BEVERAGE MARKETING AGREEMENT
Exhibit
10.73
COCA-COLA
NORTH AMERICA
SCOPE
OF MARKETING AGREEMENT
The
parties to the Beverage Marketing Agreement (the "Agreement") are Xxxxx’x
Restaurants, Inc. ("Customer") and Coca-Cola North America FoodService ("CCF"),
a division of The Coca-Cola Company. The Agreement will apply to all outlets
where Fountain Beverages are served that are owned or operated by Customer
or
any of its subsidiaries, or has the same ownership group as Customer, including
(a) any outlets that are opened after the Agreement is signed, (b) any outlets
that are co-branded, and (c) any outlets acquired during the Term of the
Agreement, unless those outlets are already governed by an agreement with CCF
and that agreement is validly assigned to Customer as part of the acquisition.
If the acquired outlets are under a pre-existing agreement with a competitive
beverage supplier, the acquired outlets will come under this Agreement after
the
competitive agreement is terminated or expires. In addition, this Agreement
shall not apply to any System Outlets (as defined below) located at a special
site (i.e., public transportation facilities, military bases, sports facilities
including race tracks, student unions or other similar buildings on college
or
university campuses, or amusement or theme parks) to the extent that the sale
of
CCF Beverages is prohibited at such location. The Agreement will not apply
to
any outlets outside the fifty United States. All outlets owned or operated
by
Customer are referred to as "Corporate Outlets." Outlets owned by authorized
franchisees of Customer ("Franchisees") are referred to as "Franchised Outlets.”
Franchised Outlets and Corporate Outlets are together referred to as “System” or
“System Outlets.” The programs described in this Agreement are the only programs
in which the System Outlets may participate during the Term. Customer agrees
to
notify CCF in writing whenever Customer authorizes a new
Franchisee.
FRANCHISED
OUTLETS
Customer
will (i) designate CCF’s
Fountain Beverages as the only Fountain Beverages approved by Customer for
use
in any outlets owned by Franchisees (subject to the “Xx Xxxxxx Exception” set
forth in Section 3 of Exhibit
“A,”
attached
hereto),
(ii)
mandate CCF as the approved soft drink supplier for Franchisees; (iii) use
its
best efforts, subject to applicable law, to cause its Franchisees to serve
in
their outlets a brand set consisting only of CCF’s Fountain Beverages; and (iv)
take no action inconsistent with the marketing programs described in this
Agreement. In addition, Customer will not authorize for sale in the Franchised
Outlets any Beverages in bottles, cans or other packaging that are marketed
under a brand name or trademark owned or licensed for use to PepsiCo, Inc.
or
any bottle/can Beverages in a category in which CCF has a product, except that
Customer may test Xx Xxxxxx in bottle or can packaging as part of the bottle/can
Beverage test described in Section 3 of Exhibit “A.”
In
consideration of these commitments by Customer, CCF agrees to provide to
Franchisees who participate in CCF’s program ("Participating Franchisees”) the
marketing, equipment and service programs set forth in this Agreement.
Franchisees will be deemed to have elected to participate by complying with
the
terms of this Agreement, including the Beverage Availability section. Outlets
owned by Participating Franchisees are referred to as "Participating Franchised
Outlets." The Corporate Outlets and the Participating Franchised Outlets are
collectively referred to as the “Participating System Outlets” or the
“Participating System.”
Customer
represents and warrants that the terms of its franchisee agreement or another
agreement it has executed with its Franchisees authorize Customer to collect
from suppliers marketing or promotional allowances made available in connection
with the purchase of such suppliers’ products by Franchisees (“the
Authorization”). Customer represents and warrants that the terms of the
Authorization authorize Customer, among other things: (i) to establish those
products and materials to be used in the System; (ii) to require that each
Franchisee sell or offer for sale only those products, foods, Beverages and
other menu items that have been expressly approved by Customer; and (iii) to
designate and approve marketing and advertising programs for the System.
Customer further represents and warrants that all of its Franchisees have
executed such Authorization and that the Authorization is in effect and
enforceable at the time of this Agreement. Should the Authorization terminate
as
to one or more Franchisees, or the applicable provisions become unenforceable
during the Term, Customer agrees to provide prompt written notice of same.
Customer agrees that all funding it receives on behalf of the Participating
System will be utilized by Customer for the benefit of the Participating System,
including specifically Participating Franchisees, and to increase the sale
of
CCF’s Fountain Beverages throughout the Participating System. Customer agrees to
provide all Participating Franchisees with written notification of the funding
being paid on their behalf and the purpose for which it is used. In addition,
if
CCF is providing equipment to Franchised Outlets, Franchisees are required
to
sign an equipment lease in a form identical in substance to that set forth
in
Exhibit
“C”.
Customer
agrees to defend, indemnify and hold harmless CCF from any and all claims or
other costs and liabilities arising out of the execution of this Agreement,
CCF’s payment of funding to Customer or out of Customer’s failure to provide
required disclosures to Franchisees.
1
ENTIRE
AGREEMENT
This
Agreement consists of this Signature Page, Exhibit
“A”
Program
Terms and Conditions, Exhibit
“B”
Standard
Terms and Conditions, and Exhibit
“C”
Coca-Cola Fountain Equipment Lease Agreement. As of the beginning of the Term,
this Agreement will supersede all prior agreements between the parties relating
to the subject matter of this Agreement. No supplement, modification, or
amendment of this Agreement shall be binding unless executed in writing by
authorized representatives of both parties.
