EXHIBIT 10.23
PROLONG SUPER LUBRICANTS. INC.
CONTRACT PACKAGING AGREEMENT
THIS AGREEMENT is entered into on this 11th day of Sept., 1998, by and
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between Prolong Super Lubricants, Inc., a Nevada corporation ("Prolong") and
Premiere Packaging, Inc., a Michigan corporation ("Premiere"). Prolong and
Premiere are hereinafter referred to at times as the "Party" and collectively as
the "Parties".
RECITALS
A. Prolong is in the business of marketing and selling car care
appearance products.
B. Premiere is located at 0000 Xxxxxx Xxxxx, Xxxxx, Xxxxxxxx (the
"Facility") and has the necessary equipment, personnel and expertise to
formulate, package, warehouse and ship the products for Prolong as listed on
Schedule "A" attached hereto and incorporated herein by this reference (the
"Products").
C. Each of the Parties believes that it is in their respective best
interest to enter into this Agreement whereby Premiere will purchase components
and raw materials, formulate, blend, package, warehouse and ship the Products
for Prolong, all in accordance with the terms and conditions as set forth in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing Recitals and the terms
and conditions hereinafter set forth, the Parties agree as follows:
AGREEMENT
1. Contract Manufacturing. Premiere agrees to purchase components and
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raw materials, formulate, blend, package, warehouse and ship the Products (the
"Contract Services") for Prolong in accordance with the terms and conditions set
forth in this Agreement. Prolong shall provide Premiere with written Bills of
Materials and complete blending and packing specifications for all of the
Products (the "Specifications"). Prolong shall also provide Premiere with Bills
of Lading specifying the ship dates and designated carriers for Products ordered
(the "Orders"). The Specifications shall be set forth on Schedule "B" which
shall be attached to this Agreement and is incorporated herein by this
reference. The Specifications may be changed by the mutual agreement of the
Parties from time to time.
In the event that any Product provided to Prolong by Premiere does not
comply with the Specifications (the "Nonconforming Products"), Premiere shall
have sixty (60) days from receipt of notice thereof from Prolong to rework the
Nonconforming Products, or at Premiere's election, to dispose of the
Nonconforming Products in a manner that does not compete in anyway whatsoever
with the sale of the Products by Prolong. In no event shall Premiere dispose of
the Nonconforming Products in a manner that would in anyway damage the name,
reputation, goodwill or integrity of the Products in the marketplace.
2. Production. On or before the 1st day of each month, Prolong shall
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provide Premiere with a four (4) month forecast for each Product (the
"Forecast"). Premiere will use the Forecast to assure that it has adequate
finished goods and raw material inventory to support timely delivery of
Prolong's requirements for the Products as set forth in the Forecast. The
Forecast shall serve as a firm commitment by Prolong to purchase one hundred
percent (100%) of the first two (2) months of finished Product and one hundred
percent (100%) of the four (4) month requirement of raw materials and components
based on the standard costs as set forth on Exhibit "A" (the Component Costs")
plus eight percent (8%).
The Orders received by Premiere from Prolong will be shipped by Premiere
within seventy-two (72) hours (three working days) or less, unless Prolong
provides express written instructions for future delivery. Premiere shall ship
the Products to the destinations as designated by Prolong, F.O.B. Premiere's
Facilities. Premiere shall use its best efforts to notify Prolong in advance of
any inability to make full and timely delivery of any Products. Products shipped
by Premiere shall be of a quality consistent with any previous samples that are
provided and shall meet the Specifications. Premiere shall use its best efforts
to produce Products that are of the highest standard and to the best advantage
of both Parties in the marketplace.
In the event of any dispute between Premiere and Prolong, Premiere will
continue to provide the Contract Services and Prolong shall continue to pay for
Products delivered by Premiere all in accordance with the terms and conditions
of this Agreement.
3. Compensation. Prices to be paid by Prolong to Premiere for the
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Products shall be those prices as set forth on Schedule "A" attached hereto and
incorporated herein by this reference (the "Prices"). The Component Costs for
the Products (the "Component Costs") shall be used in determining the Prices for
the fiscal year, October 1, 1998 to September 30, 1999. Differences between the
actual costs incurred by Premiere and the Component Costs will be reconciled
using a purchase price variance report generated by Premiere on or before the
30th day following the end of each calendar quarter (the "Variance Report"). The
difference shall be paid by Prolong to Premiere or by Premiere to Prolong
(depending on whether the variance is positive or negative) on or before the
30/th/ day following receipt by Prolong of the Variance Report. Incoming freight
costs incurred by Premiere shall be set forth on the Variance Report and
Premiere shall be reimbursed for said costs by Prolong, also within 30 days. The
Prices shall remain the same for a period of not less than one year (the "Price
Period") unless otherwise mutually agreed to by the Parties. Premiere shall have
the right to adjust the Prices following its review of overall volume and direct
and overhead costs by giving not less than 60 days notice to Prolong prior to
the end of any Price Period (the "Adjustment"). The Adjustment shall not exceed
the actual increases or decreases in costs to Premiere for the production of the
Products.
