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06-160 Resolution No.06-160 RESOLUTION AUTHORIZING EXECUTION OF AN AGREEMENT WITH PEPSI-COLA GENERAL BOTTLERS IL BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,ILLINOIS,that Olufemi Folarin,City Manager,and Dolonna Mecum,City Clerk,be and are hereby authorized and directed to execute an agreement on behalf of the City of Elgin with Pepsi-Cola General Bottlers IL for beverages at The Centre, Lords Park Family Aquatic Center and Wing Park Family Aquatic Center, a copy of which is attached hereto and made a part hereof by reference. s/Ed Schock Ed Schock, Mayor Presented: July 12, 2006 Adopted: July 12, 2006 Omnibus Vote: Yeas: 7 Nays: 0 Attest: s/Dolonna Mecum Dolonna Mecum, City Clerk BEVERAGE AGREEMENT This Beverage Agreement(the"Agreement")is made this ? 9,day of ,2006 by and between Pepsi-Cola General Bottlers IL,LLC d/b/a PepsiAmericas,an Illinois limited liability cofnpany,("PEPSI")with offices located at 1500 Touhy Avenue,Elk Grove Village,Illinois 60007 and the City of Elgin,Illinois,a municipal corporation,("CUSTOMER"),with offices located at 100 Symphony Way,Elgin,Illinois 60120. WHEREAS,CUSTOMER and PEPSI each desire that PEPSI,through its Brands(as hereinafter defined), serve as the sole,exclusive and official Beverage(as hereinafter defined)supplier,distributor and advertiser of CUSTOMER at Lords Park Family Aquatic Center,Wing Park Family Aquatic Center and the Centre of Elgin(the "Facilities"). NOW THEREFORE,in consideration of the mutual covenants PEPSI and CUSTOMER hereby agree as follows: 1. Beverages shall be defined as any and all non-alcoholic drinks except hot brewed coffee,hot brewed tea and milk. 2. Brands shall mean any and all Beverages sold and distributed by PEPSI and any and all Beverages PEPSI may sell or distribute in the future including,but not limited to,carbonated soft drinks("CSDs"),non- carbonated soft drinks,juices,juice containing beverages,teas,sports or isotonic drinks,bottled waters and bottled coffees. 3. Subject to the renewal provisions set forth herein below,the term of this Agreement shall commence on July 12 _,2006 and terminate on July 11_,2011. Either party hereto may terminate this agreement without liability for any reason upon thirty(30)days written notice,provided,however,that in the event the Customer terminates this agreement prior to the date the contract terminates as indicated above,Customer shall refund to Pepsi a pro rata share of any marketing funds paid by Pepsi to the Customer for the current year. 4. In exchange for CUSTOMER'S commitment and other valuable consideration and upon full execution of this Agreement,the parties agree as follows: a. PEPSI agrees to pay CUSTOMER an annual marketing fund payment of$8,500 during the Term. The first such payment will be made within sixty(60)days after full execution of this Agreement and thereafter,within sixty(60)days after each anniversary date of this Agreement during the Term. b. PEPSI agrees to donate to CUSTOMER five hundred dollars($500.00)worth of additional marketing support annually during the Term in the form of complimentary product,t-shirts or other promotional items. c. All payments,including the value of donations,made by PEPSI to CUSTOMER under Paragraphs 4.a.and 4.b.of this Agreement shall be deemed earned at an equal prorated rate per month for the purposes of this Agreement,notwithstanding the date of actual payment. d. PEPSI agrees to pay CUSTOMER a growth rebate of$2.00 per case on all cases purchased by CUSTOMER over 2,700 cases in any given Agreement year. Rebate payments shall be made within sixty(60)days after the anniversary date of each year of this Agreement based on the immediately prior year's purchases. e. PEPSI reserves the right to increase prices up to three percent(3%)per year on all carbonated soft drink products and up to five percent(5%)per year on all non-carbonated soft drinks,juices,juice containing beverages,teas,sports or isotonic drinks,bottled waters and bottled coffees during the Term. f. Initial vend pricing and commission structure on full-service vending products will be as follows: Beverage Size Vend Price Commission CSDs/Aquafina PET 12 oz. $0.75 29.9% CSDs/Aquafina 20 oz. $1.50 39.8% Non-CSD 20 oz. $1.75 39.8% Propel/Gatorade 16.9 oz. $1.75 20.1% Juice Blends/Flavored 16 oz.or 20 oz. $1.50 39.8% Water Dole Juices 15.2 oz $1.75 29.9% 6. CUSTOMER hereby licenses and appoints PEPSI,through its Brands,as the sole,exclusive and official Beverage supplier,distributor and advertiser of CUSTOMER and the Facilities. CUSTOMER shall cause the Brands to be exclusively available at the Facilities and no Beverages or Beverage related items including,but not limited to,cups or premium items,that compete with or are the same as or similar to the Brands shall be made available,advertised and/or promoted at the Facilities or by CUSTOMER. 