EXHIBIT 10.15
MASTER FOUNTAIN SYRUP AGREEMENT
Between
PEPSICO, INC.
and
PEPSIAMERICAS, INC.
MASTER FOUNTAIN SYRUP AGREEMENT
THIS AGREEMENT, (this "Agreement") effective as of October 15, 1999, is
made and entered into by and between PEPSICO, INC., a corporation organized and
existing under the laws of the State of North Carolina having its principal
place of business in Purchase, New York (the "Company"), and PEPSIAMERICAS,
INC., a corporation organized and existing under the laws of the state of
Delaware having its principal place of business in Memphis, Tennessee (the
"Bottler").
W I T N E S S E T H :
WHEREAS
A. The Company manufactures and sells the concentrates (the "Concentrates")
for the manufacture of fountain beverage syrups (the "Fountain Syrups").
The Company authorizes others to manufacture the Fountain Syrups from the
Concentrates and to distribute and sell the Fountain Syrups to certain
customers for use in preparing the fountain soft drinks identified on
Schedule A (as modified from time to time under paragraphs 18 and 19, the
"Beverages"). The formulas for the Concentrates, Fountain Syrups and the
Beverages constitute trade secrets owned by the Company;
B. The Company is the owner of the trademarks identified on Schedule B
(together with such other trademarks as may be authorized by the Company
from time to time for current use by the Bottler under this Agreement, the
"Trademarks"), which, among other things, identify and distinguish the
Fountain Syrups;
C. A significant business of the Bottler is the manufacture and distribution
of the Fountain Syrups either pursuant to certain agreements previously
entered into with the Company, (collectively, together with all amendments
thereto, the "Existing Syrup Appointments"), or indirectly through one or
more persons controlling, controlled by or under common control with the
Bottler (the "Bottler Affiliates");
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D. The reputation of the Fountain Syrups as being of consistently superior
quality has been a major factor in stimulating and sustaining demand for
the Fountain Syrups, and special technical skill and constant diligence on
the part of the Bottler and the Company are required in order for the
Fountain Syrups to maintain the excellence that consumers expect; and
E. Conditions affecting the production, sale and distribution of Fountain
Syrups have changed since the Company and the Bottler, or its
predecessors-in-interest, entered into the Existing Syrup Appointments, and
as a consequence, the Company and the Bottler desire to amend the Existing
Syrup Appointments, the terms of the Existing Syrup Appointments, as so
amended, being replaced and restated in the form of this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and the Bottler agree as follows:
ARTICLE I
The Authorization
1.
(a) The Company authorizes the Bottler, and the Bottler undertakes, to:
(i) manufacture and package the Fountain Syrups and (ii) distribute
and sell the Fountain Syrups under the Trademarks in and throughout
the Territories (as hereinafter defined) for Local Account Customers
(as hereinafter defined) only. The Bottler may conduct any of the
activities with respect to which it is authorized or appointed and
satisfy any duty or obligation imposed upon it under this Agreement
through its Bottler Affiliates provided that the Bottler shall remain
responsible for all obligations imposed under this Agreement and for
all of the conduct of its Bottler Affiliates.
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(b) The Company appoints the Bottler as its sole and exclusive purchaser
of the Concentrates for the purpose of manufacturing and packaging the
Fountain Syrups under the Trademarks for distribution and sale in the
Territories to Local Account Customers.
(c) (i) "Territories" means each of the territories identified Schedule C
hereto subject to the possible elimination of Subterritories under
paragraph 26 hereof and including any Territories added in accordance
with paragraph 28 hereof.
(ii) "Local Account Customers" means a single outlet, chain or
multiple outlet operations and cup vending machine operators that have
all of their outlets located within only one of the Territories.
(iii) "National Account Customers" means chain or multiple outlet
operations and cup vending machine operators that have outlets in (x)
more than one of the Territories or (y) in at least one of the
Territories and in one or more other PepsiCo licensed territories.
(iv) "Program Customer" means any of the following (a) any National
Account Customer that enters into an agreement with the Company's
Fountain Beverage Division or National Sales Business Unit (or
successors thereto) after the date hereof, (b) any National Account
Customer listed on Schedule D annexed hereto and made a part hereof,
(c) any existing National Account Customer, not otherwise designated
as a Program Customer hereunder, if and when such National Account
Customer converts from DSD (as defined below) to Commissary (as
defined below) delivery, or (d) any National Account Customer, not
otherwise designated as a Program Customer hereunder, that Bottler and
Company agree should be deemed to be a Program Customer.
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(v) "Commissary" means a distributor of food or beverage or related
items to restaurants, hotels, theatres, stadiums or any other entity
serving food or beverages that do not receive beverage shipments to
their outlets through DSD.
ARTICLE II
Reservation of Company's Rights; Agency Arrangements
2.
(a) The Company reserves the right to (i) manufacture and package the
Fountain Syrups and (ii) distribute and sell the Fountain Syrups under
the Trademarks in and throughout the Territories for all National
Account Customers. Notwithstanding the foregoing, if a National
Account Customer elects to receive shipments of Fountain Syrup through
direct store door delivery ("DSD") in one or more of the Territories,
the Company shall appoint the Bottler, and upon appointment the
Bottler hereby undertakes to serve, as the Company's exclusive agent
in such Territories for the (i) manufacture and packaging of the
Fountain Syrups and (ii) distribution of the Fountain Syrup under the
Trademarks to such National Account Customer. In the event the
National Account Customer elects to discontinue DSD of the Fountain
Syrups at any time, or if the bottler refuses to serve as the
Company's exclusive agent, the exclusive agency granted to the Bottler
pursuant to this paragraph shall immediately terminate without any
liability whatsoever to the Company in connection therewith. If a
National Account Customer does not elect DSD, the Company may in its
sole discretion appoint the Bottler as its non-exclusive agent for
manufacturing and packaging Fountain Syrups for the Company's sale to
National Account Customers.
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(b) The Company authorizes the Bottler, and the Bottler undertakes, to
maintain and service the equipment used to dispense the Beverages
located at the premises of all National Account Customers (unless the
National Account Customer elects to handle its service requirements
independently) in and throughout the Territories provided that the
Bottler complies with all of the Company's requirements and service
performance standards.
(c) The Company and the Bottler agree that the rights and authorizations
set forth in Article I and Article II paragraphs 2(a) and (b) are
necessary to effectively promote the development and growth of the
Fountain Syrup business in the Territories. In this regard the Company
and the Bottler agree to certain fees and incentive payments as set
forth in Schedules E-1 through E-6 hereto, as may be amended by the
parties from time to time. The categories addressed by Schedules E-1
through E-6 are as follows: Bottler Delivery Remittance, Brand
Development Fee, Equipment Service Standards and Fees, New Equipment
Program, Production Fee, and Service Incentive.
ARTICLE III
Obligations of Bottler
Relating to Trademarks and Other Matters
3. The Bottler acknowledges that the Company is the sole and exclusive owner
of the Trademarks, and the Bottler agrees not to question or dispute the
validity of the Trademarks or their exclusive ownership by the Company. By
this Agreement, the Company extends to the Bottler only: (i) an exclusive
license to use the Trademarks solely in connection with the manufacture,
packaging and sale of the Fountain Syrups for distribution and sale to
Local Account Customers in the Territories as set forth in Article I
hereof; (ii) an exclusive license to use the Trademarks solely in
connection with the manufacture, packaging and sale of the Fountain Syrups
for distribution and sale to National Account Customers in the Territories
who elect DSD, as set forth in paragraph 2(a) hereof; and (iii) a
non-exclusive license to use the Trademarks solely in connection with the
manufacture and packaging of the Fountain Syrups for distribution to
National Account Customers in the Territories, who do not elect DSD, as set
forth in subparagraph 2(a) hereof. Nothing herein, nor any act or failure
to act by the Bottler or the Company, shall give the Bottler any
proprietary or ownership interest of any kind in the Trademarks or in the
goodwill associated therewith.
