Loading...
HomeMy WebLinkAbout2002-07-09 - AGENDA REPORTS - PEPSI BEVERAGE PARTNERSHIP (2)CITY OF SANTA CLARITA AGENDA REPORT CONSENT CALENDAR DATE: July 9, 2002 City Manager Approval: Item to be presented by: Tina Haddad SUBJECT: BEVERAGE VENDING PARTNERSHIP WITH PEPSI BOTTLING GROUP DEPARTMENT: City Manager RECOMMENDED ACTION City Council authorize the City Manager or designee to execute a strategic alliance and partnership agreement between the City of Santa Clarita and the Pepsi Bottling Group. BACKGROUND On May 1, 2001 the City Council approved of pursuing an exclusive beverage vending partnership to advance corporate sponsorships and directed staff to solicit proposals from beverage vendors. Subsequently, a Request for Information & Qualifications (RFIQ) was advertised in the Daily News and the Signal Newspaper. RFIQs were mailed out to SC Concessions, Pepsi Bottling Group, and Coca-Cola Bottling Company. The City only received proposals from Pepsi and Coca-Cola. On November 13, 2001, the City Council rejected beverage partnership proposals submitted by Coca-Cola and the Pepsi as insufficient and authorized staff to commence negotiations with both companies. Staff has completed the negotiation process. Subsequent to negotiating with both vendors, there was a consensus amongst Beverage Partnership Committee Members that Pepsi Bottling Group provided the most desirable partnership package. Below is a summary of both beverage companies' negotiated proposals: ib UU�' 'jJ5 ��e Agenda Item .01T BEVERAGE PARTNERSHIP July 9, 2002 Page 2 of 4 As indicated in the table above, Pepsi Bottling Group is proposing a partnership package with a total value of $816,490 to the City. This is $732,169 more than Coca-Cola Bottling Company's proposal. Pepsi's proposal includes annual payments of $72,000 for category and territory exclusivity, and $5,000 for special event sponsorship. In addition to annual payments, Pepsi is offering an annual growth incentive, which will allow the City to earn up to 40% in commissions on vending sales over a set benchmark. For example, for any year in which the volume of vending cases exceeds the benchmark for a given year, Pepsi will pay the City a commission for such incremental cases. Pepsi projects that the City could earn an additional $40,500 during the life of the partnership through the growth incentive program. The benchmark will be set at 8,500 cases for year one of the agreement, increasing by 2% per year for the remainder of the partnership. In addition, the partnership also allows the City an opportunity to evaluate vending sales and determine whether it would be more profitable to receive a 40% commission on vending sales in lieu of the annual payment for category and territory exclusivity. Thus, if commission on vending sales exceeds $72,000 in annual payment, the City can waive the annual payment for commissions. This can take place during year three of the partnership. The agreement will also allow the City to partner with Pepsi in marketing City special events or programs. In exchange for the above partnership proposal, Pepsi requests that the City provide the following entitlements: Pepsi Bo Bottling Contract Duration 10 years 3 years Vending Machines 54 42 Total Contribution $720,000 for the life of the $45,000 for the life of the contract. contract. ($72,000 per ear) ($15,000 per ear). Special Event Funding $50,000 for the life of the 0 contract. ($5,000 per year) Commission Growth Incentive Funds — 20% of net profit. Projected at projected at $40,500 for the $42,350.88 for the life of the life of the contract. contract. Product Donation • 100 cases per year (valued 200 cases per year (100 Coca-Cola at $5,990 for life of Products and 100 non -carbonated contract) products valued at $7,500 for the • 5 custom banners for life of the contract). special events. TOTAL VALUE $816,490.00 $94,850.88 As indicated in the table above, Pepsi Bottling Group is proposing a partnership package with a total value of $816,490 to the City. This is $732,169 more than Coca-Cola Bottling Company's proposal. Pepsi's proposal includes annual payments of $72,000 for category and territory exclusivity, and $5,000 for special event sponsorship. In addition to annual payments, Pepsi is offering an annual growth incentive, which will allow the City to earn up to 40% in commissions on vending sales over a set benchmark. For example, for any year in which the volume of vending cases exceeds the benchmark for a given year, Pepsi will pay the City a commission for such incremental cases. Pepsi projects that the City could earn an additional $40,500 during the life of the partnership through the growth incentive program. The benchmark will be set at 8,500 cases for year one of the agreement, increasing by 2% per year for the remainder of the partnership. In addition, the partnership also allows the City an opportunity to evaluate vending sales and determine whether it would be more profitable to receive a 40% commission on vending sales in lieu of the annual payment for category and territory exclusivity. Thus, if commission on vending sales exceeds $72,000 in annual payment, the City can waive the annual payment for commissions. This can take place during year three of the partnership. The agreement will also allow the City to partner with Pepsi in marketing City special events or programs. In exchange for the above partnership proposal, Pepsi requests that the City provide the following entitlements: BEVERAGE PARTNERSHIP July 9, 2002 Page 3 of 4 • Designation — Throughout the term of the partnership, Pepsi shall be known as the "Official soft-drink of the City of Santa Clarita." • Category Exclusivity — The partnership requires the City to ensure that Pepsi is the exclusive soft drink supplier to the City with respect to all carbonated and non- carbonated, non-alcoholic beverages defined as soft drinks, including, but not limited to, juice drinks, ready -to -drink