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HomeMy WebLinkAboutBottling Group, LLC-3/3/2014CITY OF WATERLOO Council Communication City Council Meeting: 3/03/14 Prepared: 2/24/14 Dept. Head Signature: PH # of Attachments: 1 SUBJECT: Resolution -to approve and authorize Mayor Clark to sign a 5 -YEAR BEVERAGES AGREEMENT with PEPSI BEVERAGES COMPANY Submitted by: Paul Huting, Leisure Services Director Recommended City Council Action: Pass said Resolution Summary Statement The current 5 -year agreement with Pepsi has expired. The proposed new agreement establishes pricing and volume -based rebates for the next 5 years. This contract would apply to beverage sales at concession stands and vending machines in all Leisure Services facilities including Young Arena, Cedar Valley SportsPlex, athletic complexes and outdoor swimming pools. Proposals were requested of representatives from Coca Cola, Dr.Pepper/Snapple, and Pepsi. Written proposals were due on October 17 and only one was received. Expenditure Required: NA Source of Funds: N/A Policy Issue: N/A Alternative: N/A Background Information: A copy of the Agreement is available for your review in the City Clerk's office. This agreement has been reviewed, edited, and approved by the City Attorney's office. 4111PdP' PEPSI BEVERAGES COMPANY BEVERAGE SALES AGREEMENT This sets forth the agreement ("Agreement") between Bottling Group, LLC, a Delaware limited liability company, and its affiliates and/or respective subsidiaries collectively comprising Pepsi Beverages Company with an office located at 400 6th Avenue SE, Cedar Rapids, IA 52401 ("Pepsi") and City of Waterloo, with offices at 715 Mulberry Street, Waterloo, Iowa 50703 (the "Customer") relating to the purchase by the Customer from Pepsi of the Products. The support described below is in lieu of any other discounts, allowances or rebates to which the Customer might otherwise be entitled from time to time. Definitions As used in this Agreement, the following capitalized terms shall have the respective meanings assigned thereto below. "Beverage" or "Beverages" means all carbonated and non -carbonated, non-alcoholic drinks, however dispensed, including but not limited to, (i) colas and other flavored carbonated drinks; (ii) fruit juice, fruit juice containing and fruit flavored drinks; (iii) chilled coffee drinks; (iv) chilled tea products; (v) hypertonic, isotonic and hypotonic drinks (sports drinks and fluid replacements); (vi) energy drinks, (vii) packaged carbonated or still water (including spring, mineral or purified), (viii) liquid concentrate teas, (ix) frozen carbonated and non -carbonated beverages, and (x) any future categories of nonalcoholic beverage products that may be distributed by Pepsi. For purposes of clarification, fresh brewed hot coffee, hot chocolate and milk products are excluded from the definition of "Beverages". "Beverage Products" shall mean Beverages that are distributed in pre-packaged form (e.g., bottles and cans). A current list of Pepsi's Packaged Products is listed in attached Exhibit B which may be amended by Pepsi from time to time. "Cases" shall mean the number of cases of Beverage Products purchased by the Customer from Pepsi, initially delivered in quantities of 24, 15, and 12 bottle/can units, and thereafter in such other size, quantity and type of containers as determined by Pepsi, from time to time. "Facilities" shall mean the following existing Customer locations as listed in attached Exhibit A: Byrnes Park Pool, Byrnes Tennis Center, Cedar Valley SportsPlex, Gates Park Pool, River Front Sports Complex, and Young Arena, and shall include any restaurant, outlet or other facility that may be opened or acquired by the Customer at or within the Facilities. In the event that new Facilities are added during the Term of this Agreement, the parties shall create an updated Exhibit A and attach it hereto. The Facilities shall include the parking garages or other Customer-owned/controlled/operated surrounding areas located at or within those facilities. "Products" shall mean collective the Beverage Products and Snack Products (defined below). "Snack Products" shall mean any and all snack food products sold and distributed under the trademarks of Frito-Lay, Inc. and/or its subsidiaries and affiliates. 1 Law 119999-1 Cd PEPSI BEVERAGES COMPANY "Year" shall mean each 12 -month period during the Term commencing on the first day of the Term or an anniversary thereof. 