AMENDMENT TO LEASE AND OPERATING AGREEMENT
 
This Amendment to Lease and Operating Agreement (this “Amendment”) is made and
entered into as of February 28, 2002 by and between Eastern Livestock Co., LLC,
a Kentucky limited liability company, (“Operator”), and eMerge Interactive,
Inc., a Delaware corporation (“Owner”).
 
RECITALS
 
1.    Owner and Operator entered into a Lease and Operating Agreement, dated
October 16, 2001, and effective as of October 1, 2001 (the “Agreement”).
 
2.    The parties wish to amend the Agreement to add certain provisions relating
to the line of credit maintained by Operator for purposes of the Business.
 
NOW, THEREFORE, in consideration of the foregoing and the representations,
covenants and agreements contained herein, and certain other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties agree as follows:
 
AGREEMENT
 
1.    Certain Terms.    All capitalized terms used herein without definition
shall have the meanings assigned thereto in the Agreement. All references to the
Agreement shall refer to the Agreement as hereby amended.
 
2.    Amendment to Section 3 of the Agreement.    Section 3 of the Agreement is
hereby amended by adding a new section 3(1), as follows:
 

 
(1)    Ownership
 
of Inventory and Accounts and Operator’s Borrowing and Relationship with
National City Bank of Kentucky.

 

 
(i)
 
As part of its operation of the Rollover Business, and as provided in this
Agreement, Operator will purchase and sell cattle, and generate and collect
accounts and other proceeds of the cattle it sells. Owner and Operator each
acknowledge, stipulate, and agree that all cattle purchased by Operator in its
operation of the Rollover Business, beginning on the date of this Agreement,
will be purchased in Operator’s name and will be solely owned and controlled by
the Operator. Owner disclaims any rights in the cattle purchased by the Operator
for the Rollover Business and the proceeds of those cattle, and stipulates that
its only interest in the proceeds of the transactions of Operator in the
Rollover Business will be Owner’s share of net profits of the Business as
provided herein.

 

 
(ii)
 
This Agreement requires Operator to maintain operating accounts and lines of
credit at banking institutions in relation to the Business

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Owner acknowledges and agrees that Operator maintains such operating accounts
and lines of credit with National City Bank of Kentucky (“National City”), and
that it has granted and/or will grant security interests in the cattle owned by
Operator, in the proceeds of cattle, including accounts due Operator, and in the
operating accounts into which the proceeds are deposited, as collateral for the
money it borrows on its lines of credit with National City. Owner further agrees
that the cattle, accounts, and other collateral in which Operator grants
National City a security interest shall secure all of Operator’s liabilities to
National City under Operator’s Revolving Loan and Security Agreement, dated
December 29, 2000, and all amendments and modifications thereto, including
without limitation amendments and modifications as to the maximum principal
amount, and certain other (as set forth in the following sentence) debts and
liabilities of Operator to National City and are not limited to securing
Operator’s debts and liabilities incurred with National City in the operation of
the Business. Owner acknowledges and agrees that Operator may use the cattle,
accounts, and other collateral relating to the Business to cross-collateralize
the following obligations (and only the following obligations) of Operator to
National City: (A) Commercial Installment Note (Hartley) dated November 12, 1997
in the original principal amount of $2,225,000 and with a maturity of November
12, 2004; (B) Commercial Installment Note (Hartley Mill) dated May 14, 2001 in
the original principal amount of $790,500 and with a maturity of November 12,
2007; (C) Promissory Note (Building) dated August 5, 2006 in the original
principal amount of $790,500 and with a maturity of August 5, 2006; and (D) all
extensions, renewals and modifications of each of (A) through (C).
Notwithstanding the foregoing, Operator will use reasonable efforts to cause
National City (either through replacement or repayment of such obligations) to
release the cattle, accounts, and other collateral relating to the Business as
collateral for obligations (A) through (D) as soon as is practicable, and in any
case upon replacement or repayment of such obligations. Owner acknowledges that
National City may send notices of its perfected security interest in the
property of Operator to secured parties of Owner that have perfected security
interests in property similar to the property Operator will buy, sell, generate,
and use in the Business.
 
            (iii)     Owner hereby waives and subordinates in favor of National
City any landlord’s or agister’s lien that Owner may now or hereafter hold as a
result of Operator storing or keeping cattle at facilities owned, leased or
controlled by Owner and, in compliance with Operator’s agreements with National
City, Owner will permit National City to enter the premises of such facilities
upon reasonable advance notice, and will authorize National City to remove its
collateral therefrom in a commercially reasonable manner in order to efficiently
sell or otherwise dispose of Operator’s cattle kept at such facility.
 