teas, ready -to -drink coffees, isotonics, energy drinks, bottled water and frozen beverages. Beverages do not include hot teas or hot coffee products, ice cream or frozen yogurts. • Territory Exclusivity — In addition to category exclusivity, the partnership requires that the City provide territory exclusivity. The agreement defines territory exclusivity as to all properties and facilities owned or operated by the City within the City limits. This includes City parks and recreation facilities, City offices, and other City owned facilities. Exclusions are given to properties in which the City and Pepsi agree not to include. • Ten -Year Partnership — The partnership must extend for a period of ten years. • Minimum of 54 Vending Machines — During the duration of the partnership, the City must maintain a minimum of 54 vending machines. Staff and Pepsi representatives have visited all City facilities to determine the most appropriate locations for vending machines. Vending machines will have a minimum vending price of one dollar for bottle vending and seventy-five cents for can vending. • Special Event Participation — Pepsi requests that the City provide the first right of refusal to non-exclusive or exclusive participation at City events through beverage sales, sampling activities, signage at mutually agreed upon locations and event marketing. Pepsi is also requesting the first right -of -refusal to any opportunity for a non-alcoholic beverage company to sponsor a special event. • Signage — Pepsi is also requesting an opportunity to display banners at City special events and company logo on City owned scoreboards. All signage opportunities are subject to City Council approval. • Access to City Marks and Logos — The partnership will allow Pepsi the right to use official City logos and trademarks, subsequent to City's prior written approval. Pepsi will be responsible for installation and maintenance of all beverage vending machines. This includes costs for pulling stub -out of electrical utility. City will be responsible for electrical/utility charges incurred for the operation of the vending machines. FISCAL IMPACT This partnership will generate a total of $770,000 in revenues and potential additional funding from the growth incentive program during the life of the partnership. Fifty thousand of these funds ($5,000 per year) will be designated for special event sponsorship. The up -front contribution of $720,000 ($72,000 per year) will have unrestricted use. All revenues generated from this partnership will go into Revenue Account # 001-6701. With regard to electrical/utility costs, the additional 24 vending machines will increase electric costs by $7,200 per year ($300 per vending machine per year). The City currently operates 30 vending machines, which are located at park and recreation facilities, City Hall, Corporate Yard, and transit facilities. The partnership revenues will offset this cost. BEVERAGE PARTNERSHIP July 9, 2002 Page 4 of 4 ALTERNATIVE ACTION Reject Pepsi Bottling Company's negotiated proposal. ATTACHMENTS 1. Strategic Alliance and Long Term Partnership Agreement Between the City of Santa Clarita and the Pepsi Bottling Group. 2. Letter dated December 14, 2001 from Coca-Cola Bottling Company to City with negotiated proposal. TH:js /Pepsi Partnership 7-09-02-GF.doe STRATEGIC ALLIANCE AND PARTNERSHIP AGREEMENT BETWEEN THE CITY OF SANTA CLARITA AND THE PEPSI BOTTLING GROUP TABLE OF CONTENTS SECTION 1: CONTACTS SECTION 2: TERM SECTION 3: CONSIDERATION SECTION 4: EXCLUSIVE BEVERAGE AVAILABILITY RIGHTS SECTION 5: PRICING AND PRODUCTS SECTION 6: REPORTING SECTION 7: POINTS OF SALE SECTION 8: SPECIAL EVENT SPONSORSHIP SECTION 9: SAMPLING / PROMOTIONAL OPPORTUNITIES SECTION 10: ACCESS TO CITY MARKS AND LOGOS SECTION 11: SIGNAGE REQUIREMENTS AND LOCATIONS SECTION 12: MAINTENANCE OF VENDING MACHINES AND OTHER EQUIPMENT SECTION 13: TERMINATION UPON DEFAULT SECTION 14: REMOVAL OF VENDING MACHINES AND OTHER EQUIPMENT AND LOSS OF RIGHTS AFTER TERMINATION SECTION 15: HOLD HARMLESS AGREEMENT SECTION 16: WORKERS' COMPENSATION INSURANCE SECTION 17: INSURANCE SECTION 18: CERTIFICATES OF INSURANCE; ADDITIONAL INSURED ENDORSEMENT SECTION 19: SURVIVAL OF INDEMNITIES SECTION 20: NON -LIABILITY OF CITY, OFFICIAL, EMPLOYEES OR AGENTS SECTION 21: ASSIGNMENT, SUCCESSORS AND WAIVER SECTION 22: REPRESENTATIONS AND WARRANTIES SECTION 23: CONFLICT OF INTEREST SECTION 24: PHOTOGRAPHY SECTION 25: NON -DISCLOSURES / PRESS RELEASES SECTION 26: TIME OF ESSENCE SECTION 27: FORCE MAJEURE — UNAVOIDABLE DELAYS SECTION 28: COMPLIANCE WITH LAWS SECTION 29: TAXES SECTION 30: EMINENT DOMAIN SECTION 31: NOTICE SECTION 32: CONTROLLING LAW AND VENUE SECTION 33: CUMULATIVE REMEDIES SECTION 34: ATTORNEY'S FEES SECTION 35: AGREEMENT IN WRITING SECTION 36: PARTIAL INVALIDITY SECTION 37: AGREEMENT IN COUNTERPARTS SECTION 38: SECTION TITLES SECTION 39: PRIORITIES SECTION 40: ENTIRETY Page 1 of 18 STRATEGIC ALLIANCE AND LONG TERM PARTNERSHIP AGREEMENT BETWEEN THE CITY OF SANTA CLARITA AND THE PEPSI BOTTLING GROUP THIS AGREEMENT ("Agreement") is made and entered into effective _, 2002 (the "Effective Date"), by and between the City of Santa Clarita, a municipal corporation of the state of California (herein referred to as "City), and Bottling Group, LLC d/b/a/ The Pepsi Bottling Group, a limited liability company (herein referred to as "Company"). In consideration of the mutual promises set forth below, the parties agree as follows: SECTION 1. CONTACTS Company designates a Key Account Manager or an Account Sales Representative, who shall, or whose appointee shall, represent it and be its sole contact and agent in consultations with City during the performance and implementation of this Agreement and throughout the entire term of the Agreement. City hereby designates the City Manager of The City of Santa Clarita or appointee who shall represent it and be its sole contact and agent in all consultations with the