EXHIBIT 10.4
LEASE AND OPERATING AGREEMENT
This Lease and Operating Agreement ("Agreement") is made and entered
into as of October 16, 2001, and effective as of October 1, 2001, by and between
Eastern Livestock Co., LLC, a Kentucky limited liability company, ("Operator"),
and eMerge Interactive, Inc., a Delaware corporation ("Owner").
RECITALS
A. Owner and Operator desire to enter into an arrangement whereby
Operator will plan, manage and operate certain functions relating to the buying
of cattle for immediate resale (and/or on a short-term basis) and related
activities, including those known in the livestock industry as dealing,
brokering and trading (the "Rollover Business"), and including Owner's current
branches 01, 02, 03, 04, 06, 07, 13, 17, 18, 19, 22, 23, 27, 30 and all other
branches relating to Operator's Rollover Business, but excluding other branches
that are solely engaged in preconditioning and excluding branch 20 relating to
Operator's long-term business and excluding branch 24 (relating to the
operations of Xxxxx Xx Xxxxx XX) (collectively, the "Business").
B. In connection with this arrangement, Owner and Operator desire
to enter into a lease of certain of Owner's equipment related to the Business.
C. Operator has the personnel necessary to provide for the
operation and efficient administration of Owner's business and Operator has the
ability to provide all of the services necessary, incidental and appropriate to
conduct the "back office" business functions and operations for Owner as
described in more fully in this Agreement.
D. Owner and Operator acknowledge and stipulate that all of the
cattle subject to this Agreement and the conduct of the Business by Operator
will be solely owned by Operator and subject to the prior perfected security
interest of Operator's lender, National City Bank, Louisville, Kentucky.
E. Notwithstanding the transactions contemplated in this
Agreement, Xxxxxx X. Xxxxxx will remain an employee of Owner and will continue
his duties under his employment agreement (with the modification to his
noncompetition restrictions as set forth in the Second Amendment to Employment
Agreement dated as of the date of this Agreement).
NOW, THEREFORE, for and in consideration of the mutual premises, terms,
covenants and conditions contained herein and for other good and valuable
consideration, Owner and Operator agree as follows:
AGREEMENT
1. Term. The initial term of this Agreement will begin on October
1, 2001 (the "Commencement Date") and will end on September 30, 2002, unless
earlier terminated in accordance with this Agreement. Unless this Agreement is
earlier terminated in accordance with
this Agreement, or unless either party provides the other with a written notice
of non-renewal at least 90 days prior to September 30, 2002, the term will
automatically be extended for successive one year periods until this Agreement
is terminated as provided herein or unless either party provides a written
non-renewal notice to the other party at least 90 days prior to the end of any
renewal term. The expiration date of this Agreement (either at end of initial
term, a renewal term or the effective date of termination as provided in this
Agreement) is referred to as the "Termination Date."
2. Operator Contributions and Compensation.
(a) Contributions. On or before the Commencement Date,
Operator will complete the transition to become the operator of the Business. In
this regard, Operator will take the following steps:
(i) Operations of Owner relating to any branches
not covered by this Agreement will be clearly segregated from Operator's books
and records pertaining to the Business.
(ii) Operator will use good faith efforts to
maintain the relationships with Xxxxx Beef that are currently maintained by
Owner in connection with the Business, and Operator represents that any
transactions it may conduct with Xxxxx Beef following the Commencement Date will
be conducted through the Business.
(iii) Operator will use all commercially
reasonable efforts to collect all accounts receivable of the Business, including
those of Owner outstanding as of the Commencement Date.
(iv) Operator will purchase from Owner all
inventory (including feed and medicine) relating to the Business as of the
Commencement Date for a price equal to that paid by Owner for the inventory.
(v) Operator will assume and perform all cattle
purchase contract commitments entered into by Owner as of the Commencement Date.
As the cattle subject to these contracts are delivered and the balance of the
purchase price is paid by Operator, Operator will reimburse Owner for any
payments Owner has made with regard to these contracts. The profit or loss from
Operator's performance of these contracts will be segregated from the books and
records of the Business and Owner will be solely responsible for those profits
and losses.
