Letter Agreement re: Internet Auction of Cattle - Southern States Cooperative Inc. and eMerge Interactive Inc.
COPY
MLE Marketing
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A Division of Southern States Cooperative, Inc.
January 12, 2000
VIA FACSIMILE AND REGULAR MAIL
eMerge Interactive, Inc.
Attn: Scott Matthews, Chief Operating Officer
10315 102nd Terrace
Sebastian, FL 32958
Dear Scott:
This letter agreement (hereinafter the "Agreement") sets forth the
proposed terms and conditions under which Southern States Cooperative, Inc. of
6606 West Broad Street, Richmond, Virginia 23260 (hereinafter "Southern States")
and eMERGE INTERACTIVE of 10315 102nd Terrace, Sebastian, FL 32958 (hereinafter
"eMerge") intend to sell cattle via the Internet using eMerge's technology and
cyberstockyard website.
OBJECTIVES.
- Southern States and eMerge will work together to create a strategic
relationship leveraging the strengths of both companies.
- Southern States and eMerge will conduct auctions on the dates set forth on
Schedule A, which are projected auction dates and may be changed from time
to time as necessary.
TERM.
- This Agreement shall expire on May 31, 2000. The terms and conditions
herein supercede any and all previous written agreements between the
parties. This Agreement may not be amended or extended without the written
agreement of both parties.
AGENCY.
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Mr. Scott Matthews
January 7, 2000
Page 2
- Southern States will be eMerge's exclusive representative for eMerge's
live cattle auction technology in the in the territory described in
Schedule B.
- Southern States will also be acting as paying agent for eMerge according
to this Agreement. As such Southern States, accepts no risk of non-payment
by the Qualified Buyers (as hereinafter defined below), unless non-payment
is the direct result of misrepresentation or negligence on the part of
Southern States or its designated representative.
EXCLUSIVE RIGHTS.
- eMerge grants Southern States an exclusive right to use and promote its
live cattle auction technology in the territory described in Schedule B.
eMerge acknowledges and agrees that it, and any of its representatives or
agents other than Southern States, are prohibited from soliciting cattle
for cyberstockyard auctions in the territory described in Schedule B.
eMerge and Southern States agree that both parties may solicit cattle for
cyberstockyard auctions outside of this defined region.
- During the term of this Agreement, all producer profiles and cattle
Information that Southern States furnishes to eMerge regarding Southern
States' customers shall be considered confidential and will remain the
exclusive property of Southern States.
- Southern States, exclusive rights under this Agreement shall be subject to
Southern States' ability to deliver the number of cattle described In
Schedule C.
INDIVIDUAL OBLIGATIONS OF THE PARTIES.
SOUTHERN STATES:
- Southern States will be responsible for locating and videotaping quality
load lots of cattle from producers (hereinafter "Seller(s)") from the
territory described in Schedule B to Qualified Buyers (defined herein
below) provided by eMerge.
- After each auction, Southern States will work with eMerge to facilitate
delivery of the cattle from the Sellers to the Qualified Buyers. Southern
States will coordinate the transportation arrangements between the
Qualified Buyers and the Sellers. Southern States will be responsible for
verifying the insurance coverage, both liability and cargo, of all
transportation agents unless the Qualified Buyer provides "buyer-owned"
transportation.
- Southern States agrees to perform all of the process requirements outlined
in Schedule D.
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Mr. Scott Matthews
January 7, 2000
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- cattle are not accepted by the Qualified Buyers due to misrepresentation
by Southern States, eMerge will contact Southern States immediately upon
receiving notice from the Qualified Buyer. Southern States will have the
opportunity to talk with the Qualified Buyer to investigate and determine
the validity of the misrepresentation claim. If Southern States determines
that it misrepresented the cattle at the time of the auction, or the
cattle delivered to the Qualified Buyer do not meet the specifies outlined
at the time of the sale, Southern States will be responsible for
negotiating any price adjustment and the cattle auction price paid to
Southern States by eMerge will be adjusted dollar for dollar.
eMERGE:
- eMerge will provide Qualified Buyers for the auctions whose
credit-worthiness and identities eMerge has Investigated and verified
prior to enabling such users access to the cyberstockyard auction system
(hereinafter "Qualified Buyers").