Company during the performance and implementation of this Agreement and throughout the entire term of the Agreement (excepting City officials such as the City Attorney, or other officials as designated by the City Manager). Any amendments or modifications to agreement shall be negotiated through the City Manager of the City of Santa Clarita or appointee subject to City Council approval. SECTION 2. TERM The term of this Agreement shall be ten (10) years, beginning on the date named above and expiring 2012, unless mutually extended or sooner terminated as herein provided. SECTION 3. CONSIDERATION A. Annual Fee and Growth Incentive Fund In consideration of the rights and privileges provided to the Company under this Agreement, Company agrees to pay City an annual fee of Seventy -Two Thousand Dollars ($72,000.00) (the "Annual Fee") as well as the appropriate growth of incentive revenue as further described below, if any, (the "Growth Incentive Funds") for each one of the ten (10) Years of this Agreement. The Annual Fee for Year one shall be paid as follows: Thirty -Six Thousand Dollars ($36,000) within thirty (30) days of execution of this Agreement and Thirty -Six Thousand Dollars ($36,000) upon completion of the installation of 54 vending machines at agreed upon locations within City limits. Machines must be installed within thirty (30) days of execution of this Agreement. The Annual Fee Page 2 of 18 for each of Years Two through Ten shall be paid commencing on the first anniversary date of the signing of this Agreement and each anniversary date thereafter until the end of the Term of this Agreement. The Growth Incentive Funds, if any, will be paid within ninety (90) days after end of each Agreement Year. Growth Incentive Funds shall be calculated as set forth in Exhibit A (Benchmark volume will begin at 8,500 cases for Year One, increasing by 2% per Year for the remainder of the contract). B. Commission Beginning with Year Three and for each subsequent Year, each party will have the right to waive the Annual Fee and, in its place, fees will be paid on a commission basis. Such right may only be exercised by giving written notice to the other party no less than thirty (30) days prior to the beginning of the new Agreement Year. Once the fees are converted to Commissions, if ever, they shall remain Commission throughout the remainder of the Agreement. Growth Incentive Funds will only be eligible for those Years in which an Annual Fee is paid. At such time as either party elects to have fees determined on a commission basis, the commissions will be calculated on cash collected (less sales taxes and recycling fees) ("Commissions") from all sales of Products through Vending Machines located on City sites during the Term which shall be calculated as follows: • (Cash collected x 40%) minus sales tax and CRV = Commission due. Checks for such Commissions will be sent to the City every four (4) weeks, based upon the above percentages of actual cash collected from vending machines. Such Commissions shall be contingent on a minimum vend price of $1.00. The fees specified in this Section shall be paid by Company to the City of Santa Clarita at 23920 Valencia Boulevard, Suite 300, Santa Clarita, CA 91355-2196 or at such other place or places as City may from time to time designate by written notice delivered to company. SECTION 4. EXCLUSIVE BEVERAGE AVAILABILITY RIGHTS Subject to the terms of this Agreement, the City grants Company the following exclusive Beverage availability rights: A. TERRITORY EXCLUSIVITY City grants to Company the right of "Territory Exclusivity," subject to the limitations set forth herein, including the limitations set forth under "Category Exclusivity" defined in Subsection B below. For the purposes of this Agreement, "Territory Exclusivity" is defined as exclusivity as to all properties and facilities owned or operated by City within the City limits (excluding mutually agreed upon properties, as may be determined), including City parks & recreation facilities, City offices, and other City owned facilities (collectively, the "Facilities"). Company will be given first right of refusal to City events held at non -city Page 3 of 18 locations. If Company chooses not to participate, the event will not be considered exclusive. B. CATEGORY EXCLUSIVITY City grants to Company the right of "Category Exclusivity," subject to the limitations set forth herein, including the limitations set forth under "Territory Exclusivity" defined in Subsection A above. For the purposes of this Agreement, "Category Exclusivity" is defined as insuring that Company is the exclusive soft drink supplier to the City with respect to all carbonated and non -carbonated, non- alcoholic beverages defined as soft drinks, including, but not limited to, juices, juice drinks, ready -to -drink teas, ready -to -drink coffees, isotonics, energy drinks, bottled water and frozen beverages. Frozen beverages shall not include ice cream and frozen yogurts. Beverages do not include hot teas or hot coffee products. SECTION 5. PRICING AND PRODUCTS Vending products to be offered are certain Products as determined by the Company from time to time. Vending Price shall be a minimum of one dollar, with the exception of can vending, which shall have a minimum vending price of seventy-five cents. Vending Prices shall be determined by the company and re-evaluated each year on the contract anniversary. In the event the City wishes to purchase and resell Pepsi Cola products at various special events throughout the term of the agreement, Pricing and Products are listed on Exhibit B. The City recognizes that such pricing is subject to annual inflationary increases. SECTION 6. REPORTING Company agrees to provide the City with a bi-monthly report, commencing on the execution date of this agreement, and year-end report, commencing on the anniversary date of this agreement, on vending sales throughout the entire term of this