THIS
AGREEMENT SHALL NOT BE EFFECTIVE UNTIL SIGNED BY CUSTOMER AND AN AUTHORIZED
REPRESENTATIVE OF CCF.
|
Accepted
and agreed to
this
day
of September,
|
Accepted
and agreed to this 20th day of September,
|
|
COCA-COLA
NORTH AMERICA FOODSERVICE,
a
division of The Coca-Cola Company
|
Xxxxx’x
Restaurants, Inc.
|
|
By:/s/
Xxxxxx X. Xxxxxxx
(signature)
Xxxxxx
X. Xxxxxxx
Vice
President West Region
|
By:/s/
Xxxxxx Xxxxxxx
(signature)
Xxxxxx
Xxxxxxx
0000
Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx,
Xxxxxxxxxx 00000
ACN:
1315951
|
2
EXHIBIT
"A"
PROGRAM
TERMS AND CONDITIONS
1. TERM
The
Agreement will become effective when signed by both parties.
The
Term shall begin as of July 1, 2007 (the “Effective Date”) and will continue for
a period of five (5) years or until the Participating System Outlets have
purchased the Volume Commitment of CCF's Fountain Syrups, whichever occurs
last.
When used in the Agreement, the term "Year" means each consecutive twelve-month
period during the Term, beginning with the first day of the Term. The
Marketing Agreement between Customer and CCF dated April 1, 1998, as amended
June 1, 2002, (the “Prior Agreement”) will govern the relationship between the
parties until the beginning of the Term, at which point the Prior Agreement
is
deemed terminated by the mutual agreement of the parties.
2. VOLUME
COMMITMENT
Customer
agrees that the Participating
System will purchase a minimum of *** gallons of CCF's Fountain Syrups during
the Term.
3. BEVERAGE
AVAILABILITY AND BEVERAGE TESTS
Beverage
Availability.
Customer will serve in each Corporate Outlet, and each Participating Franchised
Outlet will serve, a core brand set of Fountain Beverages that consists of
Coca-Cola(R) classic, diet Coke(R) and Sprite(R), and the remaining
products will be jointly selected by Customer and CCF. Except as set forth
in
the two paragraphs of the Beverage Test subsection, all Fountain Beverages
served in the Participating System Outlets will be CCF's brands. Customer
further recognizes that the sale of competitive Beverages in bottles, cans
or
other packaging would diminish the product availability rights given to CCF,
and
therefore also agrees not to serve competitive Beverages in bottles, cans or
other packaging in the Participating System Outlets that are marketed under
a
brand name or trademark owned or licensed for use to PepsiCo, Inc. or any
bottle/can Beverages in a category in which CCF has a product, except that
|
(i)
|
Customer
may test Xx Xxxxxx in bottle or can packaging as part of the bottle/can
Beverage test described in the Beverage Test subsection, and
|
|
(ii)
|
if
Customer
desires to
serve the national number one or number two bottle/can Beverage in
its
category (as determined on a volume basis based on data supplied
by CCF),
Customer will be permitted to do so as long as those Beverages are
not a
product of PepsiCo, Inc., and provided further that those Beverages
are
established to be competitively superior to any CCF Bottle/Can Beverage
(as defined below) in the category following a market test of CCF’s brand
with mutually agreed test parameter. If CCF does not have a bottle/can
Beverage in the category, Customer will be permitted to authorize
a
non-PepsiCo competitive bottle/can Beverage in that category, but
agrees
that at such time as CCF has a bottle/can Beverages in the category,
Customer will perform a market test with mutually agreed test parameters
to determine if the CCF Bottle/Can Beverage is an acceptable alternative.
If, following the test, the CCF Bottle/Can Beverage is determined
to be an
acceptable alternative, Customer will de-authorize the competitive
bottle/can Beverage in the category as the contract (if any) for
the
competitive bottle/can Beverage is terminated or expires.
|
Beverage
Tests.
Customer agrees that it will conduct the following Beverage tests during 2007:
(i) mutually agreed upon CCF
Specialty Beverages (e.g., Minute Maid(R) Lemonade, Minute Maid(R) Limeade
and
Monin syrups) in a minimum of ***
Participating System Outlets; (ii) mutually agreed upon bottle/can Beverages
marketed under a brand name or trademark owned by or licensed for use to The
Coca-Cola Company (“CCF Bottle/Can Beverages”); Customer may include Xx Xxxxxx
in bottle or can packaging in the test; and (iii) Gold Peak(R) teas in
bag-in-box form (as more fully described below). Such tests will be conducted
according to mutually agreed upon test parameters (including the CCF Beverages
tested, duration of tests (which are currently anticipated to be 8 - 10 weeks
in
duration) and test success criteria) that will be established in advance of
the
test to determine the success or failure of the tests. In conducting such tests,
Customer agrees that it will provide sales data to CCF at the end of every
four
weeks during the test period, which will be used to measure the results of
the
test. CCF and Customer will mutually analyze and evaluate the sales data to
meet
mutually agreed upon sales criteria and to mutually determine the success of
the
tests.
*** Portions
of this page have been omitted pursuant to a request for Confidential Treatment
filed separately with the Commission.
3
If,
after
the test of CCF’s Bottle/Can Beverages and, if Customer elects, Xx Xxxxxx in
bottle or can packaging, Customer determines based on the test results that
it
needs to serve Xx Xxxxxx in Fountain Beverage form in the System Outlets because
CCF does not offer a brand that meets consumer demand for a spicy cherry
Beverage, then Customer may, upon written notice to CCF and at Customer’s cost,
convert one valve per System Outlet to Xx Xxxxxx, provided that the following
conditions are met:
|
(i)
|
Customer
acknowledges that under the Prior Agreement, it received an advance
of
funding in the amount of *** at
the time Customer converted from Xx Xxxxxx to CCF brands. If Customer
adds
Xx Xxxxxx to CCF-owned fountain dispensing equipment as permitted
by this
Agreement, then Customer agrees to re-pay to CCF the portion of that
funding that remains unearned at the time that Customer adds Xx Xxxxxx
to
any System Outlet (the “Unearned Conversion Funds”). As of the date of
this Agreement, the amount of the Unearned Conversion Funds is ***
. The
Unearned Conversion Funds will continue to be earned at a rate of
***
cents *** per gallon of CCF’s Fountain Syrups purchased by the
Participating System Outlets during the Term. The then-existing amount
of
Unearned Conversion Funds will be deducted from the next payment
of earned
funding under the Agreement after Xx Xxxxxx is added to any System
Outlet.