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4. The Bottler agrees during the term of this Agreement and in accordance with
any requirements imposed upon the Bottler under applicable laws:
(a) Not to manufacture, package, sell, deal in or otherwise use or handle,
directly or indirectly, any "Cola Product" (herein defined to mean any
soft drink beverage or syrup which is generally marketed as a cola
product or which is generally perceived as being a cola product) other
than a soft drink or syrup manufactured, packaged, distributed or sold
by the Bottler under authority of the Company;
(b) Not to manufacture, package, sell, deal in or otherwise use or handle,
directly or indirectly, any concentrate, beverage base, syrup,
beverage or any other product which is likely to be confused with, or
passed off for, any of the Concentrates, Fountain Syrups or Beverages;
(c) Not to manufacture, package, sell, deal in or otherwise use or handle,
directly or indirectly, any product or syrup under any trademark or
other designation that is an imitation, counterfeit, copy or
infringement of, or confusingly similar to, any of the Trademarks; and
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(d) Not to acquire or hold, directly or indirectly, any ownership interest
in, or, directly or indirectly, enter into any contract or arrangement
with respect to, the management or control of, any person within or
without the Territories that engages in any of the activities
prohibited by subparagraphs (a), (b), (c) or (d) of this paragraph 4.
ARTICLE IV
Obligations of Bottler Relating to
Manufacture and Packaging of the Fountain Syrups
5.
(a) The Bottler represents and warrants that the Bottler possesses, or
will possess, in the Territories, prior to the manufacture, packaging
and distribution of the Fountain Syrups, and will maintain during the
term of this Agreement, such plant or plants, machinery and equipment,
trained staff, and distribution and fountain vending facilities as are
capable of manufacturing, packaging and distributing the Fountain
Syrups in accordance with this Agreement, in compliance with all
applicable governmental and administrative requirements, and in
sufficient quantities to fully meet the demand for the Fountain Syrups
in the Territories.
(b) The Company and the Bottler acknowledge that each is or may become a
party to one or more agreements authorizing a bottler or other
Company-authorized entity to produce Fountain Syrups for sale by
another bottler. Such agreements include, but are not limited to (i)
agreements permitting bottlers, subject to certain conditions, to
commence or continue to manufacture the Fountain Syrups for other
bottlers, and (ii) agreements pursuant to which bottlers may have the
Fountain Syrups manufactured for them by other Company-authorized
entities. It is hereby agreed that the Company shall not unreasonably
withhold (i) any consents required by such agreements, or (ii)
approval of Bottler's participation in such agreements. All such
existing agreements shall remain in full force and effect in
accordance with their terms.
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6. The Bottler recognizes that increases in the demand for the Fountain
Syrups, as well as changes in the packaging used for the Fountain Syrups,
may, from time to time, require adaptation of its existing manufacturing,
packaging or delivery equipment or the purchase of additional
manufacturing, packaging and delivery equipment. The Bottler agrees to make
such modifications and adaptations as necessary and to purchase and install
such equipment, in time to permit the introduction and manufacture,
packaging and delivery of sufficient quantities of the Fountain Syrups, to
fully meet the demand for the Fountain Syrups in the Territories.
7. The Bottler warrants that the handling and storage of the Concentrates and
the manufacture, handling, storage, and packaging of the Fountain Syrups
shall be accomplished in accordance with the Company's quality control and
sanitation standards, as reasonably established by the Company and
communicated to the Bottler from time to time, and shall, in any event,
conform with all food, labeling, health, packaging and other relevant laws
and regulations applicable in the Territories.
8. The Bottler, in accordance with such instructions as may be given from time
to time by the Company, shall submit to the Company, at the Bottler's
expense, samples of the Fountain Syrups and the raw materials used in the
manufacture of the Fountain Syrups. The Bottler shall permit
representatives of the Company to have access to the premises of the
Bottler during ordinary business hours to inspect the plant, equipment, and
methods used by the Bottler in order to ascertain whether the Bottler is
complying with the instructions and standards prescribed for the
manufacturing, handling, storage and packaging of the Fountain Syrups.
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9.
(a) For the packaging, distribution and sale of the Fountain Syrups, the
Bottler shall use only such packaging and labels as shall be
authorized from time to time by the Company for the Bottler and shall
purchase such items only from manufacturers approved by the Company,
which approval shall not be unreasonably withheld. Such approval by
the Company does not relieve the Bottler of the bottler's independent
responsibility to assure that the packaging and labels purchased by
the Bottler are suitable for the purpose intended, and in accordance
with the good reputation and image of excellence of the Trademarks and
Beverages.
(b) The Bottler shall maintain at all times a stock of packages, labels,
and other essential related materials bearing the Trademarks,
sufficient to fully meet the demand for Fountain Syrups in the
Territories, and the Bottler shall not use or permit the use of any
packages, labels or other materials, if they bear the Trademarks or
contain any Fountain Syrups, for any purpose other than the packaging
and distribution of the Fountain Syrups. The Bottler further agrees
not to refill or otherwise reuse nonreturnable containers.
10. If the Company determines the existence of quality or technical
difficulties with any Fountain Syrup, or any package used for the Fountain
Syrup, the Company shall have the right, immediately and at its sole
option, to withdraw the Fountain Syrup or any such package from the market.
The Company shall notify the Bottler in writing of such withdrawal, and the
Bottler shall, upon receipt of notice, immediately cease distribution of
the Fountain Syrup or such package therefor. If so directed by the Company,
the Bottler shall recall and reacquire the Fountain Syrup or package
involved from any purchaser thereof. If any recall of any product or any of
the packages used therefor is caused by (i) quality or technical defects in
the Concentrate, or other materials prepared by the Company from which the
Fountain Syrup involved was prepared by the Bottler, or (ii) quality or
technical defects in the Company's designs and design specifications of
packages which it has imposed on the Bottler or the Bottler's third party
suppliers if such designs and specifications were negligently established
by the Company (and specifically excluding designs and specifications of
other parties and the failure of other parties to manufacture packages in
strict conformity with the designs and specifications of the Company), the
Company shall reimburse the Bottler for the Bottler's total expenses
incident to such recall. Conversely, if any recall is caused by the
Bottler's failure to comply with instructions, quality control procedures
or specifications for the preparation, packaging and distribution of the
Fountain Syrup involved, the Bottler shall bear its total expenses of such
recall and reimburse the Company for the Company's total expenses incident
to such recall.
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ARTICLE V
Conditions of Purchase and Sale
11. The Company reserves the right to establish and to revise at any time, in
its sole discretion, the price of any of the Concentrates, the terms of
payment, and the other terms and conditions of supply, any such revision to
be effective immediately upon notice to the Bottler. If Bottler rejects a
change in price or the other terms and conditions contained in any such
notice, then the Bottler shall so notify the Company within thirty (30)
days of receipt of the Company's notice, and this Agreement will terminate
ninety (90) days after the date of such notification by the Bottler,
without further liability of the Company or the Bottler. The change in
price or other terms and conditions so rejected by the Bottler shall not
apply to purchases of such Concentrate by the Bottler during such ninety
(90) day period preceding termination. Failure by the Bottler to notify the
Company of its rejection of the changes in price or such other terms and
conditions shall be deemed acceptance thereof by the Bottler.
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12. The Bottler shall purchase from the Company only such quantities of the
Concentrates as shall be necessary and sufficient to carry out the
Bottler's obligations under this Agreement. The Bottler shall use the
Concentrates exclusively for its manufacture of the Fountain Syrups. The
Bottler shall not sell or otherwise transfer any Concentrate or permit the
same to get into the hands of third parties.
13.
(a) The Bottler agrees not to distribute or sell any Fountain Syrups
outside the Territories. The Bottler shall not distribute or sell any
Fountain Syrups to any person (other than another Bottler pursuant to
subparagraph 5(b) and other than as a delivery agent for the Company
to National Account Customers outside of the Territories which elect
to receive Fountain Syrup through distribution methods other than
direct store delivery as provided in subparagraph 2(a) hereof) for
ultimate sale outside the Territories. If any Fountain Syrup
distributed by the Bottler is found outside of the Territories in
violation of this paragraph 13, Bottler shall be deemed to have
transshipped such Fountain Syrup and shall be deemed to be a
"Transshipping Bottler" for purposes hereof. For purposes of this
Agreement, "Offended Bottler" shall mean a Bottler in any Territories
into which any Fountain Syrup is transshipped.