- eMerge will only allow those Qualified Buyers onto the site whose identity
it has verified through the use of a secure password system.
- eMerge agrees to make its internet auction site available for sales on the
dates listed on Schedule A. In the event that eMerge is unable to make Its
auction site available on those dates, eMerge's sole obligation is to
provide an alternative date(s) that is/are mutually agreed upon by the
parties. Auctions shall begin at a time mutually agreed upon by the
parties.
- eMerge will provide demonstration software for the cyberstockyard auction
system to Southern States, including all upgrades, advances and now
releases. EMERGE approves and releases Southern States to demonstrate and
promote such software technology to its field personnel, producers and
corporate employees.
- eMerge will provide Southern States with up to 20 cameras necessary for
the taping of cattle.
- eMerge will provide all necessary support for the digitizing, encoding,
and delivering of the video to the Feedlot Information System ("FIS") web
site.
- If the Qualified Buyers refuse delivery of the cattle due to alleged
misrepresentation by Southern States, eMerge must contact Southern States
immediately upon receiving notice from the Qualified Buyer. eMerge agrees
that Southern States will have the opportunity to talk with the Qualified
Buyer to investigate and determine the validity of the misrepresentation
claim. If Southern States determines that it misrepresented the cattle at
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Mr. Scott Matthews
January 7, 2000
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the time of the auction, or the cattle delivered to the Qualified Buyer do
not meet the specifics outlined at the time of the sale, Southern States
will be responsible for negotiating any price adjustment with the
Qualified Buyer and the payment between Southern States and eMerge will be
adjusted accordingly . In the case of a misrepresentation or cattle
rejection, eMerge will enter the negotiation process, to assist in
resolving the situation.
- eMerge agrees to perform all of the process requirements outlined in
Schedule D.
- eMerge consents to the use of its trademarks in Southern states promotions
and advertising at no cost to Southern States.
JOINT OBLIGATIONS OF THE PARTIES.
- Southern States and eMerge will work together to facilitate participation
with the National Livestock Producer's Association Members (N.L.P.A.).
- Southern States will agree to help distribute any producer technologies
including but not limited to eMerge's e-commerce platform to its customers
on behalf of eMerge Interactive for a fee as long as they see that such
technology is useful and profitable for Southern States' customers and
their businesses.
- Southern States and eMerge agree that the development of a shared
advertising program is mutually beneficial to the interest of both
parties. Both parties agree to undergo discussions to develop these
programs as soon as is practicable after the signing of this Agreement
- Each party recognizes the importance of the other party's relationship
with its customer base and agrees to consult with the other party in
matters concerning same.
- Each party agrees to indemnify the other party and hold the other party
harmless from and against any and all claims, liabilities, damages, costs
(including attorneys' fees) for personal injury or damage to any person or
property arising out of the other party's actions, operations, duties or
obligations arising under the terms of this Agreement.
DEFAULT AND TERMINATION.
- If one of the parties defaults under the terms and conditions of this
Agreement, the non-defaulting party may terminate this Agreement within
five days of the default. Failure of the non-defaulting party to exercise
this right shall not waive any of the non-defaulting party's rights and
remedies to recovery of damages under contract law.
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Mr. Scott Matthews
January 7, 2000
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- Should a default under or termination of this Agreement occur and there
are outstanding and unpaid financial obligations between the parties under
the Agreement, both parties agree that each party shall be and remain
liable for the full performance of those outstanding financial
obligations.
REMEDIES.
- All rights and remedies provided herein shall be in addition to and not in
substitution of all other rights and remedies available to a party at law
or in equity.
WARRANTIES.
- SOUTHERN STATES DISCLAIMS ANY AND ALL WARRANTIES TO EMERGE AND THE
QUALIFIED BUYERS WITH THE REGARD TO THE CATTLE, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
- Southern States warrants that the descriptions of the cattle and the
videos that it provides to eMerge for the cyberstockyard auctions shall
accurately reflect the Sellers' cattle.
ENTIRE AGREEMENT.