1. Term The term of this Agreement shall commence on September 1, 2013 and expire on August 31, 2018 (the "Term"). When fully executed, this Agreement will constitute a binding obligation of both parties until expiration or termination. 2. Scope (A) Exclusive Rights During the Term of this Agreement Pepsi shall have the exclusive right to provide all Products for sale and distribution within the Customer's Facilities, including at all locations located within the Facilities where Beverages are sold and catering operations, if any, for Customer or its Facilities, if any. Accordingly, the Products shall be the only Beverage Products and Snack Products of their respective types sold, dispensed or served anywhere at the Facilities, and Customer will cause the purchasing representative for each of the Facilities to purchase all its respective requirements for such Products directly and exclusively from Pepsi. Notwithstanding the foregoing, if the event Customer determines to offer a snack product(s) that is not currently available as a Snack Product, then Customer can purchase such snack product for sale at the Facilities until such time as a similar Snack Product of the same type or category is available from Pepsi to Customer. (B) Advertising Rights Pepsi may advertise and promote its Products in and with respect to the Customer and its Facilities upon mutually agreed to terms and conditions. 3. Performance This Agreement, including all of Pepsi's support to the Customer as described below, is contingent upon the Customer complying with all of the following performance criteria: (A) Exclusive Vending Machine Placement. During the Term of this Agreement, Customer agrees to permit only those vending machines placed and operated by Pepsi to operate at the Facilities ("Vending Machines"), except that vending machines offering snack foods other than Snack Products shall be permitted as set forth in Section 2(A) above. The Products shall be offered for resale only through Vending Machines. Except as set forth in Section 2(A) above, Customer represents and warrants, and undertakes to ensure, that the snack foods andbeverage Products sold through the Vending Machines shall be the exclusive snack foods and non- alcoholic beverage products advertised, promoted, identified, offered for sale or otherwise made available at the Facilities during the Term. Specific location of Vending Machines will be determined initially by mutual agreement of the parties, but in the exercise of its reasonable discretion relating to its space allocation needs Customer may notify Pepsi that particular Vending Machines must be relocated to another mutually agreeable space at the Facility. 2 Law 119999-1 Oujii, PEPSI BEVERAGES COMPANY (B) Brand ID. The Customer shall have appropriate brand identification, as identified by Pepsi, for each Product served on all menus (including catering) and menu boards at each of the Facilities throughout the Term. (C) Changes in Facilities. The Customer agrees that it shall promptly notify Pepsi, in writing, of each new Facility which is opened or acquired during the Term, as well as of any Facility which is closed, sold or otherwise disposed of during the Term, so that the parties may promptly update Exhibit A. The parties acknowledge that Customer operates many locations in the City of Waterloo that are not identified as Facilities and thus are not subject to the terms of this Agreement. 4. Consideration In consideration of the exclusive rights granted to Pepsi by Customer over the Term of this Agreement, and provided Customer is not in breach of this Agreement, Pepsi shall provide Customer with the following: (A) Advanced Rebates. Each Year throughout the Term, Pepsi will advance to Customer Advanced Rebates in the amount of Twelve Thousand Dollars ($12,000) ("Advance Rebates") based on the per Case rate of Five Dollars Fifty -Four Cents ($5.54). At the end of each Year, Pepsi will reconcile Advanced Rebates advanced to Customer as follows: Pepsi will multiply the number of 24 -count cases of 20 oz. bottles purchased by Customer (each a "24 -Count Case") during the Year by the rate of Five Dollars Fifty -Four Cents ($5.54) per 24 -count Case and will compare that result with the amount advanced. The resulting amount, if positive, will be paid by Pepsi to Customer within thirty (30) days of Year end, or if negative, will be offset against amounts that may concurrently or thereafter become due to Customer under this Agreement, or, if in the final Year of the Term, will be paid by Customer to Pepsi within 30 days following Pepsi's invoice. The parties agree that Pepsi shall not advance or pay any Advanced Rebates for sales to Facilities that are in breach of the Performance Requirements listed in Section 3 above. (B) Free Equipment Loan and Service. As further outlined in Section 5 below, Pepsi shall provide at no cost to Customer or the Facilities necessary dispensing/selling Equipment for Beverages and Snack Products at the Facilities. Such Equipment shall be in sufficient quantities (in light of sales volume) as determined by Pepsi to satisfy the reasonable needs of each Facility. (C) Snack Products. Customer shall purchase Snack Products from Pepsi to be dispensed from the Vending Machines. Customer shall be entitled to retain all proceeds from the sale of such Snack Products. 