(b) In addition to all other remedies the Company may have against any
Transshipping Bottler for violation of this paragraph 13, the Company
may impose upon any Transshipping Bottler a charge for each gallon of
Fountain Syrup transshipped by such Bottler. The per-gallon amount of
such charge shall be determined by the Company in its sole discretion.
The Company and the Bottler agree that the amount of such charge shall
be deemed to reflect the damages to the Company, the Offended Bottler
and the bottling system. In addition, the Company may directly charge
the Transshipping Bottler the full amount of all investigative and
other costs incurred by the Company in connection with the
transshipment and such Transshipping Bottler shall be obligated to pay
such amount. The Company shall forward to the Offended Bottler, upon
receipt from the Transshipping Bottler, the full amount of the per
gallon charge so received (but not including investigative and other
costs charged to the Transshipping Bottler by the Company). If the
Company or its agent recalls any Beverage which has been transshipped,
the Transshipping Bottler shall, in addition to any other obligation
it may have hereunder, reimburse the Company for its costs of
purchasing, transporting, and/or destroying such Beverage.
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ARTICLE VI
Obligations of the Bottler
Relating to the Marketing of the Beverages
Financial Capacity and Planning
14. The continuing responsibility to increase and fully meet the demand for the
Fountain Syrups within the Territories rests upon the Bottler. The Bottler
agrees to use all approved means as may be reasonably necessary to meet
this responsibility.
15.
(a) The Bottler will push vigorously the sale of the Fountain Syrups
throughout all of the Territories. Without in any way limiting the
Bottler's obligation under this Paragraph 15, the Bottler must (i)
fully meet and increase the demand for the Fountain Syrups throughout
the Territories and secure full distribution up to the maximum sales
potential therein through all channels or outlets available to
fountain beverages, using any and all equipment reasonably necessary
to secure such distribution; (ii) service all accounts with frequency
adequate to keep them at all times fully supplied with the Fountain
Syrups and (iii) keep the fountain dispensing equipment located at
such channels and outlets in good working order in accordance with
requirements and performance standards established by the Company.
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(b) The parties agree that to fully meet and increase demand for the
Fountain Syrups advertising and other forms of marketing activities
are required. Therefore, the Bottler will spend such funds in
advertising and marketing the Fountain Syrups as may be reasonably
required to increase, as well as maintain, demand for the Fountain
Syrups in the Territories. The Bottler shall fully cooperate in and
vigorously push all cooperative advertising and sales promotion
programs and campaigns that may be reasonably established by the
Company for the Territories. The Bottler will use and publish only
such advertising, promotional materials or other items bearing the
Trademarks relating to the Fountain Syrups as the Company has approved
and authorized. The expenditures required by this Article VI shall be
made by the Bottler. The Company may, in its sole discretion,
contribute to such expenditures. The Company may also undertake, at
its expense, independently of the Bottler's marketing programs, any
advertising or promotional activity that the Company deems appropriate
to conduct in the Territories, but this shall in no way affect the
responsibility of the Bottler for increasing the demand for the
Fountain Syrups.
(c) The obligations set forth in Paragraphs 14, 15(a)(i) and 15(b) above
shall be modified as follows. In the case of Program Customers only,
the Bottler and the Company agree that such obligations shall be joint
obligations of both the Bottler and the Company.
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16. The Bottler and all Bottler Affiliates shall maintain the consolidated
financial capacity reasonably necessary to assure that the Bottler and all
Bottler Affiliates directly or indirectly controlled by the Bottler will be
financially able to perform their respective duties and obligations under
this Agreement and under all other agreements between the Company and
Bottler Affiliates regarding the manufacture, packaging, distribution and
sale of the Fountain Syrups.
17.
(a) The Company and the Bottler have agreed upon a business plan for the
first three years of the term of this Agreement. Since periodic
planning is essential for the proper implementation of this Agreement,
the Bottler and the Company shall meet each year at such date as the
parties may set (but no later than ninety (90) days prior to the
commencement of any calendar year during the term of this Agreement
beginning with the commencement of the calendar year closest to the
anniversary date of this Agreement), to discuss the Bottler's plans
for the ensuing three (3) year period. At such meeting, the Bottler
shall present a plan that sets out in reasonable detail satisfactory
to the Company: (i) the marketing plans, management plans and
advertising plans of the Bottler with respect to the Fountain Syrups
for the ensuing year, including a financial plan showing that the
Bottler and all Bottler Affiliates have the consolidated financial
capacity to perform their respective duties and obligations under this
Agreement, and (ii) the projected sales and capital expenditures for
the two years immediately following such year. The Company and the
Bottler shall discuss this plan and this plan, upon approval by the
Company, which shall not be unreasonably withheld, shall define the
Bottler's obligation herein to maintain such consolidated financial
capacity and to increase and fully meet the demand for the Fountain
Syrups in the Territories for the period of time covered by the plan.
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(b) The Bottler shall report to the Company periodically, but not less
than quarterly, as to its implementation of the approved plan; it is
understood, however, that the Bottler shall report sales on a regular
basis as requested by the Company and in such format and detail, and
containing such information as may be reasonably requested by the
Company. The failure by the Bottler to carry out the plan, or if the
plan is not presented or is not approved, will constitute a primary
consideration for determining whether the Bottler has fulfilled its
obligation to maintain the consolidated financial capacity required
under paragraph 16 to push vigorously the sale of the Fountain Syrups
throughout the Territories and to increase and fully meet the demand
for the Fountain Syrups in the Territories as set forth in Paragraphs
14 and 15 hereof. If the Bottler carries out the plan in all material
respects, it shall be deemed to have satisfied the obligations of the
Bottler under Paragraphs 14, 15 and 16 for the period of time covered
by the plan.
ARTICLE VII
Reformulation, New Products and Related Matters
18. The Company has the sole and exclusive right and discretion to reformulate
any of the Fountain Syrups. In addition, the Company has the sole and
exclusive right and discretion to discontinue any of the Fountain Syrups
under this Agreement, provided such Fountain Syrups are discontinued on a
national basis. In the event that the Company discontinues any Fountain
Syrup, Schedule A to this Agreement shall be deemed amended by deleting the
discontinued Fountain Syrups from the list of Fountain Syrups set forth on
Schedule A.
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19. In the event that the Company introduces any new Fountain Syrup in the
Territories under the trademarks "Pepsi-Cola" or "Pepsi" or any
modification thereof (herein defined to mean the addition of a prefix,
suffix or other modifier used in conjunction with the trademarks
"Pepsi-Cola" or "Pepsi"), the Bottler shall be obligated to manufacture,
package, distribute and sell such new Fountain Syrup in the Territories
pursuant to the terms and conditions of this Agreement, and Schedule A to
this Agreement shall be deemed amended by adding such new Fountain Syrup to
the list of beverages set forth on Schedule A.
20. The Company has the unrestricted right to use the Trademarks on the
Fountain Syrups and on all other products and merchandise other than the
Fountain Syrups in the Territories.
ARTICLE VIII
Term and Termination of the Agreement
21.
(a) The term of this Agreement shall commence on the effective date hereof
and, unless earlier terminated in accordance with its provisions, will
end on the fifth anniversary of the effective date hereof (the
"Initial Term"). The Initial Term thereafter shall be extended
automatically for additional periods of five (5) years (each a
"Renewal Term"). Notwithstanding the foregoing, the Company may
terminate this Agreement without cause at any time during any Renewal
Term upon twenty-four (24) months notice.
(b) Upon termination of this Agreement in accordance with subparagraph
21(a) hereof and completion of the valuation process referred to in
subparagraph 21(c) below, the Company shall make a payment to the
Bottler in an amount equal to the fair market value of the business
conducted by the Bottler pursuant to the rights and authorizations set
forth in Articles I and II hereof, referred to collectively as the
"Bottler's Fountain Business".
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(c) In the event that the Company must compensate the Bottler under the
circumstance described in Paragraph 21(b) hereof, the procedures set
forth on Schedule F shall apply.