On or before the end of each week, Premiere shall provide Prolong with an
invoice for all Products shipped by Premiere during the preceding week (the
"Invoice"). Prolong shall pay to Premiere the full amount of the Invoice on or
before the 30th day following receipt of the Invoice by Prolong.
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4. Inventory.
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4.1 Raw Materials. Raw materials purchased by Premiere in
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accordance with the Forecast that remain in inventory for more than 75 days
shall be subject to the monthly charge as outlined in Schedule "A". If any
Product or component thereof is discontinued by Prolong, residual inventories
shall be for Prolong's account at standard cost plus eight percent (8%). In
no event shall Prolong be responsible for inventory on hand that exceeds the
quantities required to meet the Forecast unless otherwise mutually agreed to by
the Parties.
4.2 Finished Product. Finished Product that remains in
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Premiere's inventory for more than 60 days shall be subject to the monthly
charge as outlined in Schedule "A". If any Product is discontinued by Prolong,
any finished goods relating thereto (in a quantity not in excess of Forecast)
that remain in inventory with Premiere shall be for Prolong's account.
5. Insurance
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5.1 Premiere's Insurance. Premiere shall maintain full general
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liability insurance as well as property insurance insuring against any and all
losses arising out of fire, flood, vandalism or other damage to the Facility
and any equipment used in the performance of the Contract Services (the
"Premiere Insurance"). The Premiere Insurance shall be adequate to insure
replacement of its Facility and the equipment and inventory located therein,
with general liability insurance in an amount of not less than one million
dollars ($1,000,000).
5.2 Prolong's Insurance. Prolong shall maintain one million
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dollars ($1,000,000) of general liability insurance at all times during the term
of this Agreement.
5.3 Waiver of Subrogation. Each of the Parties hereby agrees to
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waive their respective rights of recovery against each other for any loss
insured by the insurance policy as set forth in Section 5.1 and 5.2 above for
the benefit of the respective Parties.
6. Term/Termination. This Agreement shall continue in full force and
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effect until such time as either Party gives not less than 90 days written
notice to the other Party of termination thereof. At the end of said 90 day
period, Premiere shall invoice for raw materials and finished goods inventory
on hand (up to the maximum amount of said raw materials and finished goods
as required pursuant to the Forecast) and Prolong shall pay to Premiere the
standard costs of said raw materials and finished goods plus 8% within 30 days
following receipt of said invoice.
Notwithstanding the foregoing, Prolong shall have the right to terminate
this Agreement by giving not less than thirty (30) days written notice to
Premiere, if Premiere fails to deliver the Products in accordance with the terms
and conditions as set forth herein. Premiere shall also have the right to
terminate this Agreement by giving not less than thirty (30) days written notice
if Prolong fails to pay for the Products in accordance with the terms and
conditions of this Agreement.
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7. Proprietary Rights. It will be necessary for Prolong to disclose
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to Premiere certain proprietary and confidential information that will be
required by Premiere in the performance of the Contract Services (the
"Proprietary Information"). Premiere hereby acknowledges and agrees that Prolong
has sole right, title and interest in the Proprietary Information, including but
not limited to any formulas provided to Premiere and the Specifications, and
that Premiere is expressly prohibited from asserting any rights in the nature of
a license or grant of any rights, of any trade names, trademarks, commercial
symbols, or other proprietary marks owned by or associated with Prolong, or any
rights in the Products or any formulas or specifications relating thereto of any
nature whatsoever, except as expressly set forth in this Agreement.
8. Confidentiality. Except as required in the ordinary course of
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Premiere's business, Premiere shall hold in confidence and not disclose to any
person or any entity without the express prior written authorization of Prolong,
which consent may be withheld in its sole and absolute discretion, at any time
during the term of this Agreement, or any time thereafter, the names and
addresses of any of Prolong's customers, Prolong's past or prospective dealings
with its customers; the parties, dates or terms of any of Prolong's contracts;
any information, trade secrets, systems, processes or business methods, or any
other secret or confidential matter relating to the Products, Prolong's
customers or the business affairs of Prolong or any companies affiliated with
Prolong.
9. Prolong's Materials. Any proprietary information provided by
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Premiere (as noted by Premiere) to Prolong shall be kept confidential by
Prolong. Upon termination of this Agreement, Premiere shall provide, Prolong
with all materials necessary, including all formulas, notes, memorandum,
specifications, devices, mechanical parts, lists, materials, books, files,
reports, correspondence, records and other documents that would be required by
Prolong or its designated agent to provide the Contract Services. The
Information shall be deemed to constitute trade secrets of Prolong and shall not
be disclosed to any other party, except as expressly authorized pursuant to this
Agreement.