5. Equipment During the Term, Pepsi will loan each Facility, at no charge, appropriate equipment for selling, vending and/or dispensing the Products ("Equipment"). Customer agrees that the Equipment shall be exclusively used to display and merchandise the Products, and the Customer shall not 3 Law 119999-1 CO PEPSI BEVERAGES COMPANY use the Equipment to display, stock, advertise, sell or maintain any other products (including on the exterior of the Equipment). Pepsi will also provide, at no charge to the Customer, service to the Equipment. Title to such Equipment will remain vested in Pepsi or its affiliate and all such Equipment will be returned to Pepsi upon expiration or earlier termination of this Agreement. Pepsi will provide, at no charge to the Customer, preventative maintenance and service to the Equipment. Pepsi will also provide Customer with a telephone number to request emergency repairs and receive technical assistance related to the Equipment after business hours. Pepsi will promptly respond to each applicable Customer request, and will use reasonable efforts to remedy the related Equipment problem as soon as possible. Pepsi will enter upon all Facilities and Customer locations within the scope of this Agreement in their then -current condition and, if applicable, will maintain the area occupied by the Equipment in safe, serviceable, and good condition. Pepsi will not permit or allow said premises to be damaged or depreciated in value by any negligent act or omission, or by any willful misconduct, of Pepsi, its agents or employees. 6. Pricing Pepsi will provide Customer/Facilities a complete supply of Products during the Term of this Agreement and shall deliver such Products in a timely manner (based on mutually agreed upon delivery schedules) and in good and sanitary condition. The Products shall be purchased by the Customer from Pepsi at prices established by Pepsi; provided, however, that any annual pricing increase will not exceed four percent 4% of the then current pricing. The current pricing schedule for Products is set forth on attached Exhibit B. Pepsi shall provide thirty (30) days' notice of any price increases during the Term. 7. General Terms (A) Termination. Either party may terminate this Agreement if the other commits a material breach of this Agreement; provided, however, that the terminating party has given the other party written notice of the breach and the other party has failed to remedy or cure the breach within thirty (30) days of such notice. (B) Remedies. If Pepsi terminates this Agreement as a result of default by Customer or its Facilities, or if Customer terminates this Agreement other than due to Pepsi's failure to cure a breach hereof, then Customer and its Facilities will surrender to Pepsi all Equipment provided by Pepsi and shall forfeit all funding not earned as of the date of termination. Further, either party may terminate this Agreement immediately in the event that a petition, either voluntary or involuntary, is filed to declare the other party bankrupt or insolvent or if such party makes an assignment for the benefit of its creditors. In addition, without prejudice to any other right or remedy available to Pepsi, Pepsi shall have the right to immediately seek reimbursement from Customer and the Facilities for the following: (i) An amount reflecting reimbursement for all funding previously advanced by Pepsi but not earned by the Customer pursuant to the terms of this Agreement; and (ii) An amount reflecting reimbursement for the cost of refurbishing of Equipment provided during the Term and the cost of removal of all Equipment that has been 4 Law 119999-1 cd PEPSI BEVERAGES COMPANY installed in the Facilities, if applicable, except in the case of termination due to bankruptcy or insolvency. (C) Expiration. Upon expiration of this Agreement, if Customer has not entered into a