However, if prior to converting to Xx Xxxxxx, Customer introduces
and
offers Gold Peak(R) tea (including unsweetened Gold Peak tea) in
all
System Outlets throughout the remainder of the Term, then Customer
will
not be required to re-pay to CCF the Unearned Conversion Funding;
if later
in the Term Customer decides that it will not maintain Gold Peak
Tea
(including unsweetened Gold Peak Tea) in all System Outlets, then
at the
time that Customer removes Gold Peak tea from any System Outlet,
Customer
shall pay to CCF the amount of the Unearned Conversion Funding as
of the
date that Customer first added Xx Xxxxxx to the System Outlets during
the
Term plus interest in the amount of 1% per month accrued from the
date
that Customer first added Xx Xxxxxx to the System Outlets; and
|
|
(ii)
|
Customer
will be charged a Fair Share lease charge and service charge (as
described
below) as of the date Customer adds Xx Xxxxxx to CCF-owned fountain
dispensing equipment as permitted by this Agreement.
|
MARKETING
PROGRAM
In
consideration of the Beverage Availability rights granted to CCF
above, the marketing programs outlined below will be provided to assist Customer
in maximizing the sale of CCF’s Fountain Beverages in the Participating System
Outlets. Customer agrees that CCF will have the right to audit compliance with
the performance criteria outlined herein at all reasonable times and places.
Gold
Peak(R) Teas Conversion Fund.
Customer
agrees to test Gold Peak teas for a period of *** months in a mutually agreed
upon number of Participating System Outlets during 2007 when the tea tower
equipment is available for installation. Customer further agrees to roll out
Gold Peak teas (including unsweetened Gold Peak tea) to all System Outlets
within ninety (90) days of the completion of the test. CCF will provide Customer
with a one-time fund of *** to
offset
the costs of the test and the conversion to Gold Peak teas, which costs include
but are not limited to that which is necessary to prepare the facilities for
installation of the tea towers (for example, adding additional electrical
outlets, drilling holes in the counter tops for line placement, and any other
miscellaneous installation costs not traditionally covered by CCF). Funding
is provided in return for Customer's commitment to serve Gold Peak teas in
the
Participating
System Outlets throughout
the Term. Funding will be paid to
Customer on behalf of the Participating
System after
the
Agreement is signed by both parties. The test of Gold Peak teas must include
unsweetened Gold Peak tea. The test criteria will be mutually agreed upon by
the
parties. Upon completion of the test, if the mutually agreed upon test criteria
is not met for unsweetened Gold Peak tea, then the Customer has the option
of
maintaining its current tea Beverages, but agrees to keep CCF’s tea towers
installed in all Participating System Outlets and agrees to serve CCF’s tea
Beverages to complement Customer’s current tea Beverages. CCF’s tea towers will
be used to dispense only CCF’s tea Beverages.
*** Portions
of this page have been omitted pursuant to a request for Confidential Treatment
filed separately with the Commission.
4
Reinvestment
Funding
Customer
acknowledges and agrees that CCF, in its sole discretion, may raise prices
for
its Fountain Syrups during the Term. For calendar year 2007, and in any
subsequent calendar year during the Term in which the Weighted Average Net
Price
to Customer’s for CCF’s Fountain Syrup is increased by more than ***% over its
then-current level, CCF will make available funding equal to the weighted
average per gallon price increase in excess of ***% (the
“Reinvestment Funding”) for mutually agreed upon marketing activities. For
purposes of this section, the Weighted Average Net Price will be determined
based on the Participating System Outlets’ actual purchases of CCF’s Fountain
Syrups over the twelve-month period preceding the price increases. The
Reinvestment Funding provided under this provision will be cumulative from
the
time of increase and the period following any other increase through the end
of
the Term. Funding for calendar year 2007 is estimated to be *** and will be
paid
to Customer when this Agreement is signed by both parties and will be reconciled
at the end of 2007. Beginning with calendar year 2008, funding, if any, will
be
paid quarterly in arrears, following the quarter in which it is earned.
Marketing
Support Funds
Through
calendar year 2007,
the
amount of available funding is calculated at the rate of *** for each gallon
of
CCF's Fountain Syrups the Participating System Outlets purchase. Beginning
January 1, 2008, the base rate will initially be *** for each gallon of CCF's
Fountain Syrups the Participating System Outlets purchase. However, beginning
January 1, 2008, and for each subsequent calendar year during the Term, if
the
Participating System’s volume of CCF Fountain Syrups in a calendar year is ***
gallons or more, CCF will increase the rate of the Marketing Support Funds
as
shown below, to encourage and reward the growth of CCF Fountain Beverage volume.
|
Annual
Volume Milestone |
Incremental
Amount
Added to Marketing Support Funds |
Total
Rate of Marketing
Support Funds Paid on All Gallons |
|
***
|
***
|
***
|
|
***
|
***
|
***
|
|
***
|
***
|
***
|
|
***
|
***
|
***
|
To
qualify for funding, Customer and each Participating System Outlet must
comply
*** the following performance criteria:
· Prominently
display approved renditions of CCF’s brands, trademarks and/or logos on all menu
boards to include laminated, printed and online menus.
· Implement
and
maintain a co-branded Fountain Beverage cup set consisting of medium and large
sizes*.
*** Portions
of this page have been omitted pursuant to a request for Confidential Treatment
filed separately with the Commission.