Agreement. SECTION 7. POINTS OF SALE City shall provide company with the following points of sale for its beverage products: ➢ All vending locations within City owned or operated property with a minimum of 54 vending locations maintained throughout the term; and ➢ Concession areas owned and operated by the City; and ➢ City Special Events, upon approval provided by the City. A. Vending machine locations: Company shall have access to all vending machine locations designated by City. With regard to vending machine locations, City will provide the stub -out of electrical utility to all vending machine locations, which do not already have available electrical hookup. Company shall have the responsibility to connect the vending machines to Page 4 of 18 the stub -out sites and City shall pay for any electrical/utility charges incurred for the operation of the vending machines. B. Park & Recreation Concessions: City will align Category Exclusivity with Concessions currently serving competitive products and currently under lease agreements with City upon renewal of those lease agreements. In addition, City will ensure that those concessions currently serving Company products remain exclusive upon renewal of those lease agreements. All Concessions will purchase the beverages and all related supplies directly from the Company. C. City Special Events: City grants Company the right of first refusal to exclusive participation and the right to nonexclusive participation in all City events through beverage sales, sampling activities, signage at mutually agreed upon locations and event marketing, all of which are subject to the prior written approval of City, such approval not to be unreasonably withheld. City shall give Company the first right -of -refusal to any opportunity for a non-alcoholic beverage company to sponsor a special event within the City limits of City. City shall also give company twenty-five (25) tickets/passes for access to all City held events, but not to private promoter events. D. Company will provide 100 free cases of 12 oz. cans on a yearly basis as specified in proposal, provided, however, that the City will give at least 30 days notice prior to requests. E. Designation: Throughout the term, Pepsi shall be known as the "Official soft-drink of the City of Santa Clarita." SECTION S. SPECIAL EVENT SPONSORSHIP Company agrees to pay City an annual Special Event Sponsorship Fee of Five Thousand Dollars ($5,000) for any Pepsi Cola exclusive special event of the City's choice. The Special Event Sponsorship Fee shall be due within thirty (30) days of the signing of this Agreement and thereafter on each consecutive anniversary for the remaining Years of the Agreement. The Special Event Sponsorship Fee specified in this Section shall be paid by Company to the City of Santa Clarita at 23920 Valencia Boulevard, Suite 300, Santa Clarita, CA 91355-2196 or at such other place or places as City may from time to time designate by written notice delivered to company. SECTION 9. SAMPLING/PROMOTIONAL OPPORTUNITIES Prior to the implementation of the sampling activities, Company will provide City with written notification of its intent to conduct sampling activities at specific locations at least thirty (30) days prior to such event and obtain City's written approval and any necessary permits before conducting such sampling activities. Company will provide a menu of marketing programs to the City as follows: Page 5 of 18 *Marketing: City may choose two (2) marketing options per year. Marketing options may change throughout the years and may include, but are not limited to Taste Challenge Booths, bottleneck hanger merchandising and product sampling. In the event City chooses bottleneck hanger option, City will provide bottleneck hangers, Company will provide merchandising support to place bottleneck hangers at various retail outlets. City may use various Pepsi Cola marketing menu options in cross promotions with other partners, subject to approval by Company. SECTION 10. ACCESS TO CITY MARKS AND LOGOS Company shall have the right to use the official City logos and trademarks. Company will consult with City prior to the use of any City logos and trademarks and shall obtain City's prior written approval before using any of these logos and trademarks, which approval City shall not unreasonably withhold. SECTION 11. SIGNAGE REQUIREMENTS AND LOCATIONS City will work with Company to develop a mutually agreed upon signage program. City shall provide Company with signage opportunities at properties owned and controlled by City, including but not limited to: brochures and other printed material; parks, recreation and cultural facilities; and concession stands. All signage opportunities are subject to City Council approval. SECTION 12. MAINTENANCE OF VENDING MACHINES AND OTHER Company agrees to maintain its vending machines, signs, and other equipment installed and/or operated pursuant to this Agreement in good order and repair at Company's own cost and expense during the entire term of this Agreement. All vending machines and other equipment provided by Company shall remain the property of Company or one of its affiliates. Company shall perform at its own cost and expense (within 48 hour response time) any required maintenance and repairs, and should Company fail, neglect, or refuse to do so, City shall have the right to perform such maintenance or repairs for Company, and Company agrees to promptly reimburse City for the cost thereof; provided, however, that City shall first give Company thirty (30) days written notice of its intention to perform such maintenance or repairs for Company for the purpose of enabling Company to proceed with such maintenance or repairs at its own expense. City shall not be obligated to make any repairs to, or maintain, any vending machines, sign or other equipment installed and/or operated by Company pursuant to machines, signs, or other equipment installed and/or