Packaging Agreement - Hansen Beverage Co. and US Continental Marketing Inc.
August 14, 2000
Mr. Hilton H. Schlosberg
Vice Chairman
Hansen Beverage Company
Suite 101
2380 Railroad St.
Corona, CA 91720
Re: Packaging Agreement Between Hansen Beverage
Company and U.S. Continental Marketing, Inc.
Dear Mr. Schlosberg:
U.S. Continental Marketing, Inc., a California corporation ("USCM"), is
pleased to provide packaging, bundle wrapping and distribution services for
Hansen Beverage Company ("Hansen") beverage products pursuant to the terms and
conditions set forth herein.
1. Primary Engagement.
a. Hansen hereby engages USCM as its primary distribution center for Hansen
beverage products for truck delivery other than for products shipped directly
from Hansen Co-packers in the "Territory" as described on Schedule "1" hereto
(the "Territory"). As such, USCM shall have responsibility for loading trucks
with Hansen beverage products scheduled for delivery. USCM shall manage
inventory at the distribution center and assemble and load it, as appropriate,
for truck delivery in accordance with the procedures set forth in Schedule "2"
hereto. USCM will provide all personnel and equipment necessary to meet its
obligations hereunder.
b. USCM will provide such dry packaging services and bundle wrapping of
Hansen beverage products as may be requested by Hansen and in accordance with
the procedures set forth in Schedule "2" hereto. The parties hereto acknowledge
that USCM is not responsible for filling any beverage products in cans, bottles
or other containers.
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c. USCM will case pack and hand load trucks with Hansen beverage products,
all such loading to take place at the loading dock of the "Facility" (as defined
herein).
2. Compensation.
a. Hansen will compensate USCM in accordance with the terms set forth in
Schedule "3" hereto for services rendered by USCM. Prices may increase, but such
increases shall be limited to actual increases in direct costs incurred by USCM.
USCM shall provide reasonable support for any such increases to Hansen.
b. After six (6) months from the inception of this Agreement, USCM will, in
good faith, evaluate its costs of actual operations as compared to its estimated
costs of operations at the commencement of this Agreement and in the event of
such actual costs being lower, it shall pass an appropriate price reduction onto
Hansen. Such costs shall be determined on an ongoing basis and shall exclude
costs incurred during the start up phase of the business.
3. Facility Lease and Related Expense.
a. Hansen will lease such industrial facilities as are necessary for USCM
to discharge its services in accordance herewith. The parties contemplate that
Hansen will lease a facility consisting of approximately 113,600 square feet
with a street address of 1010 Railroad Street, Corona, California 92882 (the
"Facility"). Hansen will be responsible for and pay the rent for the Facility
("the Hansen Lease").
b. The parties hereto understand that USCM will be leasing approximately
26,600 square foot of space adjoining the Facility (the "USCM Premises"), which
space shall be in the same building as the Facility. USCM will be responsible
for and pay the rent for the USCM Premises (the "USCM Lease").
c. The parties hereto acknowledge Hansen's expansion rights into the USCM
Premises as set forth in Paragraph 46 of the Hansen Lease (the "Expansion
Rights"). Hansen agrees to provide USCM with a copy of the notice delivered to
the landlord in accordance with said Paragraph 46. Hansen agrees that in the
event that it exercises the Expansion Rights, Hansen shall make payment to USCM
(the "Relocation Payment") in the amount of (i) $____ less (ii) (A) $____
multiplied by (B) the number of completed months after the commencement of the
Term of this Agreement (as set forth in Section 7(a) hereof) through the date on
which Hansen has the right to occupy the USCM Premises. In accordance with the
preceding sentence, no Relocation Payment shall be due to USCM once forty (40)
months have been completed under this Agreement. A completed month for purposes
hereof shall be concluded on each monthly anniversary of this Agreement (e.g.,
if the Term of this Agreement commences on the fifth day of the month, a
completed month shall occur effective on the fifth day of each subsequent month
during the Term of this Agreement and so forth).