7. CUSTOMER recognizes that PEPSI has paid valuable consideration to ensure an exclusive Beverage associational relationship with CUSTOMER with respect to an exclusive Beverage supply and distribution program and that any dilution or diminution of such exclusivity seriously impairs PEPSI's valuable rights. Accordingly,in the event another person or entity attempts,without PEPSI's explicit consent,to associate Beverages that compete with or are the same as or similar to the Brands("Competitive Products")with CUSTOMER or to suggest that Competitive Products are endorsed by or associated with CUSTOMER by referring directly or indirectly to CUSTOMER(all of which actions described herein are sometimes referred to as"Ambush Marketing"), CUSTOMER will promptly oppose such actions and cooperate with PEPSI's efforts to stop the Ambush Marketing and to protect the exclusive associational rights granted to PEPSI in this Agreement. In the event any such Ambush Marketing occurs during the Term of this Agreement,immediately upon learning thereof,each party shall notify the other party hereto. 8. CUSTOMER agrees to inform,require and cause any food provider,caterer or concessionaire that operates or will operate at the Facilities or third party that leases or builds on any portion of the Facilities during the Term to be bound by the terms and conditions of this Agreement and to honor the Brand sales,advertising and promoting exclusivity,with the exception of any jointly agreed upon exceptions between CUSTOMER and PEPSI. 9. All art work and logo sheets to be used in any advertisements,signage and press releases promoting the Brands are subject to the prior mutual approval of PEPSI and CUSTOMER,with neither party unreasonably withholding such approval. 10. Except as may otherwise be required by this Agreement,law or legal process,no party shall disclose to any third party the terms and conditions of this Agreement. 11. Except if prohibited by law,during the entire Term,PEPSI shall provide and supply CUSTOMER with all necessary equipment to dispense the Brands at the Facilities without charge;provided that all Beverages are supplied to CUSTOMER and the Facilities by PEPSI as set forth above and that the only products dispensed from such equipment are the Brands. PEPSI will provide service on all equipment without charge to CUSTOMER. All rights,title and interest in all PEPSI equipment supplied to CUSTOMER shall at all times remain with PEPSI. 12. CUSTOMER represents and warrants to PEPSI that all appropriate approvals required to enter into this Agreement have been granted and the individual executing this Agreement on behalf of CUSTOMER has been duly authorized by any and all persons or entities of which authorization is required to enter into this Agreement on behalf of CUSTOMER. CUSTOMER also agrees that at no time will it challenge,contest,disclaim or deny the 2 authority of the individual signing this Agreement on behalf of CUSTOMER or use as a basis to void,cancel or nullify this Agreement a claim that the individual signing below was not authorized to sign this Agreement on behalf of CUSTOMER. Further,CUSTOMER guarantees and warrants that the execution,delivery and performance of this Agreement by CUSTOMER will not and does not violate any agreements with or the rights of third parties. 13. In the event any of the covenants,agreements,terms or provisions contained in this Agreement shall be invalid,illegal or unenforceable in any respect,the validity of the remaining covenants,agreements,terms and provisions contained herein shall not in any way be affected,prejudiced or disturbed thereby. 14. If CUSTOMER fails to perform any of the promises set forth in this Agreement,then as an option but not as its sole remedy,PEPSI may terminate this Agreement. If this Agreement is terminated for any reason, CUSTOMER agrees to return to PEPSI a pro rata portion of all monetary payments,including the value of donations,made to but not earned by CUSTOMER under Paragraphs 5.a.through 5.c.of this Agreement. Further, any such breach by CUSTOMER shall be deemed as authorization to PEPSI to allow PEPSI immediate access to the Facilities to take possession of each and every piece of PEPSI's equipment without any claim of trespass. 15. Any failure by either party hereto to enforce at any time or for any period of time any one or more of the terms or conditions of this Agreement,shall not be a waiver of such terms or conditions or of either party's right thereafter to enforce each and every term and condition of this Agreement. 