operated by Company pursuant to this agreement. Company agrees to provide electrical power hook-up per mutually agreed upon site. City will be responsible for concrete slabs and permits. Page 6 of 18 SECTION 13. TERMINATION UPON DEFAULT This section covers default and termination of this Agreement for cause. A. A "Default" shall be deemed to have occurred hereunder if (i) Company defaults in the making of any of the annual payments required to be made by it by the dates specified in the Agreement OR and does not cure within ninety (90) days; (ii) Either party defaults in the performance or observance of any other term, covenant, condition, or provision of this Agreement; such default is of the kind which is curable or remediable; and Such default continues for a period of (90) days after service of a notice of default, or, if the curing or the remedying of such default requires the doing of work or the taking of action which cannot with due diligence be completed in a ninety (90) day period, continues beyond such period following the end of the period of ninety (90) days after the service of a notice of default as is reasonably necessary (taking into account unavoidable delays) to do the work required or to complete such other action as is required to cure or remedy the default in question; OR (iii) Either party defaults in the performance or observation of any term, covenant, condition or provision of this Agreement: such default is not curable or remediable and is with respect to a substantial obligation of this Agreement, the non -defaulting party cannot be made whole therefore by the collection of money damages, and such default evidences a willful or negligent disregard by the defaulting party of its substantial obligations under this Agreement; OR (iv) There is filed against either party in any court pursuant to any statute either of the United States or of any state, a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or substantially all of said party's property, and within one hundred twenty (120) days of such filing said party fails to secure a discharge of such petition or the dismissal of such proceedings, or said party files a voluntary petition in bankruptcy or insolvency or for such reorganization or for the appointment of such a receiver or trustee or makes an assignment for the benefit of creditors or petitions for or enters into OR an arrangement for the benefit of creditors; Page 7 of 18 (v) This Agreement, or any substantive part thereof, is declared invalid by a court of law. B. Within a reasonable time after the occurrence of any Default, the non - defaulting party shall give the defaulting party notice of intention to terminate this Agreement. Upon the effective date of such termination specified in such notice (which shall not be less than ten (10) days after giving of such notice), the term of this Agreement shall end fully and completely as if that were the date herein fixed for the expiration of the term of this Agreement. No Default shall be deemed to have occurred under this Section until the expiration of the ninety (90) days after giving of a notice of default notwithstanding the fact that the claimed default is not curable or remediable, so that the defaulting party will have an opportunity to initiate a judicial proceeding to determine whether the claimed default constitutes a Default hereunder. C. Within ninety (90) days after this Agreement is terminated, Company shall remove all vending machines, and other equipment and signs that Company installed and/or operated pursuant to this Agreement except as expressly excepted by City in writing. City will be entitled to any and all commissions and/or annual sponsorship fee until Company removes all machines installed and/or operated pursuant to this Agreement. Notwithstanding any of the above, City may bring a separate action for default in Company's payment of the required annual payments. D. If the Company terminates this Agreement for cause or pursuant to section 13 then Company shall, without prejudice to any other right or remedy available to Company, obtain a reimbursement from the City of any unearned Annual Sponsorship Fee paid by Company to the City for the Agreement Year in which such termination occurs. The amount of such reimbursement shall be determined by multiplying Seventy -Two Thousand Dollars ($72,000) by a fraction, the numerator of which is the number of months remaining in the Agreement Year from the time all vending machines. installed and/or operated are removed after such termination occurs and the denominator of which is 12. E. In addition, all rights granted to Company under this Agreement including, but not limited to: Territory Exclusivity, Category Exclusivity, right to use City logos and trademarks, right to conduct sampling activities within the City limits of City and rights to participate in City events, shall cease upon the termination of his Agreement. Company agrees that immediately after expiration of this Agreement, City shall have the right, and Company waives any claims against City, to enter into another similar type contract with a competitor of Company. Page 8 of 18 SECTION 14. TERMINATION Within ninety (90) days after this Agreement is terminated for any reason, Company shall remove all vending machines, and other equipment or signs that Company installed and/or operated pursuant to this Agreement except as expressly agreed to by parties in writing. If Company fails to remove the above vending machines, signs, and equipment within this ninety (90) day period, City may: A. Continue this Agreement in effect, in which event City shall be entitled to enforce all of its rights and remedies under this Agreement, including the right to recover the annual fee specified in this Agreement; or B. Remove the above vending machines, signs and equipment at Company's sole cost and expense, including any amount necessary to compensate City for all detriment