- This Agreement, together with the Schedules attached hereto, represents
the entire agreement and understanding between the parties with reference
to the transactions contemplated herein and no representations or
warranties have been made in connection with this Agreement other than
those expressly set forth herein or in the Schedules. This Agreement may
not be contradicted by evidence of prior or contemporaneous or subsequent
oral agreements between the parties. This Agreement may be modified,
altered or amended only by the written agreement of the parties hereto.
SCHEDULES.
- Schedules A-D as listed below and attached hereto are incorporated herein
by reference and shall be made a part of this Agreement:
<TABLE>
<CAPTION>
Schedule Description
-------- -----------
<S> <C>
Schedule A: Auction dates scheduled for 2000
</TABLE>
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Mr. Scott Matthews
January 7, 2000
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<TABLE>
<S> <C>
Schedule B: Region in which eMerge grants Southern States an
exclusive right to solicit cattle for cyberstockyard
auctions and also to use and promote eMerge's live cattle
auction technology
Schedule C: Volume That Will Be Generated by Southern States for
Cyberstockyard Auctions
Schedule D: Roles, Responsibilities, Process and Procedures
</TABLE>
WAIVERS AND AMENDMENTS.
- Any failure of any party to comply with any of its obligations, agreements
or conditions as set forth in this Agreement may be expressly waived in
writing by the other parties, but no such waiver shall operate or be
construed as a waiver of any subsequent default. The acceptance of any
payment or performance by any party which Is different from the provisions
of this Agreement on one or more occasions shall not be deemed to be a
waiver of the right to insist upon prompt or consistent payment or
performance in the future according to this Agreement as written. This
Agreement may be amended, modified or supplemented only by a written
instrument executed by the parties hereto.
COSTS OF ENFORCEMENT.
- In the event that any party hereto defaults in the performance of its
obligations hereunder, the non-defaulting party shall be entitled to
recover from the defaulting party all fees, costs, and expenses (including
attorneys' fees and expenses) incurred in enforcing the provisions of this
Agreement.
CONSTRUCTION OF AGREEMENT.
- No provision of this Agreement shall be construed against or interpreted
to the disadvantage of any party hereto or thereto by any court or other
governmental or judicial authority by reason of such party having or being
deemed to have structured or dictated such provision.
AUTHORITY TO ENTER INTO AGREEMENT.
- By their signatures on this Agreement, both parties covenant that they
have the authority to enter into this Agreement and bind their respective
companies to the terms and conditions contained herein.
COUNTERPART.
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Mr. Scott Matthews
January 7, 2000
Page 7
- This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original and all of which together shall be considered
one and the same agreement.
Scott, if you are in agreement with the terms and conditions contained
herein, please sign and return it to me. On behalf of Southern States, we look
forward to a successful relationship with eMerge in the area of cyberstockyard
auctions.
Sincerely,
SOUTHERN STATES COOPERATIVE, INC. ACCEPTED AND AGREED TO:
EMERGE INTERACTIVE, INC.
___________________________________(Seal)
Ray R. Ramsey
Director of Livestock Marketing By:______________________________________
Its:_____________________________________
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Mr. Scott Matthews
January 7, 2000
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SCHEDULE A
Letter Agreement between Southern States and eMerge
January 6, 2000
AUCTION DATES SCHEDULED FOR 2000
January 28, 2000
February 16, 2000
March 1, 2000
March 15, 2000
April 6, 2000
April 19, 2000
May 3, 2000
May 17, 2000
**Note: These auction dates may be changed from time to time as deemed necessary
by the parties.
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Mr. Scott Matthews
January 7, 2000
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SCHEDULE B
Letter Agreement between Southern States and eMerge
January 6, 2000
REGION IN WHICH eMERGE GRANTS SOUTHERN STATES AN EXCLUSIVE RIGHT TO
SOLICIT CATTLE FOR CYBERSTOCKYARD AUCTIONS AND ALSO TO USE AND
PROMOTE eMERGE'S LIVE CATTLE AUCTION TECHNOLOGY
[ ** ]
[ ** ]
[ ** ]
[ ** ]
[ ** ]
[ ** ]
[ ** ]
[ ** ]
[ ** ]
[ ** ]
[ ** ]
[ ** ]
[ ** ]
[ ** ]
[ ** ]
[ ** ]
[ ** ]
[ ** ] Certain portions of this exhibit have been omitted based upon a request
for confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
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Mr. Scott Matthews
January 7, 2000
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SCHEDULE C
Letter Agreement between Southern States and eMerge
January 6, 2000
VOLUME THAT WILL BE GENERATED BY
SOUTHERN STATES FOR CYBERSTOCKYARD
AUCTIONS* **
January [ ** ] head of cattle
February [ ** ] head of cattle
March [ ** ] head of cattle
April [ ** ] head of cattle
May [ ** ] head of cattle
*Months and quotas listed above are for the year 2000.