22. The obligation to supply Concentrates to the Bottler and the Bottler's
obligation to purchase Concentrates from the Company and to manufacture,
package, distribute and sell the Fountain Syrups under this Agreement shall
be suspended during any period when any of the following conditions exist:
(a) There shall occur a change in the law or regulation (including,
without limitation, any government permission or authorization
regarding customs, health or manufacturing) in such a manner as to
render unlawful or commercially impracticable:
(i) the importation of Concentrate or any of its essential
ingredients, which cannot be produced in quantities sufficient to
satisfy the demand therefor by existing Company facilities in the
United States; or
(ii) the manufacture and distribution of the Concentrates or Fountain
Syrups; or
(b) There shall occur any inability or commercial impracticability of
either of the parties to perform resulting from an act of God, or
"force majeure," public enemies, boycott, quarantine, riot, strike, or
insurrection, or due to a declared or undeclared war, belligerency or
embargo, sanctions, blacklisting, or other hazard or danger incident
to the same, or resulting from any other cause whatsoever beyond its
control.
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If any of the conditions described in this paragraph 22 persists so
that either party's obligation to perform is suspended in any
substantial respect for a period of six (6) months or more, the other
party may terminate this Agreement forthwith, upon notice to the party
whose obligation to perform is suspended.
23.
(a) The Company may terminate this Agreement in the event of the
occurrence of any of the following events of default:
(i) If the Bottler or Bottler Subsidiary becomes insolvent; if a
petition in bankruptcy is filed against or on behalf of the
Bottler or Bottler Subsidiary which is not stayed or dismissed
within sixty (60) days; if the Bottler or Bottler Subsidiary is
put in liquidation or placed under sequester; if a receiver is
appointed to manage the business of the Bottler or Bottler
Subsidiary; or if the Bottler or Bottler Subsidiary enters into
any judicial or voluntary arrangement or composition with its
creditors, or concludes any similar arrangements with them or
makes an assignment for the benefit of creditors;
(ii) If the Bottler or Bottler Subsidiary adopts a plan of dissolution
or liquidation;
(iii)If any person or any Affiliated Group, other than any person or
any Affiliated Group acting with the consent of the Company,
acquires, or obtains any contract, option, conversion privilege
or other right to acquire, directly or indirectly, Beneficial
Ownership of more than fifteen percent (15%) of any class or
series of voting securities of the Bottler and if such person or
Affiliated Group does not divest itself of Beneficial Ownership
of such voting securities or otherwise terminate any such
contract, option, conversion privilege or other right to a level
equal to or below fifteen percent (15%) within thirty (30) days
after the Company notifies the Bottler that the failure of such
person or Affiliated Group to thus divest or terminate may result
in termination of this Agreement;
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(iv) If any Disposition is made without the consent of the Company by
Bottler or by any Bottler Subsidiary of any voting securities of
any Bottler Subsidiary;
(v) If the Master Bottling Agreement between the Company and the
Bottler or any person that controls, directly or indirectly, the
Bottler is terminated, unless the Company agrees in writing that
this subparagraph 23(a)(v) will not be applied by the Company to
such termination;
(vi) If the Bottler or any person in which the Bottler has Beneficial
Ownership of any equity or voting securities, or in which the
Bottler has a right or control of management, or which controls
or is under common control with the Bottler, should engage
directly or indirectly in the manufacture, distribution or
marketing of any product specified in subparagraphs (a), (b), (c)
or (d) of paragraph 4 above, or should obtain a right or license
to do the same, and if the Company has given the Bottler notice
that such condition exists and that the Company will terminate
this Agreement within six (6) months if such condition is not
eliminated, and if such condition has not been eliminated within
the six (6) month period.
20
(vii)If all or substantially all of the Bottler's or Bottler
Subsidiary's bottling assets are sold, transferred or otherwise
disposed of (including any transfer by operation of law) other
than sales, transfers or other dispositions of Assets by the
Bottler or one or more Bottler Subsidiary to one or more wholly
owned Bottler Subsidiary.
(b) The Bottler covenants and agrees with the Company:
(i) to notify the Company promptly in the event of or upon obtaining
knowledge of any third party action which may or will result in
any change in ownership described in Section 23(a)(iii) above;
and
(ii) to make available from time to time and at the request of the
Company complete records of current ownership of the Bottler and
full information concerning any entities or parties by whom it is
controlled directly or indirectly or which it controls.
(c) For the purposes of this Agreement:
(i) "Affiliated Group" shall mean two or more persons acting as a
partnership, limited partnership, syndicate or other group, or
who agrees to act together, for the purpose of acquiring,
holding, voting or making any Disposition of any voting
securities of the Bottler; provided further that the Affiliated
Group formed thereby shall be deemed to have acquired Beneficial
Ownership of all voting securities of the Bottler beneficially
owned by any such persons.
21
(ii) "Beneficial Ownership" shall mean (i) voting power which includes
the power to vote, or to direct the voting of, any securities, or
(ii) investment power which includes the power to dispose, or to
direct the Disposition of, any securities; provided further
Beneficial Ownership shall include any such voting power or
investment power which any person has or shares, directly or
indirectly, through any contract, arrangement, understanding,
relationship or otherwise; provided, however, that the following
persons shall not be deemed to have acquired Beneficial Ownership
under the circumstances described: (a) a person engaged in
business as an underwriter of securities who acquires securities
through his participation in good faith in a firm commitment
underwriting registered under the Securities Act of 1933 shall
not be deemed to be the Beneficial Owner of such securities until
such time as such underwriter completes his participation in the
underwriting and shall not thereupon or thereafter be deemed to
be the Beneficial Owner of the securities acquired by other
members of any underwriting syndicate or selected dealers in
connection with such underwriting solely by reason of customary
underwriting or selected dealer arrangements; (b) a member of a
national securities exchange shall not be deemed to be a
Beneficial Owner of securities held directly or indirectly by it
on behalf of another person solely because such member is the
record holder of such securities and, pursuant to the rules of
such exchange, may direct the vote of such securities, without
instruction, on other than contested matters or matters that may
affect substantially the rights or privileges of the holders of
the securities to be voted, but is otherwise precluded by the
rules of such exchange from voting without instruction; and (c)
the holder of a proxy solicited by the Board of Directors of the
Bottler for the voting of securities of the Bottler at any annual
or special meeting and any adjournment or adjournments thereof of
the stockholders of the Bottler shall not be deemed to be a
Beneficial Owner of the securities that are the subject of the
proxy solely for such reason.
22
(iii)"Bottler Subsidiary" shall mean any person that is controlled
directly or indirectly by the Bottler, and either participates in
the manufacture, packaging, distribution or sale of the Beverages
in "authorized containers" or has a direct or indirect equity
interest in another Bottler Subsidiary that does so participate;
(iv) "Disposition" shall mean any sale, merger, issuance of
securities, or other transaction in which, or as a result of
which, any person other than Bottler or a wholly owned subsidiary
of Bottler, acquires, or obtains any contract, option, conversion
privilege or other right to acquire Beneficial Ownership of any
securities.
(d) Upon the occurrence of any of the events of default specified in
subparagraph 23(a), the Company may terminate this Agreement by giving
the Bottler notice to that effect, effective immediately.
24.
(a) In addition to the events of a default described in paragraph 23, the
Company may also terminate this Agreement, subject to the limitations
of subparagraph 24(b), in the event of the occurrence of any of the
following events of default:
(i) If the Bottler fails to make timely payment for Concentrate or of
any other debt owing to the Company;
23
(ii) If the condition of the plant or equipment used by the Bottler in
manufacturing, packaging or distributing the Fountain Syrups
fails to meet the sanitary standards reasonably established by
the Company;
(iii)If the Fountain Syrups manufactured by the Bottler fail to meet
the quality control standards reasonably established by the
Company;
(iv) If the Fountain Syrups are not manufactured in strict conformity
with such standards and instructions as the Company may
reasonably establish;
(v) If the Bottler fails to present or carry out a plan approved
under paragraph 17 in all material respects; or
(vi) If the Bottler materially breaches any of the Bottler's other
obligations under this Agreement.