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d. Except as otherwise provided in this Section 3.e, all expenses
associated with the lease and occupation of the Facility, including, but not
limited to, utilities, insurance, repairs and maintenance, will be paid by
Hansen. USCM will be responsible for cleaning of and expenses for the Facility
and repairs necessitated by damage caused by USCM employees, agents or invitees
to the Facility and for providing all necessary equipment and for insurance
relating to its equipment, employees and operations. It is specifically recorded
that the electrical costs of operating any equipment for the activities of USCM
shall be borne and paid for in full by USCM. Among the expense for which Hansen
will be responsible are the following:
i. Alarm service;
ii. Insurance over Hansen inventory, but not relating to the operations of
USCM in the Facility.
e. Hansen shall permit USCM to have exclusive use of the Facility for the
purpose of providing services to Hansen in accordance herewith, except that
approximately 12,000 square feet of space will be set aside as office space for
Hansen personnel.
4. Obligations of USCM. USCM shall be liable to Hansen on an annual basis
for any damage to or loss of Hansen products in excess of $____ while in the
possession and control of USCM prior to delivery of such products to carriers
(from and after which, USCM's responsibility for damage or loss of products
shall cease), except to the extent that Hansen employees, independent
contractors acting on behalf of Hansen (other than USCM) or agents of Hansen are
responsible for any such damage or loss. USCM shall also be responsible for any
other loss suffered by Hansen as a result of USCM's breach of its obligations
hereunder, except to the extent that such loss is attributable to Hansen
employees, independent contractors acting on behalf of Hansen (other than USCM)
or agents of Hansen. Damage or loss shall be monitored on a monthly basis.
5. Representations, Warranties and Covenants of Parties.
5.1 Representations and Warranties by Hansen. Hansen represents and
warrants to, and agrees with, USCM as follows:
a. Binding Agreement. This Agreement has been duly executed and delivered
by Hansen and constitutes a valid and legally binding agreement of Hansen,
enforceable in accordance with its terms subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and provided that the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
b. Non-Contravention. The execution and delivery of this Agreement by
Hansen and the consummation of the business matters contemplated thereby will
not violate any provision of any mortgage, lien, lease, agreement, license or
instrument to which Hansen (or any affiliate thereof) is a party.
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5.2 Representations and Warranties by USCM. USCM represents and warrants
to, and agrees with, Hansen as follows:
a. Binding Agreement. This Agreement has been duly executed and delivered
by USCM and constitutes a valid and legally binding agreement of USCM,
enforceable in accordance with its terms subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and provided that the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
b. Non-Contravention. The execution and delivery of this Agreement by USCM
and the consummation of the business matters contemplated thereby will not
violate any provision of any mortgage, lien, lease, agreement, license or
instrument to which USCM (or any affiliate thereof) is a party.
6. Mutual Indemnification.
a. USCM shall be indemnified by Hansen for any loss suffered by USCM due to
product liability claims, any negligence or reckless conduct of Hansen or its
agents and independent contractors (other than USCM) or the breach of any
obligation, representation, warranty or covenant of Hansen as contained herein.
b. Hansen shall be indemnified by USCM for any loss suffered by Hansen due
to any negligence or reckless conduct of USCM or its independent contractors and
agents or the breach of any obligation, representation, warranty or covenant of
USCM as contained herein.
7. Term; Termination Rights.
a. The term of this Agreement shall commence on the commencement date of
the Hansen Lease and continue through July 31, 2002 (the "Term"). The existing
agreement between the parties, as of the date hereof, shall continue in effect
until commencement of the Term, after which said agreement shall be superseded
and replaced in its entirety by the terms of this Agreement. This Agreement
shall be renewed annually after the Term (each such annual renewal constituting
a "Renewal Term"), unless a party hereto gives the other not less than sixty
(60) days prior written notice of its intention to terminate this Agreement at
the end of the then current Term or Renewal Term, as the case may be.
b. Notwithstanding Section 7(a), this Agreement may be terminated by Hansen
prior to expiration of the Term in the event that USCM fails to satisfy in
material respects its duties or obligations hereunder with respect to Hansen
beverage products on more than ____% of the bills of lading executed in any
calendar month (a "Default" hereunder); provided, however, that USCM shall not
be deemed to be in Default hereunder unless it is notified in writing by Hansen
of the facts constituting a Default and such failure is not corrected within
thirty (30) days of USCM's receipt of such notice, except that in no event shall
Hansen be required to provide an opportunity to cure with respect to more than
one (1) Default in any consecutive twelve-month period.