In addition to the Information, Prolong shall have the right to
request that any and all equipment or molds provided by Prolong to Premiere (the
"Equipment") be returned to Prolong. Premiere shall cooperate with Prolong in
expeditiously transferring the Equipment to Prolong following receipt of
Prolong's request for the Equipment.
10. Regulatory Compliance. Premiere shall be responsible for providing
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the Contract Services in a manner that will comply with all governmental rules
and regulations.
11. Indemnity.
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11. Prolong Indemnification. Except for those Products that are
not manufactured by Premiere in accordance with the Specifications, Prolong
agrees to indemnify, defend and hold Premiere harmless from and against any
payment, loss, liability, penalty, fine, tax, expense or damages, including, but
not limited to, attorney's fees, which may arise directly or indirectly out of
the sale of the Products by Prolong.
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11.2 Premiere Indemnification. Premiere hereby agrees to indemnify, defend
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and hold Prolong harmless from and against any payment, loss,liability, penalty,
fine, tax, expense or damages, including, but not limited to, attorney's fees,
which may arise directly or indirectly out of the sale by Prolong of any
Products manufactured by Premiere that do not comply with the Specifications,
provided, however, that said damages are caused in whole or in part based on the
failure of the Products to meet the Specifications.
12. Inspection. Prolong shall have the right to inspect the Facilities at
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any time by giving not less than 48 hours notice to Premiere (the "Inspection").
The Inspection shall be conducted for the sole purpose of ascertaining whether
or not Premiere is in compliance with the terms and conditions of this
Agreement, including, but not limited to, Premiere's compliance with the
requirement to manufacture the Products in accordance with the Specifications.
The Inspection shall be conducted by Prolong in a manner that will not
unreasonably interfere with Premiere's operations and shall be conducted and
concluded in the shortest reasonable time possible. In no event shall Prolong
have the right to conduct an Inspection more than one time during any
consecutive 90 day period.
13. General Provisions. This Agreement shall inure to the benefit of and
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shall be binding upon the Parties and their respective heirs, successors,
legalrepresentatives and assigns. In the event that any legal, declaratory, self
help, or equitable action is commenced between the Parties hereto or their
personal representatives concerning any provision of this Agreement or the
rights and duties of any person in relation thereto, the prevailing Party shall
be entitled, in addition to such other relief that may be granted, to a
reasonable sum for its attorney's fees and any other costs and expenses relating
thereto. This Agreement shall be governed by the laws of the State of California
and the venue of any legal action arising out of this Agreement shall be in
Orange County, California where this Agreement is deemed to have been entered
into.
Premiere shall only have the right to assign their duties and obligations
under this Agreement by giving not less than ninety (90) days notice to Prolong
of said assignment. Any notices pertaining to this Agreement shall be in writing
and transferred by facsimile, overnight mail, personal hand delivery or through
the facilities of the United States Post office, certified or registered mail,
return receipt requested. Any notice shall be deemed to be given as of the date
so delivered. This Agreement contains the entire Agreement between the Parties
hereto and supersedes any prior written or oral agreement between the Parties
concerning the subject matter contained herein.
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IN WITNESS WHEREOF, the Parties hereby adopt this Agreement as of the date
first set forth at Irvine, California.
PROLONG SUPER LUBRICANTS, INC.
By: /s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx, President
PREMIERE PACKAGING, INC.
By: /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx, President
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SCHEDULE A
PRO LONG PRICE LIST
EFFECTIVE OCTOBER 1, 1998 THRU SEPTEMBER 30, 1999
MINIMUM RUN
QUANTITIES
Part Number Description Price Per Units Cases
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FOR SALE TO XXXXX XXXXX FOR INFOMERCIAL KITS.