proximately caused by Company's failure to perform its obligations under this Agreement. Should Company hold over and continue to leave its vending machines, signs, or other equipment installed and/or operated pursuant to this Agreement following ninety days after expiration of the term of this Agreement or any extension thereof, Company's continued occupancy shall be treated as a month-to-month tenancy subject to all the terms and conditions of this Agreement. SECTION 15. HOLD HARMLESS AGREEMENT Company shall protect, defend, indemnify and save hold harmless City, its officers, officials, and employees, and agents from and against any and all liability, loss, damage, expenses, costs (including without limitation, costs and fees of litigation of every nature) allegedly arising out of, or in connection with Company's performance or actions pursuant to this Agreement, or its failure to comply with any of its obligations contained in this Agreement by Company, its officers, agents or employees except such loss or damage which is caused by the sole negligence or willful misconduct of City, its employees or agents. SECTION 16. WORKERS' COMPENSATION INSURANCE Company shall maintain workers' compensation insurance in the amount and type by law if applicable. Company shall require all its contractors and agents to provide such workers' compensation insurance for all of their employees. Company shall furnish to City a certificate of waiver of subrogation under the terms of the compensation insurance and Company shall similarly require all its contractors and agents to waive subrogation. Page 9 of 18 SECTION 17. INSURANCE In addition to the workers' compensation insurance and the Company's covenant to indemnify City, Company shall obtain and furnish to City, a proof of comprehensive general liability insurance, including automobile liability coverage. Said policy shall indemnify Company, its officers, agents, and employees, while acting within the scope of their duties, against any and all claims allegedly arising out of, or in connection with this Agreement and shall provide coverage in not less than the following amount: combined single limit bodily injury, personal injury and property damage, including products/completed operations liability and blanket contractual liability, of $1,000,000 per occurrence. If coverage is provided under a form, which includes a designated general aggregate limit, the aggregate limit must be no less than $1,000,000 for this Agreement.* Said policy shall name City, its agents, officers, employees and volunteers as Additional Insureds, and shall specifically provide that any other insurance coverage which may be applicable to this Agreement shall be deemed excess coverage and that Company's insurance shall be primary. *Claims made by modified occurrence policies are not acceptable. Insurance companies must be admitted and licensed in California and have a Best's Guide rating of A -Class VII or better. SECTION 18. CERTIFICATES OF INSURANCE• ADDITIONAL INSURED ENDORSEMENTS Prior to execution of this agreement, Company shall furnish to City certificates of insurance and additional insured endorsements to each of Company's insurance policies, subject to approval of the City Attorney, evidencing the foregoing insurance coverage as required by this agreement; said certificates shall: 1. provide name and policy number of each carrier and policy; and 2. shall state the policy; and 3. shall promise to provide that such policies will not be canceled, suspended, voided, reduced in coverage or in limits, or modified without thirty (30) days prior written notice to City; and shall state as follows: Company shall maintain the foregoing insurance coverage in force throughout the term of this Agreement. The requirement for carrying the foregoing insurance coverage shall not derogate for its provisions for indemnification of City by Company under this agreement. City or its representatives shall at times have the right to demand the original copy of all said policies of insurance which Company shall provide within fifteen (15) days of City's request. Company shall pay, in a prompt and timely manner, the premiums on all insurance herein above required. City shall not be responsible for premiums or assessments in the policies. Page 10 of 18 SECTION 19. SURVIVAL OF INDEMNITIES Termination of this Agreement shall not affect the right of City to enforce any and all indemnities given or made by Company under this Agreement, nor can it affect any provision of this Agreement that expressly states that it shall survive termination thereof. SECTION 20. NON -LIABILITY OF CITY. OFFICIAL EMPLOYEES OR AGENTS No elective or appointed City or City affiliated board, commission or member thereof, or officer, employee or agent of City shall be personally liable to Company, its successors and assigns, in the event of any default or breach by City under this Agreement, its successors and assigns, under this Agreement or for any obligation of City under this Agreement. SECTION 21. ASSIGNMENT. SUCCESSORS AND WAIVER Company shall not assign or transfer any interest in this Agreement or the performance of any of Company's obligations without the prior written consent of City. Any attempt by Company to assign or transfer any of Company's rights, duties, or obligations arising under this Agreement shall be void. Neither party shall encumber, assign, or otherwise transfer this Agreement or any Right or interest in this Agreement, without the written consent of the other party. A consent by a party to an assignment or transfer to another person shall not be deemed to be a consent to any subsequent assignment or transfer to another person. All of the terms, covenants and conditions of this Agreement shall inure to the benefit of and be binding upon the parties and their successors and permitted assigns. The provisions of this Section shall not be deemed as any waiver of any of the conditions against