*
Customer has determined that consumers prefer a 32
ounce
and a 22
ounce
cup set.
5
In
addition, to qualify for funding, Customer and each Participating System Outlet
agree to comply with *** remaining performance criteria listed below:
· Implement
and maintain a “to-go” program featuring CCF Fountain Beverages and/or CCF
Bottle/Can Beverages.
· Include
approved renditions of CCF’s brands, trademarks and/or logos on merchandising
materials.
· Execute
a CCF
Fountain Beverage trademark-identified meal combination program.
· Execute
annually a minimum of one (1) mutually agreed upon crew incentive training
program.
· Implement
and display a permanent refill program featuring CCF’s Fountain
Beverages.
· Perform
those additional Fountain Beverage marketing activities the parties mutually
agree upon.
Based
on
CCF’s estimate of the Participating System’s volume for the calendar year, CCF
will pay estimated funding on a quarterly basis, after the end of each quarter.
Actual funding earned will be reconciled at the end of each calendar year.
If
CCF has paid more Marketing Support Funds than the Participating System has
earned, CCF will deduct the excess from other funding earned under this
Agreement or will invoice Customer for the amount owed, which invoice will
be
due within 30 days of its receipt. If CCF has paid less Marketing Support Funds
than the Participating System has earned, CCF will pay the additional amount
earned within 30 days after the reconciliation is complete. Funding
will be paid to Customer on behalf of the Participating
System. Excess lease charges, service costs, and fair share charges, if any,
will be deducted from earned funding.
Promotional
Support Fund
Funding
is earned at the rate of *** each Year of the Agreement. To qualify for this
fund Customer and each Participating Franchisee
must comply with all of the following performance criteria:
· Implement
in each Participating System Outlet one mutually agreed upon Beverage
merchandising activity per Year
· Perform
those additional Fountain Beverage promotional activities that the parties
mutually agree upon.
Funding
will be paid to Customer on behalf of the Participating System annually, by
March 1 of each Year (i.e., the payment for Year One will be made by March
1,
2008). Funding will be earned annually, on a pro rata monthly basis over the
12
months of each Year. Excess lease charges, service costs, and fair share
charges, if any, will be deducted from earned funding.
National
Chain Account Price
CCF
agrees that during the Term, Customer and each Participating Franchisee
will have the right to purchase Fountain Syrups from CCF at CCF’s then-current
published chain account prices, which prices are subject to change from time
to
time.
5. EQUIPMENT
PROGRAM
Where
permitted by law, CCF
will
lease without charge during the Term, the CCF approved dispensing equipment
(including water filtration equipment and annual water filter cartridges)
reasonably necessary to enable the Participating System
Outlet to dispense a quality Fountain Beverage and tea Beverage. No ice makers
will be provided. In any state where a lease without charge is not permitted
or
Customer or a Participating Franchisee elects to lease additional dispensing
equipment, such equipment will be leased at an annual lease rate calculated
by
multiplying the total installed cost of the additional equipment by the
then-current lease factor. The lease factor currently in effect for equipment
is
*** . Should the standard lease factor change during the Term, any equipment
installed after the change goes into effect will be subject to the new lease
factor. Lease charges will be deducted from earned funding. Charges in excess
of
earned funding will be invoiced. All equipment provided by CCF will at all
times
remain the property of CCF and is subject to the terms and conditions of CCF's
standard lease agreement (the “Lease”). The Lease terms are attached as
Exhibit
“C”
and are
a part of the Agreement, except as specifically changed by the Program Terms
and
Conditions or Standard Terms and Conditions.
*** Portions
of this page have been omitted pursuant to a request for Confidential Treatment
filed separately with the Commission.
6
6. SERVICE
PROGRAM
CCF
will
provide at no charge regular mechanical repair reasonably needed for Fountain
Beverage dispensing equipment. Replacement parts associated with these service
calls that are valued at no more than $ ***
will
also be provided without charge. Any removal, remodel, relocation or
reinstallation of dispensing equipment, flavor changes, summerize/winterize,
line changes, or service necessitated by damage or adjustments to the equipment
resulting from misuse, abuse, failure to follow operating instructions, service
by unauthorized personnel, unnecessary calls (equipment was not plugged in,
CO2
or Fountain Syrup container was empty), or calls that are not the result of
mechanical failure (collectively “Special Service Calls”), are not considered
regular service and will not be provided free of charge. Charges for Special
Service Calls will be charged at CCF's then current rate and will be deducted
from earned funding. Charges will include labor, travel time, parts, and
administrative costs. Charges in excess of earned funding will be invoiced.
|
7.
|
FAIR
SHARE
|
If
Customer or a Participating Franchisee desires to use equipment provided by
CCF
to dispense one competitive Fountain Beverage brand in the Participating System
Outlets on only one valve per outlet as permitted by this Agreement, an
additional annual fair share lease charge of ***
per
valve
for each dispenser will be incurred. Equipment provided by CCF may not be used
to dispense any competitive cola product, more than one competitive Fountain
Beverage brand, or any brand of PepsiCo, Inc. If service is provided to a
Participating System Outlet that serves a competitive Fountain Beverage as
permitted by this Agreement, an annual fair share service charge of ***
per
valve per
Participating System Outlet will be incurred. Fair share charges will be
deducted from earned funding.
8. PRIOR
AGREEMENT
Customer
acknowledges that under the Prior Agreement it received two advances of Business
Development Funding, one in the amount of $ *** and the other in the amount
of $
*** . The unearned portion of the $ *** advance as of the date of this Agreement
is $ *** , and it will be deemed earned over the Term of this Agreement at
a
rate of *** per gallon of CCF’s Fountain Syrups purchased by the Participating
System Outlets, and the unearned portion of the $ *** advance as of the date
of
this Agreement is $ *** , and it will be deemed earned over the Term of this
Agreement at a rate of *** per gallon of CCF’s Fountain Syrups purchased by the
Participating System Outlets, by virtue of performance under the
Agreement.