16. It is mutually understood and agreed,and it is the intent of PEPSI and CUSTOMER that an independent contractor relationship be established and is hereby established under the terms and conditions of this Agreement:that employees of CUSTOMER are not,nor shall they be deemed to be,employees of PEPSI;and,that employees of PEPSI are not nor shall they be deemed to be employees of CUSTOMER. 17. This Agreement may not be assigned by either party hereto without the express written consent of the other. 18. This Agreement fully expresses the entire understanding of PEPSI and CUSTOMER. Any and all prior understandings are hereby canceled. No future changes in the terms of this Agreement shall be valid,except when and if reduced to writing and signed by both PEPSI and CUSTOMER,by legally authorized officials thereof. 19. This agreement shall be subject to and governed by the laws of the State of Illinois. Venue for resolution of any disputes or the enforcement of any rights arising out of or in connection with this Agreement shall be in the Circuit Court of Kane County,Illinois. IN WITNESS WHEREOF,the parties have executed this Agreement as of the date and year first above written. CITY OF ELGIN,ILLINOIS PEPSI-COLA GENERAL BOTTLERS IL,LLC 41 By: By: I'.., Name: Viii„t„. A.34 Name: 176e ('7-67. O Title: Title: sP ref 3 Agenda Item No. G.. — City of Elgin June 9, 2006 , - TO: Mayor and Members of the City Council r7-) anothd,1ncart dud FROM: Olufemi Folarin, City Manager cutturai(Ipportulones lor , Randy Reopelle, Parks and Rec eation Director SUBJECT: Beverage Agreement with Pepsi-Cola PURPOSE The purpose of this memorandum is to provide the Mayor and members of the City Council with information to enter into a beverage agreement with Pepsi-Cola for The Centre, Lords Park Family Aquatic Center and Wing Park Family Aquatic Center. O RECOMMENDATION It is recommended that the City Council approve the beverage agreement with Pepsi-Cola. BACKGROUND In May, 2002, the City entered into a beverage agreement with Pepsi-Cola for The Centre, Lords Park Family Aquatic Center and Wing Park Family Aquatic Center. Under terms of the agreement, City staff is responsible for servicing the vending machines that dispense beverages. This entails ordering the product, maintaining an inventory of the product, filling the machines, removing, counting, and depositing the money. Expenses incurred include staff time, the purchase of product, sales tax, product spoilage, product shrinkage, and labor to fill the machines. These operations also require valuable storage space that could be utilized for other Centre functions. Taking all expenses into consideration it was determined that net revenues over expenses of the beverage vending operations has been less than 10%. Given these factors it was determined that contracting with Pepsi-Cola for full service vending service would lead to increased net revenues and provide management staff the time to address more important operational issues Under this full service vending contract, Pepsi-Cola will replenish the machines, collect the money, and send a monthly check for the City's percentage of revenues. The percentage of revenues the City receives will vary depending on the product sold, with the average being 33.22%. In addition,the new agreement includes an annual marketing fund payment to the City of$8,500, verses $6,000 under the original agreement. The new agreement also calls for Pepsi to donate to il Beverage Agreement with Pepsi-Cola June 9, 2006 Page 2 the City, on an annual basis, $500 worth of additional marketing support in the form of complimentary product, t-shirts, or other promotional items. Under the original agreement, the additional marketing support was comprised of 216 t-shirts. Pepsi-Cola currently holds the largest share of the Chicago-land soft drink market with over 47% of the market. Their product line is very diverse and they are especially strong in the sport drink market (Gatorade and Propel), which sells extremely well in an active facility such as The Centre. COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED None Ri6C., FINANCIAL IMPACT The agreement with Pepsi-Cola requires a percentage reimbursement ranging from 20.1% to ___ 39.8%, based on the type of product sold. Based on 2005 sales, it is estimated that commissions generated as a result of the proposed agreement should equal approximately $9,850. Net revenues under the existing method of vending operations are approximately $2,780. LEGAL IMPACT \IWP/1/None ALTERNATIVES 1. Award the full service contract with Pepsi-Cola as recommended. 