further agreement with Pepsi for the purchase of the Products, Customer shall surrender to Pepsi all Equipment installed in the Facilities, whether leased, loaned or otherwise made available by Pepsi. (D) Right of Offset. Pepsi reserves the right to withhold payments due hereunder as an offset against amounts not paid by Customer or its Facilities for Products ordered from and delivered by Pepsi pursuant to this Agreement. (E) Indemnification. Pepsi will indemnify and hold the Customer harmless from any and all suits, actions, claims, demands, losses, costs, damages, liabilities, fines, expenses and penalties (including reasonable attorneys' fees) arising out of: (i) its breach of any term or condition of this Agreement; (ii) product liability suits resulting from the use or consumption of the Products; and/or (iii) the negligence or willful misconduct of Pepsi, its employees, contractors, and agents. To the extent permitted by applicable law, the Customer will indemnify and hold Pepsi, its subsidiaries, affiliates or assigns harmless from and against any and all suits, actions, claims, demands, losses, costs, damages, liabilities, fines, expenses and penalties (including reasonable attorneys' fees) arising out of: (i) its breach of any term or condition of this Agreement; and/or (ii) the negligence or wilful misconduct of the Customer. (E-1) Insurance. During the term of this Agreement, Pepsi shall, at its own expense, maintain in force and effect commercial general liability insurance in amounts not less than Five Million Dollars ($5,000,000.00) per occurrence for bodily injury and Five Million Dollars ($5,000,000.00) general aggregate. Such insurance shall cover liability arising from bodily injury, property damage, premises operations, independent contractors, personal injury, products, and completed operations and liability assumed under an insured contract, including but not limited to the activities of Pepsi, its employees and agents. Certificates, showing Customer as an additional insured, and providing for thirty (30) days' advance notice to Customer before cancellation, shall be delivered to Customer concurrently with execution of this Agreement. A renewal certificate shall be provided to Customer prior to expiration of any policy. Any liability shall be first assumed by Pepsi's insurance up to the limits of coverage as set forth herein. Customer may at its own expense procure and maintain additional insurance. Including Customer as an additional insured shall not constitute a waiver of Customer's governmental immunity under Iowa Code Chapter 670. (F) Assignment. (i) In the event that a third party acquires Customer or all or a group of the Facilities, or if Customer is acquired or merges with a third party, Customer will, in connection with such transaction, cause the acquiring party/merged entity, in writing, to ratify this Agreement and assume all of the obligations of Customer hereunder. In the event that Customer does not deliver written evidence of such ratification and assumption of this Agreement by the acquiring party/merged entity within thirty (30) days following the closing of the transaction, the Customer will be in breach of this Agreement and Pepsi may, at its option, terminate this Agreement effective immediately and Customer will pay to Pepsi all sums specified in Section 5 Law 119999-1 ed PEPSI BEVERAGES COMPANY 7(B) herein. The Agreement shall not be otherwise assignable without the express written consent of Pepsi. (ii) Any assignment of this Agreement by Pepsi, in whole or in part, without Customer's prior written consent shall, at the option of Customer, immediately terminate this Agreement, and Pepsi shall immediately surrender possession of any premises where is Equipment is located and, within a reasonable period of time, remove its Equipment and abide by all other provisions of this Agreement that may apply at that time. This Agreement does not give Pepsi any interest in the Facilities or appurtenant premises that is capable of being subleased, assigned, mortgaged or otherwise dispose of to another party. (G) Governing Law. This Agreement shall be governed by the laws of the State of New York without regard to conflict of laws principles. (H) Price Discrepancy. Any price discrepancy claim must be submitted to Pepsi within 365 days of the date of the invoice in question. If the Customer makes a price discrepancy claim within 90 days of the invoice date, the Customer must submit a written request specifying the particular Product, amount in dispute and reason for the