(vi) Operator will assume and perform all cattle
sales contract commitments entered into by Owner as of the Commencement Date. As
the cattle subject to these contracts are delivered and the balance of the
purchase price is received by Operator, Operator will reimburse Owner for any
payments Owner has made with regard to these contracts. The profit or loss from
Operator's performance of these contracts will be segregated from the books and
records of the Business and Owner will be solely responsible for those profits
and losses.
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(vii) On and after the Commencement Date, Operator
will conduct all futures contract and hedging activities in relation to the
Business solely through an Owner approved firm. Operator will provide Owner will
documentation of all futures contracts and xxxxxx conducted in accordance with
the Business.
(viii) On or before October 31, 2001, Owner will
advance to Operator the sum of $3,200,000 to be used by Operator solely in the
conduct of the Business. The advance will be evidenced by a Note, dated as of
the date of this Agreement, made by Eastern Livestock Co., LLC and guaranteed by
Xxxxxx X. Xxxxxx, in favor of Owner, copies of which are attached as Exhibit A.
Of this amount $700,000 will be allocated to activities relating to Owner's
"XxXxxxxx" operations. In the event that following the Commencement Date
Operator or the XxXxxxxx operations obtain financing with respect to the
XxXxxxxx operations, the $700,000 will become due and payable.
(ix) Notwithstanding the operation of the
Business by Operator following the Commencement Date, the parties will make
appropriate reimbursement to one another for any transactions occurring in
connection with the Business prior to the Commencement Date.
(x) Operator will be entitled to record as an
expense on its "net profits" calculation the actual out of pocket bond
maintenance expenses it incurs in connection with increasing its bonding
requirement from $115,000 to the level required to operate the Business.
Operator and Owner will agree upon the nature and scope of the bonding
requirement increase prior to Operator recording the expense.
(b) Compensation. As compensation for its operation and
management services under this Agreement, Operator will retain 30% of Owner's
quarterly "net profits" or "net losses" derived from the Business. The
calculation of quarterly net profits will be determined based on the financial
statements prepared in connection with the Business and applying the calculation
criteria set forth on Exhibit B, provided that in all cases each payment will be
subject to later adjustment based on the results of any audit conducted for the
period subject to that payment. Exhibit B will set forth the items that may be
recorded as expenses for purposes of the net profits calculation, including
insurance, salaries, costs of goods, leases and the other customary items.
Operator will make payment of 70% of the quarterly net profits calculation to
Owner, and in the event of a net loss Owner will make payment of 70% of the net
loss to Operator. Payment of each quarterly payment will be made by Operator to
Owner or Owner to Operator, as the case may be, in cash no later than the 10th
business day of the month following the end of quarterly calculation period, and
any adjustment payments based on audits will be made in cash no later than the
third business day following completion of the audit. The first quarterly period
will begin on the Commencement Date and will end on December 31, 2001, and
subsequent periods will be each calendar quarter thereafter.
3. Responsibilities.
(a) Appointment and Acceptance. Owner appoints Operator,
and Operator agrees, to supervise, manage and operate the Business substantially
in the form as it exists as of
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the Commencement Date. The operation of the Business will be limited to
conducting the Rollover Business and related activities such as obtaining the
necessary financing, staffing, sales support, payroll, benefits, marketing,
accounting, administrative and "back office" support services necessary for the
successful operation of the Business.
(b) Operation. Operator is responsible for the management
and day to day operations of the Business. Operator will conduct the Business at
all times in a prudent and businesslike manner and that is generally consistent
with the manner in which the Rollover Business has been historically conducted
(either by Owner or Operator). Operator agrees that the conduct of the Business
will be separate from that of any other entity or individual and will be clearly
segregated from any other operations of Operator, including without limitation
any long-term cattle operations, preconditioning, backgrounding, farming and
other activities. Operator will consult with Owner with respect to strategic
planning and material changes to the Business.
(c) Accounting; Reporting. Operator, either directly or
through its designee, will maintain accounting records, prepare and pay
payrolls, maintain and discharge working capital lines of credit and perform
required administrative duties related to the Business. Operator will keep Owner
fully informed of the status of the Business and its financial condition.