60017S PROTECTANT 17 OZ $ 1,366.92 1000 22,000 3,667
67106S PROT "EXT" FOAM PAD W/HANDLE $ 673.59 1000
67600S PROT "INT" FOAM PAD W/LABEL $ 236.68 1000
62017S GLASS CLEANER 17 OZ $ 904.16 1000 22,000 612
64017S WATERLESS WASH 17 OZ $ 911.71 1000 22,000 612
68017S MULTI PURPOSE CLEANER 17 OZ $ 1,030.06 1000 22,000 612
66010S PAINT SEALANT 10 OZ KITS/UPSELL $ 1,112.94 1000 44,000 612
66006S PAINT SEALANT PAD W/HANDLE $ 622.44 1000
67000S POLISHING CLOTH WITH BAND LABEL $ 480.31 1000
67660K PS FOAM PAD W/LABEL - UPSELL $ 248.98 1000
63044-001 WATERLESS WASH 4 OZ SAMPLE $ 586.33 1000 48,000 1,000
63174-001 WATERLESS WASH 17 OZ DISPLAY $ 1,781.94 1000 22,000 5,500
63170-001 PROTECTANT 17 OZ DISPLAY $ 4,320.75 1000 22,000 5,500
63644-001 WATERLESS WASH 64 OZ REFILL $ 2,463.95 1000 6,000 1,500
63320-001 PROTECTANT 32 OZ REFILL $ 2,813.87 1000 12,000 3,000
63172-001 GLASS CLEANER 17 OZ $ 981.77 1000 22,000 3,667
63178-001 MULTI PURPOSE CLEANER 17 OZ $ 1,107.66 1000 22,000 3,667
63106-001 PAINT SEALANT 10 OZ DISPLAY $ 3,818.47 1000 44,000 11,000
63050-001 RETAIL - INFO KIT WITH DISPLAY $11,325.52 1000 20,000 5,000
RAW MATERIALS - STANDARD COST PLUS 8%
- CARRYING CHARGE (OVER 75 DAYS) 1.5% PER MONTH
FINISHED GOODS - AS COSTED ABOVE
- CARRYING CHARGE (OVER 60 DAYS) 1.5% PER MONTH
ADDITIONAL WORK - WORK PERFORMED BY PREMIERE NOT NORMALLY REQUIRED IN THE
MANUFACTURE OF PRODUCTS WILL BE BILLED AT THE RATE OF
$22.50/HOUR
OVERTIME - $750.00/LINE SHIFT
WAREHOUSE FEE - $18 PER PALLET INCLUDES: TRUCKING TO WAREHOUSE, 6 WEEKS OF
STORAGE, AND LOADING FULL PALLETS AT THE WHSE FOR SHIPMENT TO
FULFILLMENT CENTER
SCHEDULE B
RECEIPT OF PROLONG SPECIFICATIONS
RECEIVED DATE
BATCHING SPECIFICATIONS: Y N RECEIVED COMMENTS
04-64000-001 WATERLESS WASH & SHINE Y 08/06/98
RA-66000-001 PAINT SEALANT Y 08/06/98
00-00000-000 PROTECTANT Y 08/06/98
00-00000-000 CLEANER DEGREASER Y 08/06/98
00-00000-000 GLASS CLEANER Y 08/06/98
FINISHED PRODUCT SPECIFICATIONS:
63044-001 WATERLESS WASH 4 OZ SAMPLE Y 9/17/98
63174-001 WATERLESS WASH 17 OZ DISPLAY Y 9/17/98
63170-001 PROTECTANT 17 OZ DISPLAY Y 9/17/98
63644-001 WATERLESS WASH 64 OZ REFILL Y 9/17/98
63320-001 PROTECTANT 32 OZ REFILL Y 9/17/98
67006K PROT "EXT" FOAM PAD W/LABEL N
63172-001 GLASS CLEANER 17 OZ Y 9/17/98
63178-001 MULTI PURPOSE CLEANER 17 OZ Y 9/11/98
63106-001 PAINT SEALANT 10 OZ DISPLAY Y 9/21/98
63050-001 RETAIL - INFO KIT WITH DISPLAY Y 9/21/98
67106K PROT "EXT" FOAM PAD W/HANDLE N
67600K PROT "INT" FOAM PAD W/LABEL N
66006K PAINT SEALANT FOAM PAD W/HANDLE N
67000K POLISHING CLOTH WITH BAND LABEL N
66010K BULK PAINT SEALANT 10 OZ Y 9/17/98
60017K BULK 17 OZ PROTECTANT Y 9/11/98
62017K BULK 17 OZ GLASS CLEANER Y 9/11/98
64017K BULK WATERLESS WASH 17 OZ Y 9/11/98
68017K BULK 17 OZ CLEANER DEGREASER Y 9/11/98
SALE TO XXXXX XXXXX FOR INFO KIT:
66006S PAINT SEALANT APPL W/HANDLE N
67106S PROT "EXT" FOAM PAD W/HANDLE N
67600S PROT "INT" FOAM PAD W/LABEL N
67000S POLISHING CLOTH WITH BAND LABEL N
67660K PS FOAM PAD W/LABEL UPSELL N
66010S PAINT SEALANT 10 OZ KITS/UPSELL Y 9/17/98 SAME AS 66010K
60017S PROTECTANT 17 OZ Y 9/11/98 SAME AS 60017K
62017S GLASS CLEANER 17 OZ Y 9/11/98 SAME AS 62017K
64017S WATERLESS WASH 17 OZ Y 9/11/98 SAME AS 64017K
68017S MULTI PURPOSE CLEANER 17 OZ Y 9/11/98 SAME AS 68017K
10/13/98