assignment herein before set forth. Waiver by City or Company of any breach of any of the provisions of this Agreement shall not constitute a waiver of any other provision, nor a waiver of any subsequent breach or violation of the same or any other provision of this Agreement. Acceptance by the City of any work or services by Company shall not be a waiver of any of the provisions of this Agreement. SECTION 22. REPRESENTATIONS AND WARRANTIES Each party to this Agreement represents and warrants that it has the full right, power, and authority to enter into, and perform its obligations under this Agreement and that the terms and conditions of this Agreement do not violate, interfere with or infringe upon the rights of any third parties pursuant to written agreement or otherwise. Each party further represents and warrants that each has complied with all laws, ordinances, codes, rules and regulations relating to its entering into this Agreement and its performance thereunder. Page 11 of 18 SECTION 23. CONFLICT OF INTEREST Company shall at all times avoid conflicts of interest or appearance of conflict of interest with the interests of the City in the performance of this Agreement. SECTION 24. PHOTOGRAPHY City has the right for its own purposes, or may grant permits to persons or corporations engaged in the production of still or motion pictures, television programs, advertising and related activities, to take photographs or motion pictures of Company's activities, vending machines, signs, and other equipment installed and/or operated by Company pursuant to this Agreement without obtaining Company's prior approval or without paying Company any compensation for such activities. SECTION 25. NON-DISCLOSURES/PRESS RELEASES Company shall consult with City and obtain City's prior written approval before issuing any press release or otherwise making public statements with respect to this Agreement or the transactions contemplated hereby. SECTION 26. TIME OF ESSENCE Time is of the essence with respect to all provisions of this Agreement in which a definite time for performance is specified including, but not limited to, the annual payments by Company and the expiration of this Agreement. SECTION 27. FORCE MAJEURE — UNAVOIDABLE DELAYS Should the performance of any such act required by this Agreement to be performed by either City or Company be prevented or delayed by any reason of an act of God, strike, lockout, labor troubles, inability to secure materials, restrictive governmental laws or regulations, or any other cause except financial inability not the fault of the party required to perform the act, the time for performance of the act will be extended for a period equivalent to the period of delay and performance of the act during the period of the delay will be excused. Provided, however, that nothing contained in this Section shall excuse the prompt payment of the annual fee by Company as required by this Agreement or the performance of any act rendered difficult solely because of the financial condition of the party, City or Company, required to perform the act. SECTION 28. COMPLIANCE WITH LAWS Company shall comply with all applicable laws, ordinances, codes, and regulations of the federal, state, and local government. The judgment of any court of competent jurisdiction, or the admission by Company in a proceeding brought against Company by Page 12 of 18 any government entity, that Company has violated any such statute, ordinance, regulation, or requirement shall be conclusive as between City and Company and shall be ground for termination of this Agreement by City. SECTION 29. TAXES Company shall be responsible for the payment of sales tax imposed on the revenue generated by the sale for beverages through vending machines placed by Company in City during the Term. SECTION 30. EMINENT DOMAIN If any property upon which Company's vending machines, signs, or other equipment installed and/or operated by Company pursuant to this Agreement is taken in eminent domain, the entire award shall be paid to the City. SECTION 31. NOTICE All notices required or permitted to be given under the terms of this Agreement, shall be in writing and be delivered personally, or sent by telecopier or certified mail, postage prepaid and return receipt requested, addressed as follows: CITY: City of Santa Clarita 23920 Valencia Boulevard, Suite 300 Santa Clarita, CA 91355 Attn: City Manager COMPANY: The Pepsi Bottling Group 1200 Arroyo St. Sylmar, Ca 91342 Attn: Market Unit Manager With a copy sent to: Pepsi Bottling Group One Pepsi Way Somers, NY 10589 Attn: General Counsel Notice shall be deemed effective on the date delivered or transmitted by facsimile or, if mailed, three (3) days after deposit in the mail. SECTION 32. CONTROLLING LAW AND VENUE This Agreement shall be deemed to be made in, and the rights and liabilities of the parties, and the interpretation and construction of this Agreement, determined in accordance with the laws of the State of California. Any controversy arising out of or under this Agreement, if litigated, shall be adjudicated in a court of competent jurisdiction in Los Angeles County Superior Court, San Fernando Branch. Page 13 of 18 SECTION 33. CUMULATWE REMEDIES The remedies given to the parties in this Agreement shall not be exclusive but shall be cumulative and in addition to all remedies now or hereafter allowed by law or elsewhere provided in this Agreement. SECTION 34. ATTORNEY'S FEES In the event suit is brought by either party to enforce the terms and provisions of this Agreement or to secure the performance hereof, each party shall bear its own attorney's fees. SECTION 35. AGREEMENT IN WRITING This Agreement, including the Exhibits, embodies the entire understanding of the parties with respect to the matter addressed in this Agreement and the Exhibits and supersedes all other agreements entered into between the parties prior to the execution of this Agreement. No