Operator will maintain the books of account, ledgers and records relating to the
Business, including paying and receiving monies, billing, tax return preparation
and contract coordination. Operator will prepare accounting reports and
financial statements (including balance sheets, income statements and statements
of cash flows) on no less often than a monthly basis, and will provide those
reports and statements to Owner on or before the 10th day of the subsequent
month. All accounting records will be maintained on a GAAP basis, consistently
applied. Operator also will provide Owner with weekly "flash reports" in the
form as currently prepared in connection with the Business, a form of which is
attached as Exhibit C. Operator will maintain separate, complete and accurate
books of account relating to the Business with entries for all receipts and
expenditures made by or on behalf of the Business. The books of account will
open to inspection by any officer, director or designee of Owner at any time
during normal business hours. Operator also will prepare and submit from time to
time to Owner or its designee, such other reports, returns, notices or other
filings as may be appropriate in the conduct of the Business.
(d) Audits. The books of records of Operator will be
subject to periodic financial reviews and audits by Owner, including quarterly
reviews and annual audits as conducted by Owner or its designee (currently
anticipated to be KPMG). The cost of conducting regular quarterly reviews (the
expense for which will not exceed $5,500 per quarter), the annual audit and
opinion (the expense for which will not exceed $25,000 per year) and the audits
required by Operator's lender in connection with the lines of credit will be
paid by Operator and included as an expense in the net profits calculation. The
cost of any additional audits required by Owner will be paid solely by Owner and
will not be included as part of the net profits calculation.
(e) Accounts; Funds Received. Operator will maintain an
operating account and lines of credit at banking institutions in relation to the
Business. These accounts and lines of
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credit will relate solely to the operation of the Business and the clearing
arrangement between Operator and Xxxxx Xx Xxxxx XX and these accounts will have
separate account numbers from accounts relating to any other activities,
provided that Operator may also maintain accounts and lines of credit relating
to other aspects of its operations. Material increases in the costs and
conditions relating to the lines of credit pertaining to the Business will be
subject to the reasonable approval of Owner. Operator will receive and hold on
behalf of Owner all monies and income received from or in connection with the
Business, and will deposit these monies and income into (and maintain them in)
the operating account or as required in connection with the lines of credit. The
payment of all expenses and disbursements relating to the Business will likewise
be made solely from either the operating account or lines of credit maintained
in relation to the Business.
(f) Personnel. Operator will hire, promote, discharge and
supervise the work of all personnel employed in the Business, all of whom will
be employees of Operator and not of Owner; provided, however, that Xxxxxx X.
Xxxxxx will remain an employee of Owner in addition to conducting his activities
under this Agreement. Operator will be responsible for paying salaries,
providing benefits and maintaining compliance with applicable employment laws in
connection with its employees.
(g) Insurance. Operator will secure and maintain at all
times all insurance customarily maintained in connection with the conduct of the
Business, including workers compensation insurance, employee medical insurance
and comprehensive and general liability insurance. Operator will supply Owner
with evidence of its insurance upon request. Operator may include insurance
costs as part of the net profits calculation.
(h) Compliance. Operator will timely prepare and file all
reports, forms, documents, certificates and other instruments required by
federal, state and local tax and regulatory authorities in order to conduct
lawfully the Business. Operator will obtain and maintain at all times all bonds,
licenses and permits appropriate for the operation of Business. Operator will
comply with the Packers and Stockyards Act, the Food Security Act and all
applicable federal, state and local laws relating to the activity of the
Business (including as a "livestock dealer").
(i) Management of Receivables / Inventory. Operator's
management of receivables / inventory with regard to the purchases of cattle
will be as is consistent with past practices of the Business. Operator will use
all commercially reasonable efforts to collect accounts receivable of the
Business, as well as those outstanding with respect to the Business as of the
Commencement Date. To the extent Operator engages in any transaction where any
portion of the accounts receivable is not received by Operator within seven days
of the sale, Operator will charge that party interest commencing on the seventh
day following the related sale for which the account receivable has been
created, at the rate of the prime rate (as set forth in The Wall Street Journal
on the first business day of each month) plus 1.5%, provided that Operator in
its reasonable discretion may waive interest charges that are not material and
do not amount to more than $5,000 per quarter in the aggregate.
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(j) Capital Expenditures. The parties will agree upon any
capital expenditures made by Operator relating to the Business that are in
excess of $5,000 per quarter. To the extent the parties agree upon an
expenditure that is made by Operator, the parties will agree upon the ownership
or disposition of that item following the Termination Date and Operator may
include as an expense the depreciation for the item purchased in the applicable
depreciation period.