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c. Notwithstanding Section 7(a), this Agreement may be terminated by USCM
prior to expiration of the Term in the event that Hansen fails to pay any amount
due hereunder within ten (10) days of being notified by USCM in writing of
Hansen's failure to make timely payment.
8. Obligations in the Event of Termination.
a. In the event that this Agreement is terminated by Hansen prior to the
expiration of the Term or the Renewal Term in accordance with the terms hereof,
then Hansen shall have the right, but not the obligation, to purchase and/or
assume the lease of all (but not less than all) equipment used by USCM at the
Facility for the purposes of repacking and handling of Hansen product. In the
event that USCM owns equipment subject to purchase by Hansen in accordance
herewith, the purchase price therefor shall be as mutually agreed to between the
parties; provided, however, that if they do not agree, then the purchase price
shall be determined by appraisal by Rabin Brothers Company. Hansen may assume a
lease for equipment subject to acquisition by Hansen hereunder by assuming all
payment obligations thereunder and indemnifying USCM for any claim of the lessor
of such equipment.
b. In the event of any termination hereof, each party shall promptly return
property belonging to the other.
9. Notices. Any notice, direction or instrument required or permitted to be
given hereunder shall be given in writing by telegram, facsimile transmission or
similar method if confirmed by mail as herein provided, by mail, if mailed
postage prepaid, by certified mail, return receipt requested, or by hand
delivery to any party at the address set forth below; and, if by telegram or
facsimile transmission or similar method or by hand delivery, shall be deemed to
have been given or made on the day on which it was given, and if mailed, shall
be deemed to have been given or made on the fifth business day following the day
after which it was mailed. Any party may, from time to time by like notice, give
notice of any change of address, and in such event, the address of such parties
shall be deemed to be changed accordingly. The address for each party is:
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(a) If to Hansen: Mr. Hilton H. Schlosberg
Vice Chairman
Hansen Beverage Company
1010 Railroad St.
Corona, CA 91720
with a copy to: Mr. Tom Kelly
Hansen Beverage Company
1010 Railroad St.
Corona, CA 91720
(b) If to USCM: Mr. David Williams
President
U.S. Continental Marketing, Inc.
1010 Railroad St.
Corona, CA 91720
with a copy to: Daniel S. Latter
15760 Ventura Boulevard
Suite 1010
Encino, CA 91436
10. Severability. In the event any provision of this Agreement shall be
void or unenforceable for any reason whatsoever, then such provision shall be
stricken and of no force and effect. The remaining provisions of this Agreement,
however, shall continue in full force and effect, and to the extent required,
shall be modified to preserve their validity.
11. Remedies Not Exclusive. Except as otherwise specifically provided, no
remedy conferred by any of the specific provisions of this Agreement is intended
to be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or otherwise. The
election by a party of any one or more remedies shall not constitute a waiver of
the right to pursue other available remedies.
12. Compliance with Laws. The consummation of the transactions hereunder
shall be subject to compliance with all applicable laws.
13. Expenses. Each party shall be responsible for its own expenses,
including legal and accounting fees, in connection with this Agreement and any
subsequent matters pertaining to the transactions contemplated hereby.
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14. Governing Law. This Agreement shall be interpreted in accordance with,
and governed by, the internal substantive laws of the State of California,
without regard to the choice of law rules thereof.