**Monthly volume quotas listed above are a collective figure for all
auctions during that month.
[ ** ] Certain portions of this exhibit have been omitted based upon a request
for confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
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Mr. Scott Matthews
January 7, 2000
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SCHEDULE D
Letter Agreement between Southern States and eMerge
January 6, 2000
ROLES, RESPONSIBILITIES, PROCESS AND PROCEDURES
PRIOR TO THE AUCTION:
1. Southern States will solicit cattle producers (hereinafter "Seller(s)") to
participate in selling their cattle on the Internet using eMerge's
Cyberstockyards auction website.
2.. Southern States will film the cattle, describe the cattle in a consignment
agreement with each Seller and collect a $[ ** ] per head consignment fee.
3. Southern States will send the film and one copy of the consignment
agreement to eMerge at least five business days prior to the auction date.
Southern States will be responsible for all mailing expenses.
4. Consignment information will be entered into systems of both eMerge and
Southern States. Both parties will work to develop a system that
eliminates this duplication of effort. In the future, information will be
entered by Southern States and downloaded to eMerge.
5. Film is edited at eMerge with the assistance of Southern States personnel
and incorporated into the Cyberstockyard auction arena at least 48 hours
prior to sale date. Determining sale order will be a joint effort between
Southern States and eMerge.
6. eMerge will provide Qualified Buyers for the cattle that Southern States
signs up through the consignment forms.
7. eMerge will only allow those Qualified Buyers onto the site whose
identities it has verified through the use of a secure password system.
[ ** ] Certain portions of this exhibit have been omitted based upon a request
for confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
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Mr. Scott Matthews
January 7, 2000
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SCHEDULE D (CONTINUED)
DAY OF THE AUCTION
8. Southern States will communicate each Seller's suggested starting auction
price, required final selling price and any changes or corrections to lot
descriptions to the eMerge sale administrator at least one (1) hour before
the lot is scheduled to sell. Southern States will also be in contact with
both the Seller and the eMerge sale administrator throughout the sale of
each lot as changes may be necessary (i.e. delivery date).
9. After bidding has ended on each lot of cattle, eMerge will notify the
highest bidder that they are the successful Qualified Buyer. Southern
States will contact the Seller and notify eMerge of the Seller's
acceptance or rejection of the Qualified Buyers final bid as soon as
possible. % If the Seller rejects the Qualified Buyer's final bid Price,
eMerge
will notify the Qualified Buyer of the "no sale" on that particular
lot of cattle. The Seller will forfeit the $[ ** ] per head
consignment fee to Southern States as a "no sale" fee.
10. eMerge will communicate confirmation of the purchase to the Qualified
Buyer following the sale by executing an agreement with the Qualified
Buyer. eMerge agrees to include the following in its agreement with each
Qualified Buyer:
- Specifically indicate that transportation and delivery are to be
coordinated between the Qualified Buyer and the listed
representative for each lot of calls.
- If Qualified Buyer rejects the cattle due to misrepresentation, the
Qualified Buyer must verbally notify and provide written notice to
eMerge of such rejection within twenty-four- (24) hours of delivery.
- Confirmation of price, delivery dates and transportation
arrangements.
[ ** ] Certain portions of this exhibit have been omitted based upon a request
for confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
Delivery and Equipment
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Mr. Scott Matthews
January 7, 2000
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11. Qualified Buyer will send a $[ ** ] per head prepayment by overnight mail
or electronic funds transfer to eMerge within 24 hours of the final sale.