(k) Facilities. Subject to the reasonable review of
Owner, Operator will be responsible for securing and maintaining the physical
facilities on which the Business is conducted, including the payment of rent,
property taxes, governmental fees and charges, utilities, insurance premiums,
repairs, improvements, signage and any other fees and expenses related to the
facilities. The amounts paid for the payment of rent is limited as to the use as
part of the "net profits" calculation, as set forth in Exhibit B. In addition,
any transactions or expenditures made by Operator in connection with the
Business to parties that are related to or affiliated with Operator or Xxxxxx X.
Xxxxxx will be identified to Owner in advance and will be subject to reasonable
review by Owner.
4. Lease of Equipment. As part of the consideration for this
Agreement, Owner agrees to lease to Operator and Operator agrees to lease from
Owner, for the term of this Agreement, the equipment related to the Business as
set forth on Exhibit D. Operator will be responsible for all insurance, taxes,
maintenance and repair (including any appropriate replacements) of the
equipment. Operator will maintain in good condition and repair (including
replacement as appropriate) the equipment, reasonable wear and tear excepted. At
the termination of this Agreement, Operator will deliver the equipment to Owner
in reasonably good repair and condition, ordinary wear and tear excepted. Owner
will have the right to enter upon the facilities at any reasonable time upon at
least 24 hours advance notice to Tenant for the purpose of inspecting the
equipment and operations of the Business. Costs and expenses of Operator in
maintaining or replacing the equipment related to the Business may be used by
Operator as part of its net profits calculation.
5. Confidential Information. From the Commencement Date until the
date that is one year after the termination of this Agreement, each party will
keep the nature and terms of this Agreement and all confidential information
each party may obtain concerning the other parties and its respective business
(together, the "Confidential Information"), strictly confidential, using the
information solely for the purposes contemplated by this Agreement and
disclosing such information only to those persons or agents with a need to know
(and then, solely for the purposes of assisting in such purposes and subject to
such persons or agents being bound by this section). This section will not apply
to extent the disclosing party can demonstrate the information (i) is generally
available to or known by the public other than as a result of improper
disclosure by a the disclosing party, (ii) is obtained by the disclosing party
from a source other than the other party, provided that such source was not
bound by a duty of confidentiality with respect to such information, (iii) is
independently developed by the disclosing party without the use of the
information learned from the other party, or (iv) is required to be disclosed
under applicable law, or (v) is required to be disclosed by contract between
Operator and Operator's lender. Owner will be permitted to file this Agreement
and to describe the transactions contemplated hereby in filings under the
Securities Exchange Act of 1934, as amended, provided
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that Owner will provide any intended disclosures regarding this Agreement to
Operator for review in advance of filing. In the event of a termination of this
Agreement, each party will promptly return to the other party all notes, memos,
reports and other materials provided to such party in connection with this
Agreement.
6. Trade Secrets. Operator expressly acknowledges that the
Business involves trade secrets, confidential and proprietary information and
personal relationships with customers, and that the success of the Business is
due in large part to the exclusive retention of such trade secrets, confidential
and proprietary information and the undisturbed continuation of such personal
relationships with customers. Operator agrees and acknowledges that all
documents pertaining to the Business's personnel, finances, facilities and
customers constitute trade secrets that Owner will allow Operator to use
pursuant to this Agreement (collectively the "Trade Secrets"). Operator
recognizes that such information is not readily available to the public and is
information from which Owner will derive an independent economic value from not
being known and that the information is subject to efforts that are reasonable
to maintain its secrecy. The failure to xxxx any documents, reports, data or
information "confidential" shall not affect the confidential nature of the
material. Operator expressly covenants and agrees that it shall not at any time,
directly or indirectly, copy, utilize, reveal, disclose or otherwise disseminate
to any third party, for its own benefit or for the benefit of others, any Trade
Secrets relating to the Business (other than such information personally known
by Operator relating to Rollover Businesses generally) or customers of the
Business without the express prior written consent of Owner, nor will Operator
make use of such Trade Secrets for any of such parties' personal benefit at any
time other than in connection with such parties carrying out their
responsibilities under this Agreement. The prohibition provided in this Section
is effective during the period beginning on the Commencement Date and continuing
indefinitely.