*** Portions
of this page have been omitted pursuant to a request for Confidential Treatment
filed separately with the Commission.
7
EXHIBIT
"B"
STANDARD
TERMS AND CONDITIONS
1. BEVERAGE
DEFINITION
2. TERMINATION
AND DAMAGES
Once
both
parties sign the Agreement, it may be terminated before the scheduled expiration
date only in the following circumstances: (i) Either party may terminate the
Agreement if the other party fails to comply with a material term or condition
of the Agreement and does not remedy the failure within ninety (90) days after
receiving written notice (the "Cure Period"); or (ii) CCF may terminate the
Agreement if there is a transfer or closing of a substantial number of the
Participating System Outlets or
a
transfer of a substantial portion of the assets of Customer that is not in
the
ordinary course of business.
Upon
expiration or termination, Customer must return any dispensing equipment owned
by CCF, facilitate the return by Franchisees of any equipment owned by CCF,
and
the marketing program will no longer be made available. In addition, if any
piece of equipment is removed from an outlet prior to 100 months from the
installation date for that piece of equipment, Customer will pay CCF the actual
cost of removal of the Equipment, as well as the unamortized portion of the
costs of (i) installation, (ii) non-serialized parts (e.g., pumps, racks and
regulators) and other ancillary equipment, (iii) remanufacturing, and (iv)
standard shipping and handling charges. Upon termination, Customer must also
pay
the following amounts: (i) All unearned prepaid funding including the unearned
portion of the Gold Peak Teas Conversion Fund, Marketing Support Funds,
Promotional Support Funds, Business Development Funding, and Unearned Conversion
Funds; and (ii) Interest
at the rate of ***
per
month, or such lesser percentage as required by law, accrued from the date
funds
were paid through the date of repayment.
The
parties acknowledge that in addition to the liquidated damages outlined above,
either party may pursue other remedies or damages if the other party breaches
the terms of the Agreement. The prevailing party shall be entitled to all costs
and expenses incurred to collect the amounts due including without limitation
reasonable attorneys’ fees. Nothing herein shall be construed as a waiver of any
right of CCF to prove consequential damages as a result of a breach by Customer
including, but not limited to, lost profits, and other damages
allowable.
3. GOVERNING
LAW/ DISPUTE RESOLUTION
This
Agreement shall at all times be governed by the laws of the State of Georgia.
Should there be a dispute between CCF and Customer relating in any way to the
Agreement, the breach of the Agreement, or the business relationship of the
parties, the parties agree that they will make a good faith effort to settle
the
dispute in an amicable manner. If the parties are unable to settle the dispute
through direct discussions, at that time they will attempt to settle the dispute
by mediation administered by the American Arbitration Association (the "AAA").
If the parties do not agree to pursue mediation or if that procedure is
unsuccessful, the dispute will be resolved by binding arbitration administered
by AAA in accordance with its Commercial Arbitration Rules using a single
arbitrator, at a location selected by AAA based on the convenience of the
parties and the location of potential witnesses. The arbitrator shall have
the
authority to award specific performance and any other appropriate remedies
including interim injunctive relief to maintain the status quo pending the
conclusion of arbitration. The prevailing party shall also be entitled to
recover its reasonable attorneys’ fees and other costs and expenses of
litigation. A judgment on the award of the arbitrator may be entered in any
court with jurisdiction.
4. TRANSFERS
AND ASSIGNMENTS
If
there
is a transfer or closing of a substantial number of the Corporate Outlets,
or a
transfer of a substantial portion of the assets of Customer that is not in
the
ordinary course of business, and CCF does not elect to terminate the Agreement
under the "Termination" section above, Customer shall cause the acquiring,
surviving or newly created business to assume all of Customer's obligations
under the Agreement with regard to the acquired assets or business. The
Agreement shall not be otherwise assignable without the express written consent
of CCF. Nothing contained herein shall be construed as a waiver of CCF’s
termination rights pursuant to this Agreement.
If
any
System Outlet is transferred or closed, Customer shall pay CCF actual cost
of
removal of the equipment, as well as the unamortized portion of the cost of
(i)
installation, (ii) non-serialized parts (e.g., pumps, racks and regulators)
and
other ancillary equipment, (iii) remanufacturing, and (iv) standard shipping
and
handling charges for equipment in such outlet installed less than 100 months
prior to the transfer or closure, unless Customer causes the new owner or
operator at the location to assume the lease of the equipment on terms
acceptable to CCF in its reasonable discretion.
5. TRADEMARKS
Neither
Customer nor CCF shall make use of any of the other party's trademarks or logos
without the prior written consent of that party, and all use of the other
party's trademarks shall inure to the benefit of trademark owner. For purposes
of this Agreement, CCF's trademarks include trademarks owned, licensed to or
controlled by an entity in which The Coca-Cola Company has a fifty percent
(50%)
or more ownership interest.
6. CONFIDENTIALITY
Neither
party shall disclose to any third party without the prior written consent of
the
other party, any information concerning this Agreement or the transactions
contemplated hereby, except for disclosure (1) to any attorneys, accountants
and
consultants involved in assisting with the negotiation and closing of the
contemplated transactions, or (2) to affiliates of CCF including its Bottlers,
or (3) to Franchisees, or (4) as required by law. A party that makes a permitted
disclosure must obtain assurances from the party to whom disclosure is made
that
such party will keep confidential the information disclosed.
7. OFFSET
If
Customer or Participating Franchisees default on any obligation to CCF under
this or any other agreement, in addition to any other remedies it may have,
CCF
may use funds due Customer or Participating Franchisees to offset amounts due
to
CCF under this or any other agreement.
