less than $500,000.
The reductions (if applicable) in the respective purchase prices for the
Maverick and Checkmate mergers resulting from the foregoing shall be allocated
two-thirds to the Maverick merger and one-third to the Checkmate merger, and
to each Seller pro rata in accordance with their share ownership in each of
Checkmate and Maverick.
Sellers agree that they will not transfer or pledge any Stock
Consideration until it becomes reasonably certain that the shares proposed to
be transferred will not be subject to forfeiture hereunder.
3. Continuing Operations. Buyer shall keep Sub (with the former
Checkmate and Maverick operations intact) as a separate financial reporting
division or subsidiary until January 1, 2001. If any Seller disputes the
results of the audit, he shall give prompt notice thereof to Buyer and the
matter shall be arbitrated in accordance with Section 5.1 of the Merger
Agreement. Notwithstanding the foregoing, any amounts not in dispute
hereunder shall be paid or forfeited, as the case may be, as required above.
4. Miscellaneous. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of Florida, without regard to conflicts of laws principles. This
Agreement constitutes the entire agreement among the parties pertaining to the
subject matter contained in it and supersedes all prior and contemporaneous
agreements, representations, and understandings of the parties.
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2
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Price Adjustment Agreement as of the date first above written.
U.S. TRUCKING, INC.
BY:/s/ Xxxxxxx Xxxx
TITLE: Chairman
/s/ Xxxxx Xxxxxxxx /s/ Xxxxxxx X'Xxxxxx
Xxxxx Xxxxxxxx Xxxxxxx X'Xxxxxx
/s/ Xxxxxxx Xxxxxxxx /s/ Xxxxxxx X'Xxxxxx
Xxxxxxx Xxxxxxxx Xxxxxxx X'Xxxxxx