7. Noncompetition. Other than through this Agreement, Operator
covenants and agrees that from the Commencement Date until the date that is one
year after the termination of this Agreement, it will not, directly or
indirectly: (a) own, manage, operate, join, control, be employed by, be engaged
on an independent contractor basis or other representative capacity, or
participate in the ownership, management, operation, or control of, receive any
monetary benefits from or in connection with, or be connected in any other
manner with, any individual, corporation, partnership or other entity (other
than Owner) that is engaged in, or any other transaction or activity in, a
business that is engaged in, or any other transaction or activity in, the
Rollover Business or any other business involving the buying or selling of
cattle or other livestock for resale, or order buying, brokering, selling,
trading, auctioning, or otherwise dealing in or with cattle or livestock, other
than a business engaged in the purchase of cattle to be owned on a long-term
basis, anywhere within the United States or on or through the Internet (whether
with respect to purchasers or sellers inside or outside such states) (a
"Prohibited Business"), without the prior express written permission of Owner;
(b) solicit any employee of Owner to accept employment with any Prohibited
Business; (c) accept employment with or otherwise agree to provide any services
to any Prohibited Business; or (d) solicit or attempt to solicit, divert, or
obtain any Prohibited Business from any of Owner's or Operator's customers
existing as of the Commencement Date, in each case anywhere within the United
States or on or through the Internet. The parties acknowledge that Xxxxxx X.
Xxxxxx and Xxxx X. Xxxxxx also are subject to certain restrictions on the use of
confidential information and trade secrets, and are
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subject to certain restrictions on competition and solicitation of employees and
business, as contained in separate agreements with Owner. The parties
acknowledge and agree that these restrictions will run concurrently with the
restrictions contained in this Agreement, will remain in place notwithstanding
the provisions of this Agreement and will not be affected by this Agreement.
8. Additional Remedies. Operator acknowledges and agrees that the
covenants and agreements contained in Section 6 (Trade Secrets) and Section 7
(Noncompetition) are of the essence of this Agreement; that each of such
covenants is reasonable and necessary to protect and preserve the Trade Secrets
and the legitimate business interests of Owner; that irreparable harm, loss and
damage that cannot be remedied in damages in an action at law will be suffered
by Owner should Operator breach any of the covenants and agreements contained in
those Sections; that a breach of any such covenant and agreement may constitute
an infringement of Owner's rights in and to the Trade Secrets; that each of such
covenants or agreements is separate, distinct and severable not only from the
other of such covenants and agreements but also from the other and remaining
provisions of this Agreement; and that, in addition to other rights and remedies
available to it as a matter of law or equity, Owner shall be entitled to an
immediate temporary injunction and also to a permanent injunction to prevent a
breach or contemplated breach by Operator of any of such covenants or
agreements.
9. Exclusivity. During the term of this Agreement, including any
extensions and renewals, Operator agrees not to directly or indirectly market,
contact or develop relationships with, or authorize or approve the taking of any
such action by any other person, firm or entity, and customer of Owner or any
other person, firm or entity with whom Owner or Operator has developed a
relationship or enhanced its relationship with, in anticipation of or in
connection with pursuing the Business other than for Owner.
10. Termination.
(a) Events of Termination. This Agreement may be
terminated:
(i) By either party, to the extent permitted
under applicable law, if the other ceases to function as a going concern,
becomes insolvent, makes an assignment for the benefit of creditors, files a
petition in bankruptcy, permits a petition in bankruptcy to be filed against it
and such petition is not dismissed within 60 days of filing, or admits in
writing its inability to pay its debts as they mature, or if a receiver is
appointed over a substantial part of its assets.
(ii) By either party by reasons of any material
breach of this Agreement by the other party which breach has not resulted in a
reasonably acceptable plan for remedy or cure or which breach has not been
remedied or cured after at least 30 days' written notice delivered by the
aggrieved party to the other party (provided that the terminating party is not
in material breach of this Agreement).
(b) Transition Plan Upon Expiration or Termination. Upon
the expiration of this Agreement, or if this Agreement is rightfully terminated
pursuant this Section, Operator will
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provide an adequate transition plan to Owner at least 60 days prior to the
termination date. The transition plan will provide that Owner will have the
right to extend offers of employment to Operator employees and provide for the
orderly transition of the management of the Business back to Owner. The
transition plan will identify positions requiring transition, procedures in
place supporting all responsibilities to be transitioned, documentation of
existing personnel actions, and existing or planned projects and support
activities. The parties will also agree with respect to the settlement of
matters relating to the treatment of capital expenditures made by the parties
during the term of this Agreement.