The standards and instructions of the Company comprise privately
published information concerning the manufacture, handling and storage
of the Fountain Syrups under good manufacturing practices, as well as
technical instructions, bulletins and other communications issued or
amended from time to time by the Company.
(b) Upon the occurrence of any of the foregoing events of default, the
Company shall, as a condition to termination of this Agreement under
this paragraph 24, give the Bottler notice thereof. The Bottler shall
then have a period of sixty (60) days within which to cure the
default, including, at the instruction of the Company and at the
Bottler's expense, by the prompt withdrawal from the market and
destruction of any Fountain Syrup that fails to meet the quality
control standards of the Company or any Beverage that is not
manufactured in accordance with the instructions of the Company. If
such default has not been cured within such period, then the Company
may, by giving the Bottler further notice to such effect, suspend
sales to the Bottler of Concentrates and require the Bottler to cease
production of the Fountain Syrups and the packaging and distribution
of Beverages in Authorized Containers. During such second period of
sixty (60) days, the Company also may supply, or cause or permit
others to supply, the Beverages in Authorized Containers under the
Trademarks in the Territories. If such default has not been cured
during such second period of sixty (60) days, then the Company may
terminate this Agreement, by giving the Bottler notice to such effect,
effective immediately.
24
25. Upon the termination of this Agreement:
(a) The Bottler shall forthwith take such action as necessary to eliminate
the trademark "Pepsi-Cola" from its corporate name;
(b) Any other agreement between the Company and the Bottler regarding the
manufacture, packaging, distribution, sale or promotion of Fountain
Syrups may, at the election of the Company, be automatically
terminated and thereby become of no further force or effect.
(c) The Bottler shall not thereafter continue to manufacture, package,
distribute or sell any of the Fountain Syrups or to make any use of
the Trademarks or any packaging, labels or advertising material
bearing the Trademarks;
25
(d) The Bottler shall forthwith remove and efface all reference to the
Company, the Fountain Syrups and the Trademarks from the business
premises and equipment of the Bottler and from all business papers and
advertising used or maintained by the Bottler; and it shall not
thereafter hold forth in any manner whatsoever that it has any
connection with the Company or the Beverages; and,
(e) The Bottler shall forthwith deliver all Concentrate, Fountain Syrup,
usable returnable or any nonreturnable containers, packaging, labels,
and advertising material bearing the Trademarks, still in the
Bottler's possession or under the Bottler's control, to the Company or
the Company's nominee, as instructed, and, upon receipt, the Company
shall pay to the Bottler a sum equal to the reasonable market value of
such supplies or materials. The Company will accept and pay for only
such articles as are, in the opinion of the Company, in first-class
and usable condition, and all other such articles shall be destroyed
at the Bottler's expense. Containers and advertising material and all
other items bearing the name of the Bottler, in addition to the
Trademarks, that have not been purchased by the Company shall be
destroyed without cost to the Company, or otherwise disposed of in
accordance with instructions given by the Company, unless the Bottler
can remove or obliterate the Trademarks therefrom to the satisfaction
of the Company. The provisions for repurchase contained in
subparagraph 25(e) shall apply upon termination by either party under
paragraph 22; and upon termination by the Bottler under subparagraph
11. In all other cases, the Company shall have the right, but not the
obligation, to purchase the aforementioned items from the Bottler.
26
26.
(a) Subject to the limitations set forth in subparagraph 26(b), in the
event that the Bottler at any time fails to carry out a plan approved
under paragraph 17 in all material respects in any segment of the
Territories, whether defined geographically or by type of market or
outlet, which segment shall be defined by the Company (hereinafter a
"Subterritory"), the Company may reduce the Territories covered by
this Agreement, and thereby restrict the Bottler's authorization
hereunder to the remainder of the Territories, by eliminating the
Subterritory from the Territories covered by this Agreement.
(b) In the event of such failure, the Company may eliminate the
Subterritory from the Territories covered by this Agreement by giving
the Bottler notice to that effect, which notice shall define the
Subterritory or Subterritories to which the notice applies. The
Bottler shall then have a period of six (6) months within which to
cure such failure. If the Bottler has not cured such failure in such
six (6) month period, the Company may eliminate such Subterritory or
Subterritories from the Territories by giving the Bottler further
notice to that effect, effective immediately.
(c) Upon elimination of any Subterritory from the Territories:
(i) Schedule C to this Agreement shall be deemed amended by
eliminating such Subterritory from the Territories;
(ii) The Company may manufacture, package, distribute and sell the
Fountain Syrups under the Trademarks in such Subterritory, or
authorize others to do so;
27
(iii)Any other agreement between the Bottler and the Company
regarding the manufacture, packaging, distribution or sale of
Fountain Syrups in such Subterritory may, at the election of the
Company, be automatically terminated and thereby become of no
further force or effect in such Subterritory;
(iv) The Bottler shall not thereafter continue to manufacture,
package, distribute or sell any of the Fountain Syrups in such
Subterritory, or to make any use of the Trademarks, packaging,
labels or advertising material bearing the Trademarks in
connection with the sale or distribution of the Fountain Syrups
in such Subterritory; and
(v) The Bottler shall not thereafter hold forth in such Subterritory
in any manner whatsoever that it has any connection with the
Fountain Syrups.
ARTICLE IX
Transferability/Additional Territories
27. The Bottler hereby acknowledges the personal nature of the Bottler's
obligations under this Agreement with respect to the performance standards
applicable to the Bottler, the dependence of the Trademarks on proper
quality control, the level of marketing effort required of the Bottler to
increase demand for the Fountain Syrups, and the confidentiality required
for protection of the Company's trade secrets and confidential information.
In recognition of the personal nature of these and other obligations of the
Bottler under this Agreement, the Bottler may not assign, transfer or
pledge this Agreement or any interest therein, in whole or in part, whether
voluntarily, involuntarily, or by operation of law (including, but not
limited to, by merger or liquidation), or delegate any material element of
the Bottler's performance thereof, or sublicense its rights hereunder, in
whole or in part, to any third party or parties, without the prior consent
of the Company. Any attempt to take such action without such consent shall
be void and shall be deemed to be a material breach of this Agreement.
29
28.
(a) The Bottler hereby agrees that it will not acquire or attempt to
acquire, directly or indirectly, without the prior written consent of
the Company, the right to manufacture and sell any of the Fountain
Syrups or any equity or economic interest in any entity having such
rights in any territory located outside the Specified Area (the term
"Specified Area" shall have the meaning as set forth in the Master
Bottling Agreement between the parties hereto). Any acquisition of
such rights by the Bottler within the Specified Area shall be subject
to the approval of the Company, which approval shall not be withheld
if (i) the Bottler has successfully negotiated the acquisition of such
rights for any such territories with the holder thereof and (ii) in
the reasonable judgment of the Company, the Bottler has satisfactorily
performed its obligations under this Agreement.
(b) In the event that the Bottler acquires the right to manufacture and
sell any of the Fountain Syrups in any territories in the United
States outside of the Territories, such additional territories shall
automatically be deemed to be included within the Territories covered
by this Agreement for all purposes, except as set forth below. Any
separate agreement that may exist concerning such additional
territories shall be ipso facto amended to conform to the terms of
this Agreement, except as set forth below. In addition, if the Bottler
acquires control, directly or indirectly, of any person which is a
party, or which controls directly or indirectly a party, to an
agreement whereby such party has the right to manufacture and sell any
of the Fountain Syrups in any territory in the United States, the
Bottler shall cause such party to amend such agreement, effective as
of the date of acquisition of control of such party, to conform to the
terms of this Agreement with respect to all such territory in the
United States, except as set forth below. Notwithstanding the
foregoing, in the event the Bottler makes any such acquisition after
the date hereof, the Bottler's right to receive the Brand Development
Fee and the Bottler Delivery Remittance applicable to such acquired
territories shall continue to be governed by the agreement that
existed between the Company and the former bottler on the date of
acquisition, provided however that (i) such agreement shall be deemed
to expire five years from the date such territory was acquired after
which date this Agreement shall become applicable as if it were in
effect from the date of the acquisition and (ii) such agreement shall
only be applicable to those National Account Customers under contract
with the former bottler or the Company on the date of the acquisition.