8. FORCE
MAJEURE
Either
party is excused from performance under this Agreement if such nonperformance
results from any act of God, strikes, war, terrorism, riots, acts of
governmental authorities, shortage of raw materials or any other cause outside
the reasonable control of the nonperforming party.
9. WAIVER
The
failure of either party to seek redress for the breach of, or to insist upon
the
strict performance of any term, clause or provision of the Agreement, shall
not
constitute a waiver, unless the waiver is in writing and signed by the party
waiving performance.
*** Portions
of this page have been omitted pursuant to a request for Confidential Treatment
filed separately with the Commission.
8
10. WARRANTIES
Customer
and CCF each represent and warrant that they have the unrestricted right to
enter into this Agreement and to make the commitments contained in this
Agreement. In
addition, each party represents that the person whose signature appears on
the
Agreement has the right to execute this Agreement on behalf of the party
indicated.
Customer
represents and warrants that it complies and will seek the compliance of
Franchisees with all applicable laws and regulations and all appropriate
practices with respect to food safety including the storing, preparation and
serving of food and potability of water. Furthermore, Customer acknowledges
and
agrees to comply and seek the compliance of Franchisees with all equipment
manufacturers’ specifications and product dispensing and preparation
instructions and specifications. Finally, Customer agrees to comply and seek
the
compliance of Franchisees with CCF’s Quality Beverage standards.
11. CONSTRUCTION/
SEVERABILITY
This
Agreement and any accompanying documents constitute negotiated agreements
between the parties, and the fact that one party or his or its counsel, or
the
other, shall have drafted this Agreement, any document or particular provision
hereof shall not be considered in the construction or interpretation of this
Agreement, the documents or any provision hereof. If any term or provision
of
this Agreement is found to be void or contrary to law, such term or provision
will be deemed severable, but only to the extent necessary to bring this
Agreement within the requirements of law, from the other terms and provisions
hereof, and the remainder of this Agreement will be given effect as if the
parties had not included the severed term herein.
9
COCA-COLA
FOUNTAIN EQUIPMENT LEASE AGREEMENT
1.
LEASE
AGREEMENT AND TERM.
The
Coca-Cola Company, through its Coca-Cola North America division, ("Company")
hereby leases to the account identified on the attached Beverage Marketing
Agreement ("Lessee") all fountain beverage dispensing equipment provided to
Lessee (the "Equipment"), subject to the terms and conditions set forth in
this
Lease Agreement. Unless otherwise agreed in writing, the Equipment shall also
include, where applicable, all permanent merchandising, menu boards,
refrigeration units, ice makers and water filtration equipment installed by
Company on Lessee's premises. Each piece of Equipment is leased commencing
on
its installation date (the “Commencement Date”). Lessee may request the removal
of any Equipment upon thirty (30) days prior written notice to Company. Removal
of Equipment will not affect the term of any other agreement between the
parties, such as the Beverage Marketing Agreement. If this Lease is terminated
with respect to any piece of Equipment for any reason prior to 100 months from
the Commencement Date for that piece of Equipment, Lessee will pay Company
the
actual cost of removal of that Equipment, as well as the unamortized portion
of
the costs of (i) installation, (ii) non-serialized parts (e.g., pumps, racks
and
regulators) and other ancillary equipment, (iii) remanufacturing, and (iv)
standard shipping and handling charges. The terms of this Lease will continue
in
effect with respect to each piece of Equipment until the Equipment has been
removed from Lessee's premises and will survive the expiration or termination
of
the Beverage Marketing Agreement.
2.
RENT
FOR THE EQUIPMENT.
All
equipment leased to Lessee will be leased at an annual rate calculated by
multiplying the total installed cost of equipment by the then-current lease
factor, plus all applicable sales and use taxes, if any, as rent for the
Equipment. Rent will be due monthly. At Company's discretion, Company may
utilize funds due Lessee to offset amounts due Company under this Agreement.
If
Lessee fails to pay, within 10 days of its due date, rent or any other
amount required by this Lease to be paid to Company, Lessee shall pay to Company
a late charge equal to *** per month of such overdue payment, or such lesser
amount that Company is entitled to receive under any applicable
law.
3.
TITLE
TO THE EQUIPMENT.
Title to
the Equipment is, and will at all times remain, vested in Company. Lessee will
have no right, title, or interest in or to the Equipment, except the right
to
quiet use of the Equipment in the ordinary course of its business as provided
in
this Lease. Lessee shall execute such title documents, financing statements,
fixture filings, certificates and such other instruments and documents as
Company shall reasonably request to ensure to Company's satisfaction the
protection of Company's title to the Equipment and Company's interests and
benefits under this Lease. Lessee shall not transfer, pledge, lease, sell,
hypothecate, mortgage, assign or in any other way encumber or dispose of any
of
the Equipment. THE
PARTIES AGREE, AND LESSEE WARRANTS, THAT THE EQUIPMENT IS, AND WILL AT ALL
TIMES
REMAIN, PERSONAL PROPERTY OF COMPANY NOTWITHSTANDING THAT THE EQUIPMENT OR
ANY
PART THEREOF MAY NOW BE, OR HEREAFTER BECOME, IN ANY MANNER AFFIXED OR ATTACHED
TO, OR EMBEDDED IN, OR PERMANENTLY RESTING UPON, REAL PROPERTY OR IMPROVEMENTS
ON REAL PROPERTY.
