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EXHIBIT 2.3
SUPPLY AND SUPPORT AGREEMENT, DATED MAY 1, 2000
THIS SUPPLY AND SUPPORT AGREEMENT (the "Agreement") is made and entered
into this 1st day of May, 2000, by and between: (I) EMERGE INTERACTIVE, INC., a
Delaware corporation, referred to herein as "eMerge;"(II) EASTERN LIVESTOCK CO.,
INC., a Kentucky corporation, referred to herein as "Eastern;" (III) XXXXXX X.
XXXXXX ("Xxxxxx"); (IV) XXXX X. XXXXXX ("Brother"), with Xxxxxx and Brother
referred to herein jointly as the "Gibsons." eMerge, Eastern, and the Gibsons,
or any combination thereof, as the context may require, are referred to
collectively herein as the "Parties."
BACKGROUND
A. Headquartered in Louisville, Kentucky, Eastern is engaged in
the business of buying cattle for immediate resale and in the business of buying
cattle to place on pasture or feed (hereinafter collectively referred to as the
"Cattle Business").
B. The Cattle Business has two separate but interrelated
components: the "Rollover Business" and the "Long-Term Business." The "Rollover
Business" includes the buying of cattle for immediate resale (and/or on a
short-term basis). The Rollover Business generates profits based on the
difference between the purchase price and the selling price of the cattle, and
generates profits by the buying or selling of cattle for others on a commission
or other basis. The Rollover Business includes, without limitation, the
activities known in the livestock industry as dealing, brokering and trading.
The "Long-Term Business" includes the purchasing of cattle to be owned on a long
term basis. The Long-Term Business generates profits based on the increase in
value of cattle because of weight gain during the time of ownership, in addition
to the difference between the purchase price and the selling price. The
Long-Term Business also generates profits as a result of the fees earned in
connection with certain profit sharing arrangements with third-party caretakers,
known as its Retained Ownership Program. Eastern's Financial Statements
segregate and compile the financial results of certain of its business
activities as being attributable to the Long-Term Business, and the definition
of the Rollover Business contained herein incorporates any and all such
activities not attributable to such.
C. Simultaneous with the execution of this Agreement, eMerge will
close a transaction with Eastern and the Gibsons whereby eMerge will acquire
certain assets used by Eastern in the Rollover Business (the "Business
Acquisition") pursuant to that certain Agreement for the Purchase and Sale of
Assets (the "Asset Purchase Agreement"), and the Gibsons will enter into
employment agreements with eMerge (the "Employment Agreements"), with their
duties thereunder to include assisting eMerge with conducting the Rollover
Business and eMerge's related Internet-based cattle auction and marketplace
(collectively, the "eMerge Cattle Business") following the Business Acquisition.
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D. Following the Business Acquisition, Eastern will continue to
conduct and operate the Long-Term Business, and each of the Gibsons will
continue to conduct various activities in the cattle industry relating to or
supporting the Long-Term Business, including without limitation, various
feedlots (e.g., Rocking E Feeders, LLC), sorting facilities (e.g., Providence),
and buying stations (e.g., Edmonton) (with any and all such activities, whether
being currently operated by any of Eastern or the Gibsons or whether to be
established, directly or indirectly, by any of such Parties in the future,
referred to herein as the "Xxxxxx Businesses").
E. Prior to the Business Acquisition, the Rollover Business was
supported by various activities conducted by the Xxxxxx Businesses.
F. Prior to the Business Acquisition, various independent
contractors, purchaser representatives, and buyers assisted Eastern in obtaining
supply sources for the Rollover Business' cattle inventory (with these
individuals or businesses, including, without limitation, those listed on
Exhibit A attached hereto, referred to as "Facilitators").
G. Prior to the Business Acquisition, various persons or
businesses sold or otherwise supplied cattle inventory to the Rollover Business
(with these individuals or businesses, including, without limitation, those
listed on Exhibit B attached hereto, referred to as "Suppliers").
H. Prior to the Business Acquisition, various persons or
businesses purchased cattle inventory from the Rollover Business (with these
individuals ad businesses, including, without limitation, those listed on
Exhibit C attached hereto, referred to as the "Customers").
