Contract Packing Agreement

This Agreement made and entered into this 5 day of April, 1996, by and between HANSEN BEVERAGE COMPANY (hereinafter referred to as "Company") and SOUTHWEST CANNING & PACKAGING, INC., (hereinafter referred to as "Packer").


"RECITALS"


"A. A Packer is in the business of packaging various carbonated beverages.


"B. Company sells and distributes carbonated beverages under its own brand name and other brand names.


"C. Packer and Company wish to provide for the terms and conditions upon which package Packer's products."


"COVENANTS"


"For and in consideration of the mutual covenants, conditions and provisions contained herein, the parties hereto agree as follows:"


1. Packer agrees to pack carbonated beverages of Company as shown on Schedule 'A' (the "Product"), in accordance with written formulas and standards set by the Company and provided to Packer, which formulas and standards may be omitted from time to time."


2. The packaging for the Product shall be in accordance with the rates and prices as set forth in Schedule 'A.' In the event of a default in the payment as provided in Schedule 'B' Packer shall give Company five (5) business days' notice and if the default is not cured and the Letter of Credit is insufficient to cover any outstanding balance, then Packer shall have the right to sell wherever necessary including but not limited to California, any and all Product inventory and raw materials in Packer's possession to satisfy any of Company's obligations to Packer under this Agreement."


3. Packer agrees to package for Company the flavors and sizes in Schedule 'A', at such times and in such quantities as may be mutually agreed upon between Company and Packer during the terms of this Agreement.


4. Packer will schedule production of products when inventory of products reaches the minimum reasonable stock levels or at such other intervals as maybe mutually agreed upon between Packer and Company from time to time. Packer further agrees to code-date products so as to make possible identification of date of production in accordance with coding system as required by Company.


5. Packer and Company will each provide raw materials for the Company's product as outlined in Schedule 'C'.


6. Packer agrees to maintain sufficient materials in its inventory to accommodate normal production requirements of Company. It is understood that inventory levels of materials ordered by Packer specifically for Company's product will be maintained at a level that will consider supplier minimum run requirements, Packer's minimum run requirements, historical sales data when available and Company's sales projections. Company agrees to maintain a two months supply of concentrate at Packers location.


7. Packer agrees to send samples of products at Company's expense to Company at places and intervals reasonably determined by Company.


8. Packer agrees to allow representatives of Company to inspect its production facilities including observing the syrup making'' process and Quality Control functions at any time during normal business hours.


9. Title to all finished goods shall remain with Packer. Packer shall be responsible for warehousing such inventories, which cost is included in the rates as shown in Schedule 'A'. A shrinkage allowance of two percent on concentrate usage shall be allowed Packer under this Agreement. Any losses in excess of this amount, as determined by the Company during month-end inventories, shall be the sole r ...