Lessee
may perform ordinary maintenance and repairs to the Equipment as required by
this Lease, but shall not make any alterations, additions, or improvements
to
the Equipment without the prior written consent of Company. All parts added
to
the Equipment through alterations, repairs, additions or improvements will
constitute accessions to, and will be considered an item of the Equipment and
title to such will immediately vest in Company. Lessee agrees that Company
may
transfer or assign all or any part of Company's right, title and interest in
or
to any Equipment (in whole or in part) and this Lease, and any amounts due
or to
become due, to any third party ("Assignee") for any reason. Upon receipt of
written notice from Company of such assignment, Lessee shall perform all its
obligations with respect to any such Equipment for the benefit of the applicable
Assignee, and, if so directed, shall pay all amounts due or to become due
hereunder directly to the applicable Assignee or to any other party designated
by such Assignee.
4.
USE
OF EQUIPMENT.
Lessee
acknowledges that the rent does not fully compensate Company for its expenses
concerning its research and development efforts designed to improve fountain
equipment or in providing the Equipment to Lessee, and that Company provides
the
Equipment to Lessee for the purpose of dispensing Company products. Therefore,
Lessee agrees that if the Equipment is a fountain beverage dispenser, then
the
Equipment will be used for the purpose of dispensing fountain beverage products
of Company, such as Coca-Cola(R) classic (or Coke(R)), diet Coke(R) and
Sprite(R), with the understanding that, if the dispenser has four (4) or
more valves, one (1) valve may be used at Lessee's option for dispensing
one (1) non-Company, non-cola fountain beverage product; provided, that no
product of PepsiCo, Inc. or of an affiliate thereof may be dispensed. Lessee
further agrees not to dispense any product whose pungency could affect normal
operation of the Equipment. In accordance with Company's Fair Share Policy,
Company will have the right to additional rent if any valve is used for a
non-Company beverage (including water), at a rate of not less than $45 per
dispenser per year. If the Equipment is a pump for bag-in-box or similar
container, such pump may be used only to dispense Company products. If the
Equipment is other than a fountain beverage dispenser or a pump, then it will
be
used only in a location where fountain beverage products of Company are served
and where no fountain beverage products of PepsiCo, Inc. or an affiliate of
PepsiCo, Inc. are served. This Section 4 shall not apply within the State of
Wisconsin.
5.
INSPECTION
AND NOTIFICATION.
Company
shall have the right during Lessee's regular business hours to inspect the
Equipment at Lessee's premises or wherever the Equipment may be located and
to
review all records that relate to the Equipment. Lessee shall promptly notify
Company of all details arising out of any change in location of the Equipment,
any alleged encumbrances thereon or any accident allegedly resulting from the
use or operation thereof.
6.
WARRANTY
DISCLAIMER:
LESSEE
ACKNOWLEDGES THAT COMPANY IS NOT A MANUFACTURER OF THE EQUIPMENT AND THAT
COMPANY HAS MADE NO REPRESENTATIONS OF ANY NATURE WHATSOEVER PERTAINING TO
THE
EQUIPMENT OR ITS PERFORMANCE, WHETHER EXPRESS OR IMPLIED, INCLUDING (WITHOUT
LIMITATION) ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, OR ANY OTHER WARRANTIES RELATING TO THE DESIGN, CONDITION,
QUALITY, CAPACITY, MATERIAL OR WORKMANSHIP OF THE EQUIPMENT OR ITS PERFORMANCE,
OR ANY WARRANTY AGAINST INTERFERENCE OR INFRINGEMENT, OR ANY WARRANTY WITH
RESPECT TO PATENT RIGHTS, IF ANY, PERTAINING TO THE EQUIPMENT. COMPANY SHALL
NOT
BE RESPONSIBLE FOR ANY LOSS OF PROFITS, ANY DIRECT, INCIDENTAL OR CONSEQUENTIAL
LOSSES, OR DAMAGES OF ANY NATURE WHATSOEVER, RESULTING FROM THE DELIVERY,
INSTALLATION, MAINTENANCE, OPERATIONS, SERVICE OR USE OF ANY EQUIPMENT OR
OTHERWISE.
7.
TAXES.
Lessee
shall pay all assessments, license fees, taxes (including sales, use, excise,
personal property, ad valorem, stamp, documentary and other taxes) and all
other
governmental charges, fees, fines or penalties whatsoever, whether payable
by
Company
or Lessee, on or relating to the Equipment or the use, xxxxxxxxxxxx, xxxxxx,
shipment, transportation, delivery, or operation thereof, and on or relating
to
this Lease.
8.
MAINTENANCE
AND REPAIRS.
If
Lessee elects to use one valve to dispense one (1) non-Company beverage pursuant
to Section 4, Company may charge for its costs of servicing such valve in
accordance with Company's Fair Share Policy at a rate of not less than $25
per
outlet per year. Lessee shall, at its expense, keep the Equipment in good
condition, repair, and working order. Lessee shall pay all costs incurred in
connection with the shipment, use, operation, ownership, or possession of the
Equipment during the term of this Lease. Lessee's sole recourse against Company
with respect to service provided by Company or its agents to the Equipment
is
that Company will correct any defective workmanship at no additional charge
to
Lessee, provided that Company is given prompt notification of any defective
workmanship. Company shall not be otherwise liable for negligent acts or
omissions committed in regard to maintenance or repair of the Equipment and
assumes no responsibility for incidental, consequential or special damages
occasioned by such negligent acts or omissions.
9.
RISK
OF LOSS.
All risk
of loss, including damage, theft or destruction, to each item of Equipment
will
be borne by Lessee. No such loss, damage, theft or destruction of Equipment,
in
whole or in part, will impair the obligations of Lessee under this Lease, all
of
which will continue in full force and effect.
10.
INDEMNITY.