2. Do not award the full service contract with Pepsi-Cola as recommended Respectfully submitted for Council consideration. RR Attachment Io • BEVERAGE AGREEMENT This Beverage Agreement(the"Agreement")is made this_day of May,2006 by and between Pepsi-Cola General Bottlers IL,LLC d/b/a PepsiAmericas("PEPSI")with offices located at 1500 Touhy Avenue,Elk Grove Village,Illinois 60007 and the City of Elgin("CUSTOMER"),with offices located at 100 Symphony Way,Elgin,Illinois 60120. WHEREAS,CUSTOMER and PEPSI each desire that PEPSI,through its Brands(as hereinafter defined),serve as the sole,exclusive and official Beverage(as hereinafter defined)supplier,distributor and advertiser of CUSTOMER at Lords Park Family Aquatic Center,Wing Park Family Aquatic Center and the Centre of Elgin(the"Facilities"), . NOW THEREFORE,in consideration of the mutual covenants PEPSI and CUSTOMER hereby agree as follows: 1. Beverages shall'be defined as any and all non-alcoholic drinks except hot brewed coffee,hot brewed tea and milk. 2. Brands shall mean any and all Beverages sold and distributed by PEPSI and any and all Beverages PEPSI may sell or distribute in the future including,but not limited to,carbonated soft drinks ("CSDs"),non-carbonated soft drinks,juices,juice containing beverages,teas,sports or isotonic drinks, bottled waters and bottled coffees. 4111%. 3. Subject to the renewal provisions set forth herein below,the term of this Agreement shall commence on May 23,2006 and terminate on May 22,2007("Term"). The Agreement shall automatically. renew each year for four(4)consecutive one-year terms unless PEPSI or CUSTOMER notifies the other of its intention not to renew the Agreement in writing not less than sixty(60)days before the expiration date of each term. 4. In exchange for CUSTOMER'S commitment and other valuable consideration and upon full execution of this Agreement,the parties agree as follows: ' a. PEPSI agrees to pay CUSTOMER an annual marketing fund payment of$8,500 during the Term. The first such payment will be made within sixty(60)days after full execution of this Agreement and thereafter,within sixty(60)days after each anniversary date of this Agreement during the Term. b. PEPSI agrees to donate to CUSTOMER five hundred dollars($500.00)worth of additional marketing support annually during the Term in the form of complimentary product,t-shirts or other promotional items. c. All payments,including the value of donations,made by PEPSI to CUSTOMER under Paragraphs 4.a.and 4.b.of this Agreement shall be deemed earned at an equal prorated rate per month for the purposes of this Agreement,notwithstanding the date of actual payment. d. PEPSI agrees to pay CUSTOMER a growth rebate of$2.00 per case on all cases purchased by CUSTOMER over 2,700 cases in any given Agreement year. Rebate payments shall be made within sixty(60)days after the anniversary date of each year of this Agreement based on the immediately prior year's purchases. AO' e. PEPSI reserves the right to increase prices up to three percent(3%)per year on all carbonated soft drink products and up to five percent(5%)per year on all non-carbonated soft drinks,juices,juice containing beverages,teas,sports or isotonic drinks,bottled waters and bottled coffees during the Term. ,A01., f. Initial vend pricing and commission structure on full-service vending products will be as follows: Beverage Size Vend Price Commission CSDs/Aquafina PET 12 oz. $0.75 29.9% CSDs/Aquafina 20 oz. • $1.50 39.8% Non-CSD 20 oz. $1.75 39.8% Propel/Gatorade 16.9 oz. $1.75 20.1% Juice Blends/Flavored 16 oz.or 20 oz. $1.50 39.8% Water Dole Juices 15.2 oz $1.75 29.9% 6. CUSTOMER hereby licenses and appoints PEPSI,through its Brands,as the sole,exclusive and official Beverage supplier,distributor and advertiser of CUSTOMER and the Facilities. CUSTOMER shall cause the Brands to be exclusively available at the Facilities and no Beverages or Beverage related items including,but not limited to,cups or premium items,that compete with or are the same as or similar to the Brands shall be made available,advertised and/or promoted at the Facilities or by CUSTOMER. 7. CUSTOMER recognizes that PEPSI has paid valuable consideration to ensure an exclusive aolP"' Beverage associational relationship with CUSTOMER with respect to an exclusive Beverage supply and distribution program and that any dilution or diminution of such exclusivity seriously impairs PEPSI's valuable rights. Accordingly,in the event another person or entity attempts,without PEPSI's explicit consent,to associate Beverages that compete with or are the same as or similar to the Brands("Competitive Products")with CUSTOMER or to suggest that Competitive Products are endorsed by or associated with CUSTOMER by referring directly or indirectly to CUSTOMER(all of which actions described herein are sometimes referred to as"Ambush Marketing"),CUSTOMER will promptly oppose such actions and cooperate with PEPSI's efforts to stop the Ambush Marketing and to protect the exclusive associational rights granted to PEPSI in this Agreement. In the event any such Ambush Marketing occurs during the Term or any renewal thereof,immediately upon learning thereof, each party shall notify the other party hereto. 