ASSIGNMENT AND AMENDMENT NO. 1
TO
SUPPLY AGREEMENT AND ROYALTY AGREEMENT
THIS ASSIGNMENT OF, AND AMENDMENT NO. 1 (this "Amendment No. 1") to
those certain Supply and Royalty Agreements by and between Basic Vegetable
Products, L.P., a Delaware limited partnership ("BVP") and Natrol, Inc., a
Delaware corporation ("Buyer") each dated February 27, 1998 (the "Supply
Agreement" and the "Royalty Agreement"), is made by and among Natrol, Inc., BVP,
ConAgra Foods, Inc., a Delaware Corporation, and CAG 45, Inc., a Delaware
corporation and wholly owned subsidiary of ConAgra Foods, Inc., (ConAgra Foods,
Inc. and CAG 45, Inc. shall be collectively referred to herein as "Seller"),
effective as of this 7th day of November 2000 (the "Effective Date").
RECITALS
WHEREAS, pursuant to the Supply Agreement and the Royalty Agreement
Buyer agreed to purchase and pay certain royalties, and BVP agreed to supply and
develop certain vegetable, fruit, herbal and botanical products.
WHEREAS, BVP intends to enter into an Asset Purchase Agreement (the
"Purchase Agreement") with CAG 45, Inc. wherein BVP shall sell certain of its
assets to CAG 45. Inc.;
WHEREAS, Seller now desires to assume the obligations and liabilities
of BVP under the Supply Agreement as modified herein, and the Royalty Agreement;
BVP desires to assign its rights under the Supply Agreement and the Royalty
Agreement as modified herein, the Buyer desires to consent to such assignment,
assumption and modification; and
NOW THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by all parties, the parties hereto hereby agree
as follows:
1. CAPITALIZED TERMS. Capitalized terms which are not defined
herein shall have the meanings defined in the Supply Agreement and the Royalty
Agreement. For purposes of this Amendment No. 1, the "Seller" under this
Amendment No. 1 and "Seller" under the Supply Agreement and the Royalty
Agreement shall be interchangeable and all references to "Seller" shall be
construed hereafter to refer to and include ConAgra Foods, Inc. and CAG 45, Inc.
2. ASSUMPTION. Effective upon the closing of the Purchase
Agreement (the "Closing"), Seller hereby takes and assumes all duties,
liabilities, obligations, rights and interests of BVP in and to the Supply
Agreement and the Royalty Agreement as modified hereby, which arise after
Closing.
3. ASSIGNMENT. Effective upon the Closing, BVP hereby assigns
all duties, liabilities, obligations, rights and interests of BVP in and to the
Supply Agreement and the Royalty Agreement, which arise after the Closing, and
Buyer hereby consents to the aforementioned assumption and assignment by the
parties.
4. MODIFICATION. Effective upon the Closing, Buyer and Seller
hereby agree that the Supply Agreement and the Royalty Agreement shall be
modified as follows:
a. PRODUCTS DEFINITION REVISED. Section 1(b) of the
Supply Agreement is deleted in its entirety and replaced with the following
provision:
1(b) PRODUCTS. "Products" shall not include nutraceutical
ingredients for use in food (including, but not limited to,
functional food) applications and shall mean any of the
following:
(i) "Schedule 1 Products," which shall consist of those
certain nutraceutical-grade ingredients currently produced
by Seller (including all such products produced by its BVP
and Gilroy Foods divisions), as set forth on Schedule 1; and
(ii) "Schedule 2 Products," which shall consist of all
nutraceutical-grade vegetable and herbal ingredients
produced by Seller (including all such products produced by
both its BVP and Gilroy Foods divisions) from time to time
but not set forth on Schedule 1.
b. PRICE INCREASE FOR SCHEDULE 1 PRODUCTS. In respect to
the Supply Agreement, the price for all Schedule 1 Products, with the exception
of certain shipments of Rexall Products as defined and described below, shall be
increased by 20 cents per pound over and above the formula price otherwise
charged by BVP to Buyer pursuant to the Suupply Agreement and Royalty Agreement.
The price for all Rexall Products ultimately sold to Rexall Sundown, Inc.