29
ARTICLE X
Litigation
29.
(a) The Company reserves the right to institute any civil, administrative
or criminal proceeding or action, and generally to take or seek any
available legal remedy it deems desirable, for the protection of its
good reputation and industrial property rights (including, but not
limited to, the Trademarks), as well as for the protection of the
Concentrates and the Fountain Syrups, and the formulas therefor, and
to defend any action affecting these matters. At the request of the
Company, the Bottler will render reasonable assistance in any such
action. The Bottler may not claim any right against the Company as a
result of such action or for any failure to take such action. The
Bottler shall promptly notify the Company of any litigation or
proceeding instituted or threatened affecting these matters. The
Bottler shall not institute any legal or administrative proceeding
against any third party which may affect the interests of the Company
in connection with this Agreement without the Company's prior consent.
30
(b) The Company has the sole and exclusive right and responsibility to
prosecute and defend all suits relating to the Trademarks. The Company
may prosecute or defend any suit relating to the Trademarks in the
name of the Bottler whenever an issue in such suit involves the
Territories and therefore it is appropriate to act in the Bottler's
name, or may proceed alone in the name of the Company, provided that
the Company shall take no action in the Bottler's name which the
Company knows or should know will materially prejudice or impair the
rights or interests of the Bottler under this Agreement.
(c) The Bottler recognizes the importance and benefit to itself and all
other licensed manufacturers and distributors of the Fountain Syrups
of protecting the interest of the Company in the Fountain Syrups and
the goodwill associated with the trademarks. Therefore, the Bottler
agrees to consult with the Company on all products liability claims or
lawsuits brought against the Bottler in connection with the Fountain
Syrups and to take such action with respect to the defense of any such
claim or lawsuit as the Company may reasonably request in order to
protect the interest of the company in the Fountain Syrups and
goodwill associated with the Trademarks. Further, the Bottler shall
supervise, control and direct the defense of all such products
liability claims and lawsuits brought against them whether
individually or jointly, provided, however, that the Bottler and the
Company expressly reserve all rights of contribution and indemnity as
prescribed by law.
31
ARTICLE XI
Automatic Amendment
30. In the event that bottlers which purchased for their own account eighty
percent (80%) or more of all of the Concentrate for Fountain Syrups
purchased for the account of all bottlers who are parties to agreements
with the Company containing substantially the same terms as this Agreement,
agree with the Company to any different provisions to be included in this
Agreement, then the Bottler hereby agrees to include an amendment
containing such different provisions in this Agreement. The gallons of
Concentrate purchased by such bottlers shall be determined based on the
most recently-ended calendar year prior to the date such amendment was
first offered to bottlers. Such gallons of Concentrate purchased shall
include purchases which were concluded in any bottler's territory through
Commissary delivery or otherwise to National Account Customers.
ARTICLE XII
General
31. For purposes of this Agreement, the following terms shall have the meanings
set forth below:
(a) "person" means an individual, a corporation, a partnership, a limited
partnership, an association, a joint-stock company, a trust, any
unincorporated organization, or a government or political subdivision
thereof.
(b) "control" (including terms "controlling", "controlled by" and "under
common control with") means: (i) Beneficial Ownership of a majority of
any class or series of voting securities of a person; or (ii) the
power or authority, directly or indirectly, to elect or designate a
majority of the members of the board of directors, or other governing
body of a person.
32
32. The Company hereby reserves for its exclusive benefit all rights of the
Company not expressly granted to the Bottler under the terms of this
Agreement.
33.
(a) Without relieving the Bottler of any of its responsibilities under
this Agreement, the Company, from time to time during the term of this
Agreement, at its option and either free of charge or on such terms
and conditions as the Company may propose, may offer technology to the
Bottler which the Company possesses, develops or acquires (and is free
to furnish to third parties without obligation) relating to the
design, installation, operation and maintenance of the plant and
equipment appropriate for the maintenance of product quality,
sanitation and safety as well as for the efficient manufacture and
packaging of the Fountain Syrups; or relating to personnel training,
accounting methods, electronic data processing and marketing and
distribution techniques.
(b) The Bottler covenants and agrees that, so long as this agreement is in
effect the Bottler shall install and maintain management information
systems that are capable of interfacing and sharing required data with
the management information systems of the Company in accordance with
standards established by the Company.
34. The Bottler agrees:
(a) it will not disclose to any third party any nonpublic information
whatsoever concerning the composition of the Concentrates or the
Fountain Syrups, without the prior consent of the Company, and it will
use any such information solely to perform its obligations hereunder;
33
(b) It will at all times treat and maintain as confidential, all nonpublic
information that it may receive at any time from the Company,
including, but not limited to:
(i) Information or instructions of a technical or other nature,
relating to the mixing, sale, marketing and distribution of the
product.
(ii) Information about projects or plans worked out in the course of
this Agreement; and
(iii)Information constituting manufacturing or commercial trade
secrets.
The Bottler, further agrees to disclose such information, as necessary to
perform its obligations hereunder, only to employees of its enterprise: (i)
who have a reasonable need to know such information; (ii) who have agreed
to keep such information secret; and (iii) whom the Bottler has no reason
to believe is untrustworthy; and
(c) Upon the termination of this Agreement, Bottler will promptly
surrender to the Company all original documents and all photocopies or
other reproductions in its possession (including, but not limited to,
any extracts or digests thereof) containing or relating to any
nonpublic information described in this paragraph 34. Following such
termination, and the surrender of such materials, the Bottler and its
employees shall continue to hold any nonpublic information in
confidence and refrain from any further use or disclosure thereof
whatsoever, provided that such obligation shall expire as to any
nonpublic information that does not constitute trade secrets ten (10)
years following such termination.
34
35. The Bottler agrees that it will not enter into any contract or other
arrangement to manage or participate in the management of any other
Pepsi-Cola bottler without the prior consent of the Company.
36. The Bottler is an independent manufacturer and not the agent of the Company
except with regard to its provision of certain services to National Account
Customers.
37. The Bottler covenants and agrees that, so long as this Agreement is in
effect the Bottler shall deliver to Company:
(i) Quarterly Statements. As soon as such statements are made available to
the public, or if such statements are not regularly made available to
the public, an unaudited income and expense statement and balance
sheet for the Bottler certified as correct by the chief financial
officer of the Bottler; and
(ii) Annual Audit Statement. As soon as such statements are made available
to the public, statements of income and retained earnings of the
Bottler for the just-ended fiscal year, and a balance sheet of the
Bottler as of the end of such year, accompanied by an opinion from the
independent public accountants of the Bottler; and
(iii)Other information. With reasonable promptness such other financial
information as the Company may reasonably request in such format as
the Company may reasonably request.
35
38. The Bottler shall maintain its books, accounts and records in accordance
with generally accepted accounting principles and shall permit any person
designated in writing by the Company to visit and inspect any of its
properties, corporate books and financial records (including, but not
limited to, auditor's workpapers), and make copies thereof and take
extracts therefrom, and to discuss the accounts and finances of the Bottler
with the principal officers thereof, all at such times as the Company may
reasonably request. The Company's rights of inspection under this paragraph
38 shall be exercised reasonably, and only for purposes of determining
Bottler's compliance with its obligations under paragraph 16, so as not to
interfere with the normal operation of the Bottler's business. The Company
will treat and maintain as confidential for a period of one year all
nonpublic financial information received from the Bottler.
39. The parties agree:
(a) All Existing Syrup Appointments and other waivers, authorizations, or
similar documents related to such existing Syrup Appointments, to the
extent they are inconsistent with this Agreement, are hereby
superseded and restated in their entirety, and all rights, duties and
obligations of the Company and the Bottler regarding the Trademarks
and the manufacture, packaging, distribution and sale of the Fountain
Syrups shall be determined under this Agreement, without regard to the
terms of any prior agreement and without regard to any prior course of
conduct between the parties;
(b) As to all matters addressed herein, this Agreement sets forth the
entire agreement between the Company and the Bottler, and all prior
understandings, commitments or agreements relating to such matters
between the parties or their predecessors-in-interest are of no force
or effect; and
36
(c) Any waiver or modification of this Agreement or any of its provisions,
and any notices given or consents made under this Agreement shall not
be binding upon the Bottler or the Company unless made in writing,
signed by an officer of the Company or by a duly qualified and
authorized representative of the Bottler, and personally delivered or
sent by telegram, telex or certified mail to an officer of the Company
(if from the Bottler) or a duly qualified and authorized
representative of the Bottler (if from the Company) at the principal
address of such party.