8. CUSTOMER agrees to inform,require and cause any food provider,caterer or concessionaire that operates or will operate at the Facilities or third party that leases or builds on any portion of the Facilities during the Term to be bound by the terms and conditions of this Agreement and to honor the Brand sales,advertising and promoting exclusivity. 9. All art work and logo sheets to be used in any advertisements,signage and press releases promoting the Brands are subject to the prior mutual approval of PEPSI and CUSTOMER,with neither party unreasonably withholding such approval. 10. Except as may otherwise be required by this Agreement,law or legal process,no party shall • disclose to any third party the terms and conditions of this Agreement. 11. Except if prohibited by law,during the entire Term,PEPSI shall provide and supply CUSTOMER with all necessary equipment to dispense the Brands at the Facilities without charge; provided that all Beverages are supplied to CUSTOMER and the Facilities by PEPSI as set forth above and that the only products dispensed from such equipment are the Brands. PEPSI will provide service on all equipment without charge to CUSTOMER. All rights,title and interest in all PEPSI equipment supplied to CUSTOMER shall at all times remain with PEPSI. 2 12. CUSTOMER represents and warrants to PEPSI that all appropriate approvals required to enter into this Agreement have been granted and the individual executing this Agreement on behalf of CUSTOMER has been duly authorized by any and all persons or entities of which authorization is required to enter into this Agreement on behalf of CUSTOMER. CUSTOMER also agrees that at no time will it challenge,contest,disclaim or deny the authority of the individual signing this Agreement on behalf of CUSTOMER or use as a basis to void,cancel or nullify this Agreement a claim that the individual signing below was not authorized to sign this Agreement on behalf of CUSTOMER, Further,CUSTOMER guarantees and warrants that the execution,delivery and performance of this Agreement by CUSTOMER will not and does not violate any agreements with or the rights of third parties. 13. In the event any of the covenants,agreements,terms or provisions contained in this Agreement shall be invalid,illegal or unenforceable in any respect,the validity of the remaining covenants, agreements,terms and provisions contained herein shall not in any way be affected,prejudiced or disturbed thereby. 14.. If CUSTOMER fails to perform any of the promises set forth in this Agreement,then as an option but not as its sole remedy,PEPSI may terminate this Agreement. If this Agreement is terminated for any reason,CUSTOMER agrees to return to PEPSI a pro rata portion of all monetary payments,including the value of donations;made to but not earned by CUSTOMER under Paragraphs 5.a.through 5.c.of this Agreement. Further,any such breach by CUSTOMER shall be deemed as authorization to PEPSI to allow PEPSI immediate access to the Facilities to take possession of each and every piece of PEPSI's equipment without any claim of trespass. 15. Any failure by either party hereto to enforce at any time or for any period of time any one or more of the terms or conditions of this Agreement,shall not be a waiver of such terms or conditions or of either party's right thereafter to enforce each and every term and condition of this Agreement. 16. It is mutually understood and agreed,and it is the intent of PEPSI and CUSTOMER that an independent contractor relationship be established and is hereby established under the terms and conditions of this Agreement: that employees of CUSTOMER are not,nor shall they be deemed to be,employees of PEPSI;and,that employees of PEPSI are not nor shall they be deemed to be employees of CUSTOMER. 17. This Agreement may not be assigned by either party hereto without the express written consent of the other. 18. This Agreement fully expresses the entire understanding of PEPSI and CUSTOMER. Any and all prior understandings are hereby canceled. No future changes in the terms of this Agreement shall be valid,except when and if reduced to writing and signed by both PEPSI and CUSTOMER,by legally authorized officials thereof. IN WITNESS WHEREOF,the parties have executed this Agreement as of the date and year first above written. • CITY OF ELGIN,ILLINOIS PEPSI-COLA GENERAL BOTTLERS IL,LLC By: By: Name: Name: Title: Title: 3