Contract Packaging Agreement

EXHIBIT 10.23


PROLONG SUPER LUBRICANTS. INC.


CONTRACT PACKAGING AGREEMENT


THIS AGREEMENT is entered into on this 11th day of Sept., 1998, by and
---- ------ 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 6220 Lehman Drive, Flint, Michigan (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
---------------------- 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
---------- 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
------------ 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.
---------

4.1 Raw Materials. Raw materials purchased by Premiere in
------------- 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
---------------- 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.


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