            (iv)     Owner and Operator agree that at all reasonable times and
from time to time National City shall have access to and the right to use the
equipment leased by Owners to Operator and set forth on Exhibit D (“Equipment”)
in order for National City to examine, inspect, and make extracts

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from Operator’s books, records, and systems and to arrange for the verification
of accounts and inventory. National City’s rights to use the Equipment shall be
limited to records and data (“Records”) relating to the Business and to its
collateral and shall include access to and the right to use all software, and
any other equipment of Owner, required to read or otherwise render meaningful,
utilize, create, maintain, and process any such Records.

 

 
(v)
 
Notwithstanding Section 3(e) of this Agreement, Owner agrees that so long as
Operator’s line of credit is maintained at National City, Operator may maintain
a single line of credit for the operation of the Business and for Operator’s
other business activities. In consideration of Owner’s agreement for Operator to
maintain a single line of credit with National City, Operator agrees that it
will segregate on its books the loans drawn from the line of credit, and
interest costs related thereto, relating to operation of the Business and to the
clearing accounts between Operator and James Ed Edens, IV, and Operator
additionally agrees that it will maintain separate operating accounts for the
Business and for Operator’s other business activities.

 

 
(vi)
 
To the extent that Section 3(e) requires Owner’s approval of “material increases
in the costs and conditions of the lines of credit pertaining to the
Business...”, Owner agrees that this section does not apply to any increases in
the interest rate at which Operator borrows from National City as long as those
increases are based on a change in National City’s index rate, or to any other
index rate or rate to which Operator’s line of credit is tied for the purpose of
calculating interest. Any agreement, or change in any existing agreement,
between Operator and National City shall be valid as between Operator and
National City, even if it results in what Owner deems to be a material increase.

 

 
(vii)
 
Any references in this Agreement to Operator’s management, supervision, and
operation of the Business, including without limitation, the management of
receivables and inventory, shall not be interpreted to in any way convey to
Owner any ownership or control of the cattle and the proceeds thereof, including
accounts, and shall be deemed to refer only to Operators handling of property
owned by Operator and over which Operator has full power and control, including
without limitation the right to grant a security interest to National City.

 

 
(viii)
 
The provisions of this Section 3(l) shall survive the termination of this
Agreement as to all cattle owned or acquired by Operator, all proceeds of those
cattle, including accounts, and as to National City’s rights regarding the
Equipment and Records. Owner and Operator will each promptly notify National
City should this Agreement be terminated either for cause or by expiration.

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(ix)
 
Notwithstanding Section 13(i) of this Agreement, relating to third-party
beneficiaries, National City is an intended beneficiary of the provisions of
this Section 3(l).

 

 
(x)
 
National City shall be deemed to be Operator’s “lender” as that term is used in
Section 5 and National City is entitled to all information it reasonably
requires in making credit decisions about Operator and in administering
Operator’s lines of credit, loans, and deposit accounts.

 

 
(xi)
 
Should any part of this Section 3(l) conflict with any other Section or any part
thereof, the provisions of this Section 3(l) shall control.

 

 
(xii)
 
If any provision of the Agreement violates any provision of Operator’s loan
agreements, security agreements, or any other lending document with National
City (“Lending Agreements”), Owner agrees to use good faith efforts to revise
this Agreement in order to bring this Agreement into conformance with Operator’s
Lending Agreements as they existed on the date of the Agreement or as the
Lending Agreements may be subsequently modified to accommodate Operator’s credit
needs resulting from this Agreement.”

 
3.    No Other Amendment.    Except as specifically amended pursuant to this
Amendment, the Agreement remains in full force and effect in accordance with its
terms.
 
4.    Governing Law.    This Amendment shall be governed by and constructed
under the laws of the State of Delaware.
 
5.    Counterparts; Facsimile.    This Amendment may be executed in a number of
identical counterparts, all of which shall constitute on Amendment and will be
binding on the parties; provided that, in making proof of this Amendment, it
shall not be necessary to produce or account for more than one such counterpart.
A telecopied facsimile of a duly executed counterpart of this Amendment shall be
sufficient evidence of the binding agreement of each party to the terms herein,
and delivery of this Amendment shall be deemed to occur upon transmission of a
facsimile of a fully executed counterpart of this Amendment to the intended
recipient.

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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
 
 

 
eM
erge Interactive, Inc.

 

 
By
:            /s/    SCOTT MATHEWS                          

 
Na
me:                Scott Mathews                                  

 
Tit
le:                President & COO                                

 

 
Ea
stern Livestock Co., LLC

 

 
By
:            /S/    THOMAS P. GIBSON                  

 
Na
me:                Thomas P. Gibson                         

 
Tit
le:                        President                                 

 

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