dispute. This request should be addressed to: Accounts Receivable Pepsi-Cola Customer Service Center P.O. Box 10 Winston-Salem, North Carolina 27102. If the Customer makes a price discrepancy claim from 91 to 365 days after the date of invoice, in addition to the written request as specified above, the Customer must submit to Pepsi a copy of the invoice in question, copies of any check remittances pursuant to the invoice in question and any additional supporting documentation. (I) Tax. The Customer acknowledges and agrees that neither Pepsi nor its affiliates shall be responsible for any taxes payable, fees or other tax liability incurred by the Customer in connection with the consideration or any other fees payable by Pepsi under this Agreement. Pepsi shall not be assessed common area maintenance fees, taxes or other charges based on its occupation of the space allocated to its Equipment at the Facilities. (J) Force Majeure. Pepsi will not be responsible for any delay or lack of delivery resulting directly or indirectly from any foreign or domestic embargo, product detention, seizure, act of God, insurrection, war and/or continuance of war, the passage or enactment of any law ordinance, regulation, ruling, or order interfering directly or indirectly with or rendering more burdensome the purchase, production, delivery or payment hereunder, including the lack of the usual means of transportation due to fire, flood, explosion, riot, strike or other acts of nature or man that are beyond the reasonable control of Pepsi or that of the suppliers to Pepsi unless such contingency is specifically excluded in another part of this Agreement. Subject to the provisions below, this Agreement will be suspended as to both Product and delivery during any of the above force majeure contingencies. Any and all suspended deliveries will resume after such 6 Law 119999-1 f„,,, PEPSI BEVERAGES COMPANY contingencies cease to exist, if possible, and this Agreement will resume in accordance with its terms, unless otherwise provided for herein. (K) Release, Discharge or Waiver. No release, discharge or waiver of any provision hereof shall be enforceable against or binding upon either party hereto unless in writing and executed by both parties hereto. Neither the failure to insist upon strict performance of any of the agreements, terms, covenants or conditions hereof, nor the acceptance of monies due hereunder with knowledge of a breach of this Agreement, shall be deemed a waiver of any rights or remedies that either party hereto may have or a waiver of any subsequent breach or default in any of such agreements, terms, covenants or conditions. (L) Relationship of the Parties. The parties are independent contractors with respect to each other. Nothing contained in this Agreement will be deemed or construed as creating a joint venture partnership between the parties. (M) Effect of Headings. The headings and subheadings of the sections of this Agreement are inserted for convenience of reference only and shall not control or affect the meaning or construction of any of the agreements, terms, covenants and conditions of this Agreement in any manner. (N) Construction. This Agreement has been fully reviewed and negotiated by the parties hereto and their respective legal counsel. Accordingly, in interpreting this Agreement, no weight shall be placed upon which party hereto or its counsel drafted the provision being interpreted. Wherever this Agreement provides for one party hereto to provide authorization, agreement, approval or consent to another party hereto, or provides for mutual agreement of the parties hereto, such authorization, approval, agreement or consent shall, except as may otherwise be specified herein, be given in such party's reasonable judgment and reasonable discretion, and shall be in writing unless otherwise mutually agreed by the parties. If any term or provision of this Agreement shall be found to be void or contrary to law, such term or provision shall, but only to the extent necessary to bring this Agreement within the requirements of law, be deemed to be severable from the other terms and provisions hereof, and the remainder of this Agreement shall be given effect as if the parties had not included the severed term herein. (0) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. (P) Further Assurances. Each party hereto shall execute any and all further documents or instruments and take all necessary action that either party hereto may deem reasonably necessary to carry out the proper purposes of this