H. Following the Business Acquisition, the parties desire that
the Xxxxxx Businesses continue to provide support to the eMerge Cattle Business,
at eMerge's request, in a manner comparable to the manner in which they provided
such support to Eastern's conduct of the Rollover Business.
I. Following the Business Acquisition, the parties desire that
eMerge continue the existing business relationships that Eastern has with the
Facilitators, Suppliers and Customers, at eMerge's request, in a manner at least
comparable to (in terms of the volume of purchases or sales, as appropriate) the
manner in which they were conducted prior to the Business Acquisition.
J. As a material inducement for eMerge to enter into the Asset
Purchase Agreement and to consummate the Business Acquisition, the Parties
desire to set forth in writing their agreements and understandings in this
regard and to be legally bound by the terms hereof.
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged and in consideration of the mutual
covenants, representations, warranties and agreements contained herein, the
Parties hereby agree as follows:
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AGREEMENT
1. Support by Xxxxxx Businesses. The parties acknowledge that the
eMerge Cattle Business may desire to use and/or have access to, or otherwise be
supported by, the Xxxxxx Businesses, including, without limitation, any of their
sorting facilities, buying stations, feedlots, pasture land, barns, and/or other
equipment or infrastructure, and further including, without limitation, their
personnel, administrative support and/or business relationships. In this regard,
Eastern and the Gibsons hereby covenant and agree that, during the term of this
Agreement, they shall cause the Xxxxxx Businesses to provide, on an arm's length
and fair value basis, any and all support to the eMerge Cattle Business that
eMerge may reasonably request. Eastern and the Gibsons further covenant and
agree to provide such requested support in a manner at least consistent with the
manner in which the Xxxxxx Businesses provided such support to Eastern's
Rollover Business in the past.
2. Continuing Relationships with Facilitators, Suppliers and
Customers. At the request of eMerge:
(i) Eastern and the Gibsons hereby covenant and agree
that, during the term of this Agreement, they will use their best efforts to
cause the Facilitators to assist eMerge in obtaining cattle inventory supply
sources for the eMerge Cattle Business in a manner comparable to the manner in
which such Facilitators provided such assistance to Eastern's Rollover Business
in the past.
(ii) Eastern and the Gibsons hereby covenant and agree
that, during the term of this Agreement, they will use their best efforts to
cause the Suppliers to sell or otherwise supply cattle inventory to the eMerge
Cattle Business in a manner comparable to the manner in which such Suppliers
supplied cattle to Eastern's Rollover Business in the past.
(iii) Eastern and the Gibsons hereby covenant and agree
that, during the term of this Agreement, they will use their best efforts to
cause the Customers to purchase cattle inventory from the eMerge Cattle Business
in a manner comparable to the manner in which such Customers purchased cattle
from Eastern's Rollover Business in the past.
(iv) In the event any Xxxxxx Business is also a
Facilitator, Supplier or Customer, Eastern and the Gibsons further covenant and
agree that, during the term of this Agreement, they shall cause such Xxxxxx
Business to conduct any and all activities and types of transactions with the
eMerge Cattle Business as such Xxxxxx Business had previously conducted with
Eastern's Rollover Business, including, without limitation, first offering for
sale to eMerge any and all cattle inventory that is available for sale by such
Xxxxxx Business, at current market rates.
(v) Eastern and the Gibsons hereby covenant and agree
that, during the term of this Agreement, they will use their best efforts to
obtain other facilitators, suppliers, and customers for the eMerge Cattle
Business (and to increase the volume of activity conducted by any current
Facilitator, Supplier and Customer).
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(vi) Eastern and the Gibsons hereby covenant and agree
that, during the term of this Agreement, they will assist eMerge in all
reasonable respects in establishing and maintaining business and strategic
relationships with the Facilitators, Suppliers and Customers, and to establish
and maintain similar relationships with other facilitators, suppliers and
customers.
3. Term of this Agreement. This Agreement shall have an initial
term of five (5) years, and shall continue and be extended thereafter for
additional one (1) year terms, unless and until one Party to this Agreement
shall give written notice to the others on or before sixty (60) days prior to
the conclusion of any such one (1) year extension.