(c) Rights and Duties Upon Termination. Upon the
expiration of this Agreement: (i) each party will cooperate reasonably and in
good faith with the other and/or its designees, so that the transition of
services rendered under this Agreement shall be timely and efficient and
implemented in a manner so as not to unduly interfere with Owner's orderly
conduct of its Business; (ii) all Confidential Information will be promptly
delivered or returned (as applicable) to its respective owner; (iii) all
equipment, documents, records, books, tapes, disks and files provided by Owner
will be returned to Owner in substantially the same condition as received,
ordinary wear and tear excepted.
(d) Survival of Obligations. Each party's obligations
relating to Confidential Information, Trade Secrets, Noncompetition, indemnity
and payment obligations and the provisions of this Agreement which by their
terms survive termination of this Agreement, will survive termination of this
Agreement for any reason. Termination of this Agreement by either Owner or
Operator according to the terms hereof will be without prejudice to the
terminating party's other rights and remedies under this Agreement, both in law
and in equity.
11. Indemnification.
(a) By Operator. Except as set forth in subsection (c),
Operator will indemnify and hold harmless Owner and its officers, agents and
employees from and against all liability and expense for claims, actions,
litigation and similar proceedings brought against Owner in connection with the
operation of the Business by Operator; provided, however, that Operator shall
not be liable for any injury, damage and/or loss occasioned by the gross
negligence or willful misconduct of Owner or its officers, agents or employees
or former officers, agents or employees.
(b) By Owner. Owner will indemnify and hold harmless
Operator and its officers, agents and employees from and against all liability
and expense for claims, actions, litigation and similar proceedings brought
against Operator in connection with Owner's operation of its business that is
unrelated to the Business or in connection with Owner's execution of this
Agreement; provided, however, that Owner shall not be liable for any injury,
damage and/or loss occasioned by the gross negligence or willful misconduct of
Operator or its officers, agents or employees or former officers, agents or
employees.
(c) Excluded Claims. Notwithstanding the indemnification
provisions of subsection (a), claims, actions, litigation and similar
proceedings brought against a party in connection with the operation of the
Business that relate to cattle sales, cattle purchases, cattle
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warranty claims, cattle title claims and breach of contract claims will be
considered "Excluded Claims." With respect to Excluded Claims, Operator will
reimburse Owner for the costs and expenses incurred by Owner in connection with
the Excluded Claim. In addition, any amounts advanced to Owner for such
reimbursement, and any costs and expenses incurred by Operator in connection
with Excluded Claims, will be considered an expense associated with the Business
that may be taken by Operator as an expense for purposes of determining the net
profits calculation.
(d) Procedures. Each party will provide the other parties
prompt and timely notice of any claims made or suits instituted which in any
way, directly or indirectly, affect the indemnification obligations of this
Section, and the indemnifying party will have the right to compromise and defend
the same, provided that the indemnifying party may not, without the prior
consent of the other parties, settle any pending or threatened claim or
proceeding. Any failure to provide such notification shall discharge the
indemnifying party of its indemnification obligation hereunder only to the
extent that such failure materially prejudices the indemnifying party. Owner
will be named as an additional insured in connection with its insurance policies
for the Business, and the indemnification obligations under this Agreement will
be effective to the extent any claim is not covered by insurance.
12. Representations and Warranties.
(a) Operator. Operator represents and warrants to Owner
that each of the following statements is true, correct and complete as of the
date of this Agreement:
(i) Operator is a limited liability company
validly existing and in good standing under the laws of the Commonwealth of
Kentucky and has full power to enter into and perform its obligations under this
Agreement and under all other agreements, documents and/or instruments to be
executed and/or delivered by Operator pursuant to or in connection with this
Agreement. Operator has full power to own, operate and/or hold the Business.
(ii) The execution, delivery and performance by
Operator of this Agreement and of all of the agreements, documents and/or
instruments to be executed and/or delivered by Operator pursuant to or in
connection with this Agreement have been duly authorized by all necessary action
of Operator. This Agreement is, and the other agreements, documents and
instruments referred to herein will be, when executed and delivered by the
parties, the valid and binding obligations of Operator, enforceable against
Operator in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors' rights generally, and
except that the availability of the remedy of specific performance or other
equitable relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
(iii) The execution, delivery and performance of
this Agreement by Operator does not and will not violate, conflict with or
result in the creation or imposition of any lien, charge or encumbrance under
any law, judgment, order or decree binding on Operator or the Articles of
Organization or the limited liability company Agreement of Operator.