amendment of this Agreement shall be valid unless in writing duly executed by the parties or their authorized representatives. This agreement was prepared as a result of the negotiations of the parties and shall not be strictly or liberally construed for or against any party as a drafter of the Agreement. The Agreement, nor any part of it may be changed, altered, modified, limited or extended orally or by any agreement between the parties unless such agreement be expressed in writing, signed and acknowledged by City and Company, or their successors in interest. SECTION 36. PARTIAL INVALIDITY Should any provision of this Agreement be held by a court of competent jurisdiction to be either invalid, void, or unenforceable, the remaining provisions of this Agreement shall remain in full force and effect unimpaired by the holding, so long as the reasonable expectations of the parties hereto are not materially impaired. SECTION 37. AGREEMENT IN COUNTERPARTS This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same document. SECTION 38. SECTION TITLES The section titles in this Agreement are inserted only as a matter of convenience and for reference, and in no way define, limit, or describe the scope of intent of this Agreement or in any way affect this Agreement. Page 14 of 18 SECTION 39. In the event that there are any conflicts or inconsistencies between this Agreement and Company's proposal, the terms of the Agreement shall govern. SECTION 40. ENTIRETY The foregoing, and Exhibit "A" and Exhibit `B" attached hereto, set forth the entire Agreement between the parties. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and through their authorized officers the day, month and year first above written. PEPSI BOTTLING GROUP By: Pres/V.P./G.M. On. By: Its: Division Chief Financial Officer/ Director of Finance CITY OF SANTA CLARITA City Manager ATTEST: City Clerk APPROVED TO AS FORM: City Attorney Page 15 of 18 EXHIBIT A GROWTH INCENTIVE FUND In any Year in which the Company pays the City an Annual Fee (and not Commissions) Company will offer the City of Santa Clarita an annual growth incentive in order to provide additional support to the City, as follows. a) For any Year in which the volume of vending cases exceeds the benchmark for that Year, the Company will pay the City a commission of such incremental cases only, at the rate set forth below. b) Benchmark will be set at 8,500 cases for year one, increasing by 2% per year for the remainder of the contract as set forth below. Benchmark Volumes % above Benchmark Commission Per case Year Cases 1%-4.99% 35% Year 1 8,500 5%-14.99% 37% Year 2 8,670 15% and above 40% Year 3 8,843 Year 4 9,020 Year 5 9,200 Year 6 9,384 Year 7 9,571 Year 8 9,762 Year 9 9,957 Year 10 10,156 * Annual growth rate of 2% ** Commission paid on growth cases only *** Commission per case earned through growth incentive paid annually at end of each contract year Page 16 of 18 EXHIBIT B PRODUCT PRICE LIST The Pepsi Bottling Group Fountain Beverage Products as of 3/22/02. Prices subject to annual inflationary increase. $8.85 per gallon Pepsi-Cola Diet Pepsi Pepsi ONE Caffeine Free Diet Pepsi Mountain Dew Mug Root Beer Sierra Mist Mandarin Orange Slice Wild Cherry Pepsi $9.85 perag llon Lipton Unsweetened Iced Tea Lipton Raspberry Iced Tea Lipton Peach Iced Tea $10.10 per gallon Pink Lemonade Page 17 of 18 LIST EXIBIT B Continued The Pepsi Bottling Group Bottles -to -Go Beverage Products as of 3/22/02. Prices subject to annual inflationary increase. 20 oz. Carbonated and non -carbonated soft drinks $15.99 per case (24 Units) Pepsi-Cola,Diet Pepsi, Pepsi ONE, Mountain Dew, Code Red Mountain Dew, Pepsi Twist, Pepsi Twist Diet, Mug Root Beer, Sierra Mist, Mandarin Orange Slice, Wild Cherry Pepsi, Fruitworks 12 oz. 6 pack cans - Carbonated and non -carbonated soft drinks $7.19 per case (24 Units I Pepsi-Cola, Diet Pepsi, Pepsi ONE, Mountain Dew, Code Red Mountain Dew, Pepsi Twist, Pepsi Twist Diet, Mug Root Beer, Sierra Mist, Mandarin Orange Slice, Wild Cherry Pepsi, $9.99 per case (24 Units) Aquafina 20 oz. $9.49 per case (15 Units) One Liter Aquafina water $11.99 per case (12 Units) Sobe 20 oz. beverages $12.49 per case (12 Units) 9.5 oz 12 pack Starbucks Frappuccino $9.29 per case (12 Units) 16 oz. Lipton Tea Page 18 of 18 12/14/01 FRI 17:15 FAX 3675312 COCA COCA 11002 ..1 CO f, A, 60I.A f: N T r R P N 1$F..5 cu in as n Sylm i Sats Cimtw December 14, 2001 Ms. Tina Haddad Administrative Analyst City Managers's Office City of Santa Clarita 23920 Valencia Boulevard, Suite 300 Santa Clarita, CA 91355 ;2:925 er,1-14,y Avenk i, :i Aywr. 0A D I.i:,1 On behalf of the Coca-Cola Bottling Company of Southern California we are responding to your request for re -bid. Please note that the items covered in this re -bid supercede our original proposal dated .August 22, 2001 already submitted. All other items in the original proposal will remain the same except the following items. o Annual contribution to be $15,000.00 per year. o This contract will extend for a three year period o Commission rate on all vending machine sales will be 20% The first annual payment will be divided into two equal payments. The first payment to be paid at the beginning of the year. The second half to be paid after the additional proposed vendors have been placed increasing the total machines on location to 42, Any additional vendors placed over the proposed 42 will increase the commission revenue accordingly. The subsequent annual payments will be, paid in January for each of the two remaining years. Thank you for the opportunity to re -bid our original proposal. We are looking forward to a rewarding partnership between Coca-Cola Enterprises and the City of Santa Clarita. If you have any questions regarding this or any other matter please don't hesitate to call me at (818) 652-6316. I will call you on Monday to confirm our appointment on Tuesday. Sicerely, Michael Van Se oonhoven District Sales Manager