Agreement. (Q) Notices. Unless otherwise specified herein, all notices, requests, demands, consents, and other communications hereunder shall be transmitted in writing and shall be deemed to have been duly given when hand delivered, upon delivery when sent by express mail, courier, overnight mail or other recognized overnight or next day delivery service, or three (3) days following the date mailed when sent by registered or certified United States mail, postage 7 Law 119999-1 ed PEPSI BEVERAGES COMPANY prepaid, return receipt requested, or by facsimile, with a confirmation copy sent by recognized overnight courier, next day delivery, addressed as follows: If to Pepsi: Pepsi Beverages Company 400 6th Avenue SE Cedar Rapids, IA 52401 Attn: Director, FoodService With a copy to (which shall not constitute notice): Pepsi Beverages Company One Pepsi Way Somers, NY 10589 Attn: Legal Department If to Customer: City of Waterloo 125 Commercial Street Waterloo, Iowa 50701 Attn: Chris Dolan (R) Right of First Negotiation/Refusal. As of the commencement of this Agreement until ninety (90) days prior to the expiration of the Term, the Customer hereby agrees to grant Pepsi exclusive negotiation rights with respect to extending the current Agreement or entering into a new agreement for Beverage pouring rights at the Facilities upon expiration of the current Term. Thereafter, if the parties have not entered into a new agreement, the Customer shall be free to enter into discussions/negotiations with third parties. (S) Limitations/Offset Rights. Pepsi reserves the right to limit quantities, withhold or deduct funding as an offset to amounts not paid by Customer under this Agreement or terminate this Agreement if the Customer (i) sells Products directly or indirectly for resale outside of the Pepsi's exclusive territory where the Facility operates, (ii) purchases Products outside Pepsi's exclusive territory where the Facility operates and resells such Products within Pepsi's exclusive territory or (iii) does not comply with Pepsi's payment terms or makes an unauthorized deduction from amounts due. (T) Entire Agreement. This Agreement contains the entire agreement between the parties hereto regarding the subject matter hereof and supersedes all other agreements between the parties. This Agreement may be amended or modified only by a writing signed by each of the parties. (U) Customer Representations. Customer represents and warrants to Pepsi that the execution, delivery and performance of this Agreement by Customer will not violate any 8 Law 119999-1 rd PEPSI BEVERAGES COMPANY agreements with, or rights of, third parties. The Customer and undersigned represent that the undersigned is duly authorized and empowered to bind the Customer to the terms and conditions of this Agreement for the duration of the Term. IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed as of the date set forth below. Bottling Group, LLC City of W rloo By: -C By: ��4- l Print Name: 131 4-4-41''p' Print Name: f ' hk.; • ( kt. Title:i7;a1vteavrize /RR. Title: VVI LF; Date: ' Date: � :� .�� 79, Z& % (1-1- 9 Law 119999-1 ed PEPSI BEVERAGES COMPANY Exhibit A Customer Facilities Byrnes Park Pool Concessions — 801 Campbell Ave., Waterloo, Iowa 50701 Byrnes Park Tennis — 1110 Campbell Ave., Waterloo, Iowa 50701 Leisure Services Cedar River Park — 539 Burton Ave., Waterloo, Iowa 50703 Gates Park Pool — 820 E. Donald St., Waterloo, Iowa 50703 Young Arena —125 Commercial St., Waterloo, Iowa 50701 Cedar Valley SportsPlex — 300 Jefferson St., Waterloo, Iowa 50701 10 Law 119999-1 PEPSI BEVERAGES COMPANY Exhibit B Products and Prices Customer acknowledges and agrees (and shall require that any third parties or Food Service Providers purchasing Products through this Agreement agree) that Pepsi shall be entitled to pass-through any governmentally imposed incremental fees, deposits, taxes or other charges (whether local, state, federal or judicially imposed) and that the pass-through of any such governmentally imposed fees, deposits, taxes or charges on the Products shall not be deemed as a price increase subject to any pricing cap or notification restrictions that may be specified in this Agreement. Bottle & Can Products Cost Per Case Cost Per Unit Carbonated Soft Drinks — 20oz 24pk Bottles * $23.58 $0.98 Lipton — 20oz 24pk $23.58 $0.98 Gatorade & G2 — 20oz 24pk $26.23 $1.09 Aquafina Water — 20oz 24pk $16.34 $0.68 SoBe Life Water — 20oz 12pk $11.79 $0.98 eposit of $0.05 per unit will be invoiced at time of purchase per the State of Iowa Bottle and Can Act. 11 Law 119999-1