4. Books and Records; Inspection; Reporting. Eastern and the
Gibsons shall cause the Xxxxxx Businesses to use their best efforts to keep and
maintain, or cause to be maintained, complete and accurate books, records and
accounts of their cattle inventory that is sold and/or disposed of (whether
through or to the eMerge Cattle Business or otherwise) during the term of this
Agreement. Such books, records and accounts shall be kept at all times at the
principal offices of Eastern or such other Xxxxxx Business, as appropriate.
eMerge and its duly authorized representatives shall have the right to examine
such books, records and accounts at any and all reasonable times and to make
copies or extracts therefrom, at eMerge's expense. Eastern and the Xxxxxx shall
cause the Xxxxxx Businesses to provide to eMerge monthly statements during the
term of this Agreement (with the statement for each month to be delivered not
later than the 20th day of the immediately following month) reflecting the
amount of the cattle inventory purchased and sold by each Xxxxxx Business.
5. Further Assurances. Each Party agrees to execute such other
documents, instruments and agreements as may be reasonably requested by any
other Party hereto in order to effect the transactions and establish the
relationships contemplated hereunder.
6. Remedies; Continuation of Obligations. The parties understand
and agree that, in the event damages are payable hereunder by any of Eastern or
the Gibsons, such payment may be partly or fully satisfied out of the "Security"
being held in escrow pursuant to that certain Registration Rights and Restricted
Stock Agreement, dated the date hereof and entered into between eMerge, Eastern
and Xxxxxx X. Xxxxxx (it being understood that such Security is not intended to
serve as any form of limitation or ceiling on the amount of any potential
damages, and no such limitation should be inferred or imposed). Notwithstanding
anything to the contrary contained herein, eMerge shall not be entitled to
assert a claim for damages under this Agreement against any party in the event
such damages originate substantially and primarily from the occurrence of the
death or disability of either Xxxxxx. With respect to each Xxxxxx, the
termination of either his or his brother's employment with the Company shall not
excuse him from his obligations hereunder, except solely in the event his
employment with the Company shall terminate because of: (i) his death, (ii) his
disability, or (iii) the material breach by the Company of his Employment
Agreement, which breach is not timely cured by the Company in accordance with
Section 11 thereof.
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7. No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any person or entity other than the Parties and
their respective successors and permitted assigns.
8. Entire Agreement. This Agreement (including the agreements
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they related in any way to
the subject matter hereof.
9. Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party; provided, however, that eMerge may, upon providing
written notice to Eastern and the Gibsons, assign any or all of its rights and
interests hereunder to one or more of its affiliates and/or to any
successor-in-interest to the eMerge Cattle Business.
10. Counterparts. This Agreement 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. All facsimile executions
shall be treated as originals for all purposes.
11. Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
12. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then three
(3) business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to Eastern: Eastern Livestock, Inc.
0000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxx, President
If to the Gibsons: Xxxxxx X. Xxxxxx
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
With a copy to: Xxxxx X. Xxxxxxxx
Middleton & Xxxxxxxxxx
2500 Xxxxx & Xxxxxxxxxx Tower
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
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If to eMerge: eMerge Interactive, Inc.
00000 000xx Xxxxxxx
Xxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxxx, President
Copy to: Gray, Harris & Xxxxxxxx, P.A.
000 X. Xxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the Commonwealth of Kentucky
without giving effect to any choice or conflict of law provision or rule that
would cause the application of the laws of any jurisdiction other than the
Commonwealth of Kentucky.
14. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Parties. No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
15. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
16. Expenses. Each of eMerge, Eastern and the Gibsons will bear
their own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
17. Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
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the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
18. Specific Performance. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
EASTERN LIVESTOCK CO., INC., A
KENTUCKY CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, President
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Individually
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx, Individually
EMERGE INTERACTIVE, INC., A
DELAWARE CORPORATION
By: /s/ T. Xxxxxxx Xxxxxx
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T. Xxxxxxx Xxxxxx, CFO
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