If the delivery date is over five (5) days from the sale date, eMerge will
send a prepayment of $[ ** ] per head to Southern States within
forty-eight (48) hours of the final sale. Southern States will then pay a
$[ ** ] per head prepayment to the Seller. All prepayments, including the
remaining $[ ** ] per head not paid to the Seller which is retained by
Southern States and eMerge, will be appropriately adjusted for in the
final sale transaction.
12. eMerge will provide a list of the Qualified Buyers and bidders, including
names and phone numbers, to Southern States immediately following each
auction. Southern States will disperse this information to the appropriate
representatives so that they can be present at the loading and weighing of
the cattle.
13. The cattle will be picked up at the Seller's location according to the
trucking arrangement provided by the Qualified Buyer and will be taken to
the weighing location specified by the Seller.
14. At the weighing location, Southern States will record the head count say,
weight and physical conclusion of the cattle.
15. Risk of loss and passage of title to the cattle will pass from the Seller
to the Qualified Buyer at the time that the cattle leave the scales and an
invoice is created confirming the terms of the sale.
[ ** ] Certain portions of this exhibit have been omitted based upon a request
for confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
16. When the cattle are weighed, Southern States will pay the Seller as
eMerge's agent on behalf of eMerge's contract with the Qualified Buyer.
Such payment will be based on a per pound calculation using the final bid
price listed on the Qualified Buyer's agreement with eMerge. The gross
sale price will include any necessary weight-related adjustments. Southern
States will deduct a [ ** ] commission from the gross sales price (net of
the
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Mr. Scott Matthews
January 7, 2000
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[ ** ] per head consignment fee) and distribute the net sale proceeds in
the form of a check to the Seller.
17. Southern States will document the average weight of the cattle loaded onto
the truck the calculation of the net price and the check number for the
payment. Southern States will send this information to eMerge along with
an invoice for payment from eMerge to Southern States. The invoice will
clearly set forth the portion of the sale price that shall be retained by
eMerge.
18. Within 48 hours of Southern States' payment to the Seller, eMerge will
electronically pay Southern States per the terms of the invoice described
in #17.
[ ** ] Certain portions of this exhibit have been omitted based upon a request
for confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
19. eMerge is responsible for collecting the Qualified Buyer's payment to
eMerge. Southern States shall bill paid as described in #18, regardless of
Qualified Buyers arrangement with eMerge and regardless of when eMerge
receives payment from the Qualified Buyer. If Qualified Buyer rejects the
cattle for any reason other than misrepresentation (see exception noted
below) or fails to pay eMerge, eMerge bears the burden of collection and
placement of the cattle.
- Exception: If the Qualified Buyer rejects the cattle due to a claim
of misrepresentation based on Southern States' filming or
descriptions of the cattle,
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Mr. Scott Matthews
January 7, 2000
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eMerge must contact Southern States immediately upon receiving
notice from the Qualified Buyer. Southern States will have the
opportunity to talk with the Qualified Buyer to investigate and
determine the validity of the Qualified Buyer's misrepresentation
claim. If Southern States determines that it misrepresented the
cattle at the time of the auction, or the cattle delivered to the
Qualified Buyer do not meet the specifics outlined at the time of
the sale, Southern States will be responsible for negotiating any
price adjustment with the Qualified Buyer and the payment between
Southern States and eMerge will be adjusted accordingly. In the case
of a misrepresentation or cattle rejection, eMerge will enter the
negotiation process to assist in resolving the situation.
- eMerge agrees to transfer its security interest to Southern States
in the event that Southern States' accepts responsibility for any
misrepresentation and agrees to remarket the cattle.
20. [ ** ] of the gross sales price of each sale will be distributed as
follows:
- [ ** ] will be deducted by eMerge from its payment to Southern
States.
- Southern States will retain [ ** ] of its payment from eMerge.
- The remaining [ ** ] will be retained as a commission by the party
whose representative solicited the Seller in each individual
transaction. Each party will be responsible for administering such
commissions to its employees and representatives where applicable.
[ ** ] Certain portions of this exhibit have been omitted based upon a request
for confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
POST-AUCTION
21. eMerge agrees to keep a copy of the film and sales information used in
each auction for a period of six (6) months or to provide a copy of such
information to Southern States for its files promptly after each auction.