(including its successors and assigns), for shipment to its location at 0000
X.X. 00xx Xxxxxx, Xxxxxxxxx Xxxxx, Xxxxxxx 00000 (or any location which succeeds
to operations at such address), shall be increased by a total of 55 cents per
pound over such formula prices (the "Rexall Upcharge"). The Rexall Upcharge
shall be paid in its entirety for all Rexall Products that are sold and shipped
directly to such location. Buyer will initially pay $.20 of the Rexall Upcharge
for all other Rexall Product sales and shall pay the remaining $.35 of the
Rexall Upcharge on a quarterly basis upon reviewing its records for any other
sales of Rexall Products made to such location. Seller shall have the right to
inspect and audit Buyer's records for
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compliance with this Section on prior notice during Buyer's normal business
hours. For purposes of this Section, "Rexall Products" shall mean those Products
now sold to Rexall Sundown, Inc., at the above location, as listed on SCHEDULE
"A" attached.
c. VOLUME TARGET MODIFICATION. The third sentence of
Section 4(a) of the Supply Agreement is deleted in its entirety and replaced
with the following sentence: "Such Volume Targets with respect to all Products
shall not be less than one million two hundred thousand (1,200,000) pounds of
garlic nor more than two million eight hundred thousand (2,800,000) pounds of
garlic."
d. TERM MODIFICATION. Section 6(a) in respect to the
Supply Agreement and Section 6.1 in respect to the Royalty Agreement shall be
deleted in their entirety and replaced with the following provision:
(a) TERM. The term of this Agreement (the "Term") is
hereby extended until December 31, 2007 (the "Initial Term");
provided that the Term will be extended automatically for
successive one-year periods thereafter unless either party
gives notice during the month of December in any year of its
intent not to renew this Agreement at least two years in
advance, in which case this Agreement shall terminate upon the
end of such two-year period. Notwithstanding the forgoing,
prior to January 1, 2001 (i) the BVP division of Seller shall
continue to supply Buyer according to the terms of this
Agreement provided that prior to such date all exclusivity and
noncompete provisions herein shall apply only to the BVP
division of Seller, and (ii) Seller shall not otherwise expand
its marketing and sales of Products in Buyer's Marketing
Channels as described on SCHEDULE 5.
e. NON-EXCLUSIVITY FOR FOOD APPLICATIONS. As of Closing
and notwithstanding anything in the Supply Agreement or Royalty Agreement to the
contrary, Buyer and Seller shall be free to produce, purchase, sell and market
any and all Products, as well as any other nutraceutical ingredients for food
applications without restriction, including any and all functional food
applications. Effective as of Closing, Schedule 5 hereby deleted in its entirety
and replaced with the following provision:
The parties agree that the term "Marketing Channel(s)"
shall mean, in respect to Buyer, those marketing and
distribution channels in which the Products are used as
nutraceutical ingredients in dietary supplements as currently
defined within the Dietary Supplement Health and Education Act
of 1994. Nothing herein shall be deemed to restrict Buyer or
Seller from each producing, purchasing, selling or marketing
either the Products or any other nutraceutical or other
ingredients for food applications, including but not limited
to functional food applications.
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5. MODIFICATION. Except as specifically modified and amended
hereby, the Supply Agreement and Royalty Agreement shall remain in full force
and effect and each is hereby ratified, confirmed and approved. No provision of
this Amendment No. 1 may be modified or amended, nor shall any terms be waived,
except expressly in a writing signed by both parties.
6. This Amendment No.1 shall be governed by the laws of the state
of Delaware, excluding conflict of law principles that would cause the law of
another jurisdiction to apply, as applied to agreements executed and performed
entirely in Delaware by Delaware residents.
7. COUNTERPARTS. This agreement may be executed in one or more
counterparts, each of which shall be regarded as an original and all of which
shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 effective as the date first above written.
Natrol, Inc.
/s/ Xxxxxxx Xxxxxxx
-------------------
By: Xxxxxxx Xxxxxxx
President & CEO
Basic Vegetable Products, LLP.
/s/Xxxxx X. Xxxxxxxx
--------------------
By: Xxxxx X. Xxxxxxxx
President & CEO
ConAgra Foods, Inc.
/s/ Xxxxxxx X. Xxxxxx
---------------------
By: Xxxxxxx X. Xxxxxx
Authorized Representative
CAG 45, Inc.
/s/Xxxxxxx X. Xxxxxx
--------------------
By: Xxxxxxx X. Xxxxxx
President
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