15. Attorneys' Fees. If any action, arbitration or proceeding in contract
or tort arising out of or relating to this Agreement is commenced by any party
to this Agreement, the prevailing party shall be entitled to receive from the
other party, in addition to any other relief that may be granted, the reasonable
attorneys' fees, costs (including court costs) and expenses incurred in the
action or proceeding by the prevailing party, along with any reasonable
attorneys' fees, costs (including court costs) and expenses incurred to collect
any amount awarded in connection with any such action or proceeding.
16. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the making, performance, breach or interpretation thereof,
shall be settled by binding arbitration in Orange County, California in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") then existing. Any claim concerning whether a particular
matter or issue is subject to arbitration in accordance herewith shall also be
so determined by arbitration. The arbitration shall be held before a single
arbitrator. Any award by the AAA shall be final and binding between the parties;
and judgment on the arbitration award may be entered in any court having
jurisdiction over the subject matter of the controversy. All parties may pursue
discovery in accordance with California Code of Civil Procedure Section 1283.05,
the provisions of which are incorporated herein by reference, with the following
exceptions: (i) the parties hereto may conduct all discovery, including
depositions for discovery purposes, without leave of the arbitrator; and (ii)
all discovery shall be completed no later than the commencement of the
arbitration hearing or one hundred twenty (120) calendar days after the date
that a proper demand for arbitration is served, whichever occurs earlier, unless
upon a showing of good cause, the arbitrator extends or shortens that period.
Any disputes relating to such discovery will be resolved by the arbitrator. The
parties agree that in rendering an award, the arbitrator shall have no
jurisdiction to consider evidence with respect to, or render any award or
judgment for, punitive or exemplary damages or any other amount awarded for the
purposes of imposing a penalty. The parties specifically waive any claims for
punitive or exemplary damages or any other amount awarded for the purposes of
imposing a penalty that arise out of or are related to this Agreement or the
breach thereof, or the conduct of the parties in connection with this Agreement.
The arbitrator shall have the power to award reasonable attorneys' fees and
costs. Either party may submit the controversy or claim to arbitration.
17. No Assignment. USCM may not assign any of its rights or delegate any of
its duties hereunder, without the prior written consent of Hansen, which consent
may be withheld irrespective of the reason therefor; provided, however, that
USCM may assign its duties and rights hereunder to a wholly owned subsidiary of
USCM.
18. Entire Agreement; Amendment. This Agreement, including Exhibits,
Schedules and other documents delivered pursuant to the terms hereof,
constitutes the entire agreement between the parties pertaining to the subject
matter contained herein and such agreements supersede any and all prior and
contemporaneous agreements, representations and understandings of the parties.
No supplement, modification or amendment of this Agreement shall be binding
unless executed in writing by both parties hereto. This Agreement may not be
altered, modified, amended, canceled, rescinded, discharged or terminated,
except by an instrument in writing signed by all parties hereto.
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19. Multiple Counterparts; Facsimile Signature. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. A signed
copy of this Agreement delivered by facsimile transmission shall be deemed to
have the same legal effect as delivery of an original signed copy of this
Agreement.
20. Headings. The headings of this Agreement are included for purposes of
convenience only, do not constitute a part hereof and shall not affect the
construction or interpretation of any of the provisions hereof.
21. All Terms Material. The parties hereby expressly acknowledge and agree
that each and every term and condition of this Agreement is of the essence of
this Agreement, constitutes a material part of the bargained-for consideration
without which this Agreement would not have been executed and is a material part
of this Agreement.
Thank you for your execution and return to USCM of this binding Agreement.
USCM looks forward to a long mutually beneficial relationship with Hansen.
Very truly yours,
U.S. CONTINENTAL MARKETING, INC.,
a California corporation
By: /s/ DAVID WILLIAMS
____________________________
David Williams, President
ACCEPTED AND AGREED TO THIS
31st DAY OF AUGUST, 2000
HANSEN BEVERAGE COMPANY
By: /s/ RODNEY SACKS
________________________________
Rodney Sacks, Chairman
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