40. Failure of the Company to exercise promptly any option or right herein
granted or to require strict performance of any such option or right shall
not be deemed to be a waiver of such option or right, or of the right to
demand subsequent performance of any and all obligations herein imposed
upon the Bottler.
41. The Company may delegate any of its rights, performance or obligations
under this Agreement to any subsidiaries or affiliates of the Company upon
notice to the Bottler, but no such delegation shall relieve the Company of
its obligations hereunder.
42. If any provision of this Agreement, or the application thereof to any party
or circumstance shall ever be prohibited by or held invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition without invalidating the remainder of such provision or any
other provision hereof, or the application of such provision to other
parties or circumstances.
43. This Agreement shall be governed, construed and interpreted under the laws
of the State of New York.
37
IN WITNESS WHEREOF, the parties have duly executed this Agreement in triplicate
effective as of the day and year first above written.
PEPSICO, INC. PEPSIAMERICAS, INC.
By:_______________________ By:________________________
Title: ___________________ Title: ____________________
Date: ____________________ Date: _____________________
38
SCHEDULE A
BEVERAGES-COLAS
Pepsi
Diet Pepsi
Pepsi One
Caffeine Free Pepsi
Caffeine Free Diet Pepsi
Wild Cherry Pepsi
Diet Wild Cherry Pepsi
SCHEDULE B
TRADEMARKS-COLAS
Pepsi
Pepsi-Cola
Diet Pepsi
Diet Pepsi-Cola
Pepsi One
Caffeine Free Pepsi
Caffeine Free Pepsi-Cola
Caffeine Free Diet Pepsi
Caffeine Free Diet Pepsi-Cola
Wild Cherry Pepsi
Diet Wild Cherry Pepsi
SCHEDULE C
TERRITORIES
Master Bottling Agreement
STATE CITY FORMER BOTTLING ENTITIES
AR Camden Delta Beverage Group, Inc.
AR Jonesboro Delta Beverage Group, Inc.
AR Little Rock Delta Beverage Group, Inc.
IA Esterville Pepsi-Cola Bottling Company of
Esterville, Inc.
XX Xxxxxx Delta Beverage Group, Inc.
LA New Orleans Delta Beverage Group, Inc.
LA Shreveport Delta Beverage Group, Inc.
MN Ortonville Min-Dak Beverages, Inc.
MN Thief River Falls Min-Dak Beverages, Inc.
MS Carthage Delta Beverage Group, Inc.
MS Columbus Delta Beverage Group, Inc.
MS Greenville Delta Beverage Group, Inc.
MS Tupelo Delta Beverage Group, Inc.
MS Winona Delta Beverage Group, Inc.
ND Bismark Pepsi-Cola Bottling Company of
Fargo, Inc.
ND Fargo Pepsi-Cola Bottling Company of
Fargo, Inc.
ND Grand Forks Pepsi-Cola Bottling Company of
Grand Forks, Inc.
SD Aberdeen Pepsi-Cola Bottling Company of
Aberdeen, South Dakota
SD Sioux Falls Pepsi-Cola Bottling Co. of Sioux
Falls
TN Xxxxxxx Delta Beverage Group, Inc.
TN Memphis Delta Beverage Group, Inc.
TX Texarkana Delta Beverage Group, Inc.
SCHEDULE D
List of Program Customers Referred to at Paragraph 1(c)(iv)(b)
Taco Xxxx AM-PM KFC Marriott
Arby's Dunkin Donuts Circle K Ponderosa/Bonanza
Canteen California Pizza Kitchen Chevron Shell
General Cinema Xxx Xxxxxx Walmart/Sam's Regal Cinemas
Xxxx In The Box Steak & Ale/Bennigans Sonic Sizzler
Lees Famous Recipe Quiktrip Coastal Mart DAKA
Long Xxxx Xxxxxxx Brueggers Bagels Amoco Aramark
Morrison's/Ruby Tuesday National Amusements Hardee's Texaco
Dairy Mart Xxxxx Xxxxxx Xxxxxxx Group/Wienerschnitzel
Pizza Hut Mobil Subway Southland
Shoney's/Captain D's AVA Western Sizzlin Xxxxx'x General Stores
Wendy's Church's/Popeye's Dairy Queen Sbarro's
SCHEDULE E-1
BOTTLER DELIVERY REMITTANCE
The Company will pay a per-gallon fee (the "Bottler" Delivery Remittance" as
hereinafter defined) to the Bottler as the Company's agent for manufacturing
and delivering the Fountain Syrup to National Account Customers electing DSD
in accordance with the provisions of paragraph 2(a) above. Such fees shall be
established by the Company on an annual basis in accordance with the terms of
this agreement. If the Bottler, as agent of the Company, collects payments
from a National Account Customer for Fountain Syrup it has delivered to a
National Account Customer, the amount due and payable by the Bottler to the
Company with respect to such Fountain Syrup (the "Bottler Delivery Fee Charge")
shall be equal to the difference between (i) the price per gallon of such
Fountain Syrup for National Account Customers as established by the Company (the
"National Account List Price") and (ii) the amount of the corresponding Bottler
Delivery Remittance.
Subject to paragraph 28(b) of the Master Fountain Syrup Agreement, the Company
and the Bottler agree, that for those National Account Customers included in
the categories listed below, the Company will reduce the amount of the Bottler
Delivery Remittance paid to the Bottler by a specified per gallon amount.
Business Unit (or successors) and that elect DSD. The Bottler Deliver
Remittance applicable to such National Account Customers shall be reduced by
$0.40 per gallon.
II. A reduced Bottler Delivery Remittance will apply to any National Account
Customer described in Paragraph 1(c)(iv)(b) and (d) of this Agreement, if and
when such National Account Customer enters into a new National Account
agreement or extends or renews its current agreement with the Company. The
Bottler Delivery Remittance applicable to such National Account Customers shall
be reduced by $0.10 per gallon during the first 12 months following such new
agreement, extension or renewal and such reduction shall increase by $0.10 per
gallon in each 12 month period following the date the initial reduction became
applicable to such National Account Customer, to a maximum of $0.40 per gallon.
If during the Initial Term or any Renewal Term there is an increase in the
National Account List Price for any Fountain Syrup (a "National Account Price
Increase") that exceeds any corresponding increase in the cost of concentrate
for the manufacture of a gallon of such Fountain Syrup (a "Concentrate Cost
Increase"), the amount of the Bottler Delivery Remittance shall be increased by
at least an amount equal to the sum of the Concentrate Cost Increase plus 25%
of the amount by which the National Account Price Increase exceeds the
Concentrate Cost Increase.
By way of examples, the following chart sets forth adjustments to the Bottler
Delivery Remittance and the Bottler Delivery Fee Charge under various scenarios
(all amounts in cents per gallon):
Increase Minimum Increase in Maximum
National Account Concentrate Cost Bottler Delivery Bottler Delivery
Fee
Price Increase Increase Remittance Charge
---------------- ---------------- ------------------- -------------------
0 0 0 0
5 8 5 0
10 10 10 0
20 8 11 9
8 cents Concentrate Cost Increase plus 3 cents (i.e. 25% of the 12 cents excess
of the 20 cents National Account Price Increase over the 8 cents Concentrate
Cost Increase)
SCHEDULE E-2
BRAND DEVELOPMENT FEE
The Company will pay a fee (hereafter called the "Brand Development Fee") to
the Bottler for each gallon of Fountain Syrup sold by the Company to National
Account Customers (other than National Account Customers serviced through DSD
as set forth in Paragraph 2(a) above). The Brand Development Fee will be equal
to eight percent (8%) of the Company's list price for Fountain Syrup.