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(iv) Operator has all licenses, permits and bonds
required for the operation of the Business. All licenses and permits held by
Operator and necessary for the conduct of the Business are valid and in full
force and effect and no proceedings which could result in the termination or
impairment of any such license or permit are pending or threatened. Operator is
not in violation of, nor has Operator received any notice of any violation of,
nor does any state of facts exist which could lead to a penalty or termination
of, any license or permit.
(v) All information furnished to Owner by
Operator herein or in any exhibit or schedule hereto is true, correct and
complete. Such information states all facts required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which such statements are made, true, correct and complete.
(vi) No authorization, consent, approval, permit
or license of, or filing with, any governmental or public body or authority, any
lender or lessor or any other person or entity is required to authorize, or is
required in connection with, the execution, delivery and performance of this
Agreement or the agreements contemplated hereby on the part of Operator.
(b) Owner. Owner represents and warrants to Operator that
each of the following statements is true, correct and complete as of the date of
this Agreement:
(i) Owner is a corporation duly and validly
existing and in good standing under the laws of Delaware and has full corporate
power to enter into and perform its obligations under this Agreement and under
all other agreements, documents and/or instruments to be executed and/or
delivered by Owner pursuant to or in connection with this Agreement.
(ii) The execution, delivery and performance of
this Agreement and of all of the agreements, documents and/or instruments to be
executed and/or delivered by Owner pursuant to or in connection with this
Agreement have been duly authorized by all necessary corporate action. This
Agreement is, and the other agreements, documents and instruments referred to
herein will be, when executed and delivered by the parties, the valid and
binding obligations of Owner, enforceable against Owner in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting the
enforcement of creditors' rights generally, and except that the availability of
the remedy of specific performance or other equitable relief is subject to the
discretion of the court before which any proceeding therefor may be brought.
(iii) The execution, delivery and performance of
this Agreement by Owner does not and will not violate or conflict with any law,
judgment, order, or decree binding on Owner, or the Certificate of Incorporation
or Bylaws of Owner.
(iv) All information furnished to Operator by
Owner herein or in any exhibit or schedule hereto is true, correct and complete.
Such information states all facts required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which such
statements are made, true, correct and complete.
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13. General
(a) Notices. Any notice required or permitted by this
Agreement shall be in writing and accomplished by registered or certified mail,
personal delivery, or overnight courier. Such notice shall be deemed to have
been delivered three (3) days after it has been mailed by such certified or
registered mail, one day after it has been delivered to the overnight courier,
or upon delivery if sent by hand delivery to the following:
If to Owner:
eMerge Interactive, Inc.
00000 000xx Xxxxxxx
Xxxxxxxxx, Xxxxxxx 00000
Attn: Chief Executive Officer
Facsimile: (000) 000-0000
With a copy to:
Jenkens & Xxxxxxxxx, a Professional Corporation
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
If to Operator:
Eastern Livestock Co., LLC
000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxxx, Xxxxxxx 00000
with a copy to:
Xxxx X. Xxxxxx, Esq.
Middleton & Xxxxxxxxxx
0000 Xxxxx & Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
or to such other persons or addresses which the Owner or Operator may from time
to time designate in writing to the other.
(b) Waiver. An effective waiver under this Agreement must
be in writing, and signed by the party waiving its right. A waiver by either
party of any instance of the other party's noncompliance with any obligation or
responsibility under this Agreement will not be deemed a waiver of subsequent
instances.
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(c) Assignment. No party may assign its rights or
delegate or subcontract its duties and obligations under this Agreement to any
third party without the prior written consent of the other party, which consent
shall not be unreasonably withheld. Any unauthorized assignment of this
Agreement is void and a material breach of this Agreement.
(d) No Authority. Neither party shall have any authority,
and neither party shall represent that it has any authority, to assume or create
any obligation, express or implied, on behalf of the other party, except as
provided in this Agreement. Each party is an independent contractor, and this
Agreement shall not be construed as creating a partnership, joint venture or
employment relationship between the parties or as creating any other form of
legal association that would impose liability on one party for the act or
failure to act of the other party.