Lessee
shall indemnify Company and Company's officers, agents, employees, directors,
shareholders, affiliates, successors, and assigns (hereinafter the "Indemnified
Parties") against, and hold Indemnified Parties wholly harmless from, any and
all claims, actions, suits, proceedings, demands, damages, and liabilities
of
whatever nature, and all costs and expenses, including without limitation
Indemnified Parties’ reasonable attorneys' fees and expenses, relating to or in
any way arising out of (a) the ordering, delivery, rejection, installation,
purchase, leasing, maintenance, possession, use, operation, control or
disposition of the Equipment or any portion thereof; (b) any act or
omission of Lessee, including but not limited to any loss or damage to or
sustained by Company arising out of Lessee's failure to comply with all the
terms and conditions of this Lease; (c) any claims for liability in tort
with respect to the Equipment, excepting only to the degree such claims are
the
result of Company's negligent or willful acts. The provisions of this
Section 10 will survive termination and expiration of this
Lease.
11.
DEFAULT.
The
occurrence of any of the following will constitute a "Default" by Lessee:
(a) nonpayment by Lessee when due of any amount due and payable under this
Lease; (b) failure of Lessee to comply with any provision of this Lease,
and failure of Lessee to remedy, cure, or remove such failure within
ten (10) days after receipt of written notice thereof from Company;
(c) any statement, representation, or warranty of Lessee to Company, at any
time, that is untrue as of the date made; (d) Lessee's becoming insolvent
or unable to pay its debts as they mature, or Lessee making an assignment for
the benefit of creditors, or any proceeding, whether voluntary or involuntary,
being instituted by or against Lessee alleging that Lessee is insolvent or
unable to pay its debts as they mature; (e) appointment of a receiver,
liquidator, trustee, custodian or other similar official for any of the
Equipment or for any property in which Lessee has an interest; (f) seizure
of any of the Equipment; (g) default by Lessee under the terms of any note,
document, agreement or instrument evidencing an obligation of Lessee to Company
or to any affiliate of Company, whether now existing or hereafter arising;
(h) Lessee taking any action with respect to the liquidation, dissolution,
winding up or otherwise discontinuing the conduct of its business;
(i) Lessee transferring all or substantially all of its assets to a third
party; or (j) the transfer, conveyance, assignment or pledge of a
controlling interest or ownership of Lessee to a third party without Company's
prior written consent.
*** Portions
of this page have been omitted pursuant to a request for Confidential Treatment
filed separately with the Commission.
10
12.
OPTION
TO ACCELERATE AT WILL.
If at
any time Company in good faith believes that the prospect for Lessee's payment
or other performance under this Lease is impaired, Company may demand immediate
payment of all rents due and scheduled to come due during the remainder of
the
Lease term. All future rent accelerated under this or any other provision of
this Agreement will be discounted to present value, which will be computed
at a
discount rate of *** percent.
Failure of Lessee to make full payment within thirty (30) days of its
receipt of the demand for accelerated rent will constitute a "Default" by Lessee
as defined in Section 11.
13.
REMEDIES.
Upon the
occurrence of any Default or at any time thereafter, Company may terminate
this
Lease as to any or all items of Equipment, may enter Lessee's premises and
retake possession of the Equipment at Lessee's expense, and will have all other
remedies at law or in equity for breach of the Lease. Lessee acknowledges that
in the event of a breach of Sections 4 or 5 or a failure or
refusal of Lessee to relinquish possession of the Equipment in breach of this
section following termination or Default, Company's damages would be difficult
or impossible to ascertain, and Lessee therefore agrees that Company will have
the right to an injunction in any court of competent jurisdiction restraining
said breach and granting Company the right to immediate possession of the
Equipment.
14.
LIQUIDATED
DAMAGES.
If
Lessee acts in violation of the prohibitions described in Section 3 of this
Agreement, or is unable or unwilling to return the Equipment to Company in
good
working order, normal usage wear and tear excepted, at the expiration or
termination of the Lease, Lessee shall pay as liquidated damages the total
of:
(i) the amount of past-due lease payments, discounted accelerated future
lease payments, and the value of Company's residual interest in the Equipment,
plus (ii) all tax indemnities associated with the Equipment to which
Company would have been entitled if Lessee had fully performed this Lease,
plus
(iii) costs, interest, and attorneys' fees incurred by Company due to
Lessee's violation of Section 3 or its failure to return the Equipment to
Company, minus (iv) any proceeds or offset from the release or sale of the
Equipment by Company.
15.
OTHER
TERMS.
Customer
represents and warrants that it complies with all applicable laws and
regulations and all appropriate practices with respect to food safety including
the storing, preparation and serving of food. Furthermore, Customer acknowledges
and agrees to comply with all equipment manufactures specifications and product
dispensing and preparation instructions and specifications. No failure by
Company to exercise and no delay in exercising any of Company's rights hereunder
will operate as a waiver thereof; nor shall any single or partial exercise
of
any right hereunder preclude any other or further exercise thereof or of any
other rights. This Lease constitutes the entire agreement of the parties and
supersedes all prior oral and written agreements between the parties governing
the subject matter of this Lease; provided, however, that if Company and Lessee
have entered into a Marketing Agreement into which this Lease is incorporated,
to the extent that any of the terms in this Lease conflict with the terms set
forth in the Marketing Agreement, the terms of the Marketing Agreement will
control. No agreement will be effective to amend this Lease unless such
agreement is in writing and signed by the party to be charged thereby. Any
notices permitted or required by this Lease will be in writing and mailed by
certified mail or hand delivered, addressed to the respective addresses of
the
parties. All claims, actions or suits arising out of the Lease shall be
litigated in courts in either the State of Georgia or in the state of Lessee’s
principal place of business. Each party hereby consents to the jurisdiction
of
any local, state or federal court located within the State of Georgia and/or
the
state of Lessee’s principal place of business, and designates the Secretary of
State of the State as its agent for service of process. THIS LEASE WILL BE
GOVERNED BY THE LAWS OF THE STATE OF GEORGIA. Time is of the essence to each
and
all of the provisions of this
Lease.
*** Portions
of this page have been omitted pursuant to a request for Confidential Treatment
filed separately with the Commission.
11