For those National Account Customers included in the categories listed below,
the Company will reduce the Brand Development Fee paid to the Bottler by a
specified per gallon amount.
CATEGORIES:
I. New National Account Customers that are not under contract on the date
hereof and are sold by the Company's Fountain Beverage Division or National
Sales Business Unit (or successors) during the Initial Term or any Renewal Term.
The Bottler will not receive any Brand Development Fee or National Account
Customers in this category.
II. Any National Account Customer described at Paragraph 1(c)(iv)(b), (c) and
(d) of this Agreement will be subject to a reduced Brand Development Fee if and
when the National Account Customer enters into a new National Account agreement
or extends or renews its current agreement with the Company, or in the case of
those accounts listed on Exhibit E-2 hereto converts from DSD to commissary
delivery. The Brand Development Fee applicable to such National Account
Customers shall be reduced from 8% to 6% of the Company's list price in the
first 12 months following such and shall decrease by an equal amount in each 12
month new agreement extension or renewal service following the date the initial
reduction became applicable to such National Account Customer until such Brand
Development Fee no longer applies.
EXHIBIT E-2
Taco Xxxx
KFC
Pizza Hut
SCHEDULE E-3
EQUIPMENT SERVICE STANDARDS AND FEES
Company has established a service program as set forth hereafter (the "Service
Program") for the Initial Term and any Renewal Term, which applies to Program
Customers. The Service Program contains the following elements:
(i) The Bottler (assuming it is in compliance with the Company's reasonable
service standards) shall have a right of first refusal to provide service as the
Company's service agent.
(ii) If the Bottler agrees to act as the Company's service agent the Bottler
will provide service according to the existing Sudden Service standards attached
hereto as Exhibit E-3(i).
(iii) If the Company adopts new or revised service standards, any such new
standards must be reasonable. In the event any such new or revised service
standards result in increases or decreases to the Bottler's costs, the Company's
payments in Exhibit E-3(ii) (described in sub-paragraph (iv) below) will be
increased or decreased accordingly.
(iv) The Bottler, as the Company's service agent will be paid a
Customers regardless of whether the Program Customer is receiving delivery
through a Commissary or through DSD.
Exhibit E-3(i)
Sudden Service Standards--Bottler Coverage
------------------------------------------
o 24 hours - 7 day/week repair answering service
o 7 a.m. to 11 p.m. dispatching - 7 days per week
o 4 hour response time during regular dispatching hours
o Reimbursement for service all willl be computed on the basis of
a one hour minimum plus fifteen minute increment (or portion
thereof) in excess of one hour. Drive time will not be included
in the above computation except where special circumstances
related to an outlet location apply.
o One preventative maintenance check per outlet every 6 months
(taking 20-30 minutes to complete).
Exhibit E-3(ii)
Bottler Service Rates
---------------------
Rate per Call Geography
------------- ---------
$65 Los Angeles, Miami, Chicago, Boston,
Baltimore/Washington D.C., Alaska, New York City
$55 HI, CA, WA, MD, IL, SC, AR, NV
$50 CT, FL, GA, VA, MN, OR, NY, IN, NJ, WI, ME, NC,
OH, AZ, DL, MA, LA, PA, RI, WV, MO, ND, AL, MS
$45 NE, MI, CO, IA, TX, TN, SD, KS, MT, OK, UT, KY,
NH, VT
$40 WY, ID, NM
SCHEDULE E-4
NEW EQUIPMENT PROGRAM
The Company has established a new equipment program for the Initial Term and any
Renewal Term which will be applicable only to the Program Customers. The
equipment program contains the following elements:
(i) The Company will provide equipment to National Account Customers
that enter into agreements with the Company's Fountain Beverage Division or
National Sales Business Unit (or successors thereto) after the date hereof.
(ii) The Company will offer to purchase from the Bottler any equipment
on loan from the Bottler to a National Account Customer that converts from DSD
to commissary delivery. The purchase price will be the fair market value of
such equipment. As used herein, fair market value will take into account costs,
age, condition, and resale opportunities. The Bottler will grant the Company
such reasonable access to the Bottler's books and records as is necessary to
determine identity, age, and cost of equipment.
(iii) If the Company and the Bottler fail to agree on the
[TEXT MISSING]
SCHEDULE E-5
PRODUCTION FEE
During the Initial Term and any Renewal Term the Company will pay a fee to the
Bottler for production of all Fountain Syrup produced by the Bottler for
delivery to a Commissary at brand specific per gallon rates reasonably
established by the Company. The rates shall be calculated to include a margin
that is 3.3% above product average variable costs, adjusted for concentrate
increases and cumulative increases or decreases in the price of high fructose
corn syrup which exceeds $0.05 per gallon of Fountain Syrup. Transportation
will be reimbursed separately according to a regional delivery rate table to be
reasonably established by the Company on an annual basis.
SCHEDULE E-6
SERVICE INCENTIVE
The Company has established an equipment service incentive fund, to be paid to
the Bottler in accordance with the following formula. Initially, this fund
will be paid at the rate of $0.15 per gallon on all Fountain Syrup delivered by
a Commissary to those National Account Customers in the Territories whose
gallons do not qualify the Bottler to receive any Brand Development Fee provided
that the Bottler meets the service criteria set forth in Schedule E-3, as
amended from time to time. This Fund may be adjusted in subsequent years at the
sole discretion of the Company.
SCHEDULE F
COMPENSATION UPON TERMINATION
1. At least 90 days prior to the end of a period for which a notice of
termination is deliverd by the Company to the Bottler, the Company and the
Bottler shall decide on a mutually acceptable appraiser for determining the
amount of the Exit Value (as defined below). If the parties cannot agree, each
party shall choose a recognized, experienced independent appraiser, which
appraisers shall in turn choose a third appraiser who shall be responsible for
conducting the appraisal and determining the Exit Value (any such appraiser is
referred to herein as the "Appraiser").
2. The parties shall provide the Appraiser with a letter setting forth the
guidelines for the conduct of the appraisal proceedings. Such guidelines shall
specify (a) that the Appraiser utilizes 5 years of Projected Cash Flow (as
defined below), (b) that the Appraiser assume that such cash flows would be
derived from the value of the Bottler's Fountain Business, with normal capital
expenditures and investments in the Bottler's Fountain Business.
4. Definitions:
(a) "Projected Cash Flow" means the projected After-Tax Cash Flow of
the Bottler's Fountain Business, based on (i) the actual After-Tax Cash Flow
(as defined below) of the Bottler's Fountain Business for the four (4) 12-month
periods ending six months prior to termination, and (ii) revenue, cost and
gallon sales growth trends for each segment of the Bottler's Fountain Business.
(b) "After-Tax Cash Flow" means net income, after taxes, plus reversal
of any provisions for depreciation or amortization and plus or minus net
interest expense or income, as the case may be, all determined in accordance
with generally accepted accounting principles then in effect.
(c) "Exit Value" shall mean five (5) years of discounted Projected Cash
Flow (as defined below); plus, in either case, the net book value (determined
in accordance with U.S. generally accepted accounting principles then in effect)
of the tangible assets of the Bottler used in the conduct of Bottler's Fountain
Business, less related liabilities assumed by the Company. The discount factor
to be used in connection with any calculation of Exit Value shall be the
EXHIBIT F-1
WEIGHTED AVERAGE COST OF CAPITAL
(WACC)
PepsiCo's WACC is determined by taking the average of the long term expected
return on debt and equity, weighted by their proportion in PepsiCo's capital
structure:
WACC = Rd x D% + Rd x E%
Rd = Expected after-tax return on debt
D% = Percentage of Net Debt to Total Capital
Re = Expected return on Equity
E% = Percentage of Equity to Total Capital
Rd is the after-tax yield on a 30-year PepsiCo bond.
Re is determined by using the Capital Asset Pricing Model.
Re = Rf + Beta x (Rm-Rf)
Rf = 30-year Treasury yield
Beta = PepsiCo's Beta, (value line)
Rf-Rm = Market risk premium, (Alcar)