(e) Governing Law. This Agreement, including its
formation, application, performance, enforcement, the relationship between the
parties, and any claims, demands, causes of action and disputes in any way
arising out of or related to it, shall be governed, construed and interpreted
under the substantive law (and the law of remedies, if applicable) of the State
of Delaware.
(f) Severability. If any term in this Agreement is found
by a competent legal authority to be illegal or unenforceable in any respect,
the validity and enforceability of the remainder of this Agreement will be
unaffected.
(g) Further Assurances. Each party shall execute,
acknowledge and deliver all documents, provide all information, and take or
forbear all such action as may be necessary or appropriate to achieve the
purposes of this Agreement.
(h) Amendments. The waiver, amendment or modification of
any provision of this Agreement or any right, power or remedy hereunder, whether
by agreement of the parties or by custom, course of dealing or trade practice,
shall not be effective unless in writing and signed by the party against whom
enforcement of such waiver, amendment or modification is sought.
(i) Third-Party Beneficiaries. Nothing contained
in this Agreement shall be construed to give any person other than Owner and
Operator any legal or equitable right, remedy or claim under or with respect to
this Agreement.
(j) Counterparts. This Agreement may be signed
in one or more counterparts, each of which when exchanged will be deemed to be
an original, binding upon the parties as if a single document had been signed by
all, and all of which when taken together will constitute the same agreement.
Any true and correct copy of this Agreement made by customary, reliable means
(e.g., photocopy or facsimile) shall be treated as an original.
(k) Entire Agreement. This Agreement and the
documents referred to in this Agreement constitute the entire agreement between
the parties pertaining to the subject matter hereof, and supersede all prior and
contemporaneous agreements, understandings, negotiations and discussions of the
parties, whether oral or written, and there are no warranties,
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representations or other agreements between the parties in connection with the
subject matter hereof, except as specifically set forth in this Agreement or
documents referred to in this Agreement.
(l) Specific Performance. Each of the parties agrees that
the other parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their terms.
Accordingly, each party agrees that the other parties shall be entitled to
injunctive relief to prevent breaches of the provisions of this Agreement and to
specifically enforce this Agreement in any action, in addition to any other
remedy to which such party may be entitled at law or in equity.
(m) Expenses. Each of the parties shall pay their
respective fees and expenses incurred in connection with the transactions
contemplated by this Agreement.
(n) No Joint Venture. Nothing contained in this Agreement
is intended to create a joint venture, partnership, employer / employee or
similar relationship between Operator and Owner, and instead Operator will at
all times be an independent contractor with respect to Owner.
(o) Arbitration. Any disputes arising pursuant to this
Agreement shall be settled by arbitration held in Orlando, Florida, in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association then in effect. Upon such a dispute, the parties will mutually agree
upon one arbitrator. In the event the parties are unable to agree upon one
arbitrator, each party will select one arbitrator, and each of those arbitrators
will agree upon a third arbitrator, who will serve as the sole arbitrator for
purposes of this Agreement. Judgment upon the award rendered by the arbitrator
may be entered in any court having in personam and subject matter jurisdiction.
The arbitrator will decide any claim or controversy at issue in accordance with
the terms of this Agreement, and will not be authorized to award any damages
other than direct compensatory damages actually incurred and proven. The
expenses of each party, including its share of the cost of the arbitration, will
be borne such party. However, in the event either party institutes arbitration
as a result of any claim, suit, action or proceeding being asserted against it
by a third party arising out of or in connection with a matter for which the
other party is alleged to be responsible under this Agreement, the party
instituting arbitration may recover any attorney fees and expenses to which it
became subject in connection with the arbitration in the event such party
prevails in such arbitration. This provision will not preclude Owner from
obtaining injunctive relief in the appropriate court for breaches or alleged
breaches of the covenants contained in Sections 5, 6, 7 and 9 of this Agreement,
or from precluding either party from obtaining other injunctive relief as
allowed by law.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first written above.
EMERGE INTERACTIVE, INC.
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
EASTERN LIVESTOCK CO., LLC
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
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EXHIBIT A
Note and Guaranty
EXHIBIT B
Net Profits Calculation
EXHIBIT C
Form of Flash Report
EXHIBIT D
Equipment Listing
