Exhibit 10.2
MASTER FOUNTAIN SYRUP AGREEMENT
BETWEEN
PEPSICO, INC.
AND
THE PEPSI BOTTLING GROUP, INC.
MASTER FOUNTAIN SYRUP AGREEMENT
THIS AGREEMENT, (this "Agreement") effective as of __________ __, 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 The Pepsi Bottling
Group, Inc., organized and existing under the laws of the State of Delaware
having its principal place of business in Xxxxxx, New York (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;
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C. A significant business of the Bottler is the manufacture and
distribution of the Fountain Syrups either pursuant to certain
agreements with the Company, all of which are identified on Schedule C
(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");
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
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the Fountain Syrups under the Trademarks in and throughout the
Territories (as hereinafter defined) for Local Account
Customers (as hereinafter defined) only.
(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 described
in Schedule D 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 E 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
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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.
(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. The
Company will pay a fee to the Bottler for such services in an
amount as shall be agreed upon by the Company and the Bottler.
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
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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. The Company will pay a fee to the Bottler for such
services in an amount as shall be agreed upon by the Company
and the Bottler.
(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 as shall be agreed upon by the Company and the
Bottler. The Bottler shall be entitled to receive payments for
such services in an amount as shall be agreed upon by the
Company and the Bottler and shall be eligible to receive the
service incentive payment in an amount as shall be agreed upon
by the Company and the Bottler. The fountain equipment used by
Program Customers in the Territories shall be subject to the
equipment program as shall be agreed upon by the Company and
the Bottler.
(c) The Company and the Bottler agree that the rights and
authorizations set forth in Article I paragraphs 2(a) and (b)
hereof are necessary to effectively promote the development
and growth of the Fountain Syrup business in the Territories.
The Bottler hereby acknowledges that it shall not be entitled
to receive a Brand Development Fee (as such term is used in
fountain syrup agreements between the Company and other
bottlers) in
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respect of Fountain Syrup delivered to National Account
Customers in the Territories, except for the payment of Brand
Development Fees to the Bottler in accordance with paragraph
28(b) hereof.
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.
4. The Bottler agrees during the term of this Agreement and in accordance
with any requirements imposed upon the Bottler under applicable laws:
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(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
(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
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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.
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
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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.
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
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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
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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.
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.
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.
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13.
(a) The Bottler agrees not to distribute or sell any Fountain
Syrups outside the Territories unless authorized by the
Company. 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
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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.
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.
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
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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
(including plans relating to (x) marketing equipment and (y)
any change in the geographic area in which existing Fountain
Syrups are distributed), management and advertising plans of
the Bottler with respect to the Fountain Syrups and any plan
for the Bottler's introduction of any new fountain syrup 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 specifically setting
forth the projected cash flows, income statement and balance
sheet (including any capitalization plans) of the Bottler and
Bottler Affiliates for such ensuing year 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
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for the Fountain Syrups in the Territories for the period of
time covered by the plan.
(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.
(c) The Bottler shall not make any significant change in the
capitalization, debt level or methods of financing the
operations of the Bottler and Bottler Affiliates set forth in
any projected balance sheet of the Bottler and Bottler
Affiliates approved under Paragraph 17(a) hereof, without the
consent of the Company.
ARTICLE VII
REFORMULATION, NEW PRODUCTS AND RELATED MATTERS
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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.
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
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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 and determined in accordance with the
Valuation Methodology (as described below) referred to
collectively as the "Bottler's Fountain Business".
(c) Within sixty days of giving a termination notice in accordance
with subparagraph 21(a) hereof, the Company and the Bottler
shall appoint a mutually satisfactory Appraiser to determine
the fair market value of the Bottler's Fountain Business. All
appraisals determined in accordance with this subparagraph
21(c) shall comply with the Valuation Methodology. If the
Company and the Bottler fail to agree upon a satisfactory
Appraiser then each shall promptly appoint a separate
Appraiser and such Appraisers shall jointly determine such
amount. If either the Company or the Bottler fails to so
appoint an Appraiser, the determination of the single
Appraiser appointed shall be final. If two Appraisers are
appointed and within sixty (60) days after the appointment of
the latter of such two Appraisers, they cannot agree upon such
amount, such two Appraisers shall, within five (5) days after
the expiration of the sixty (60) day period, appoint a third
Appraiser and such amount shall be determined by such three
Appraisers, who shall make their separate appraisals within
thirty (30) days following the appointment of the third
Appraiser, and any determination so made shall be conclusive
and binding upon the
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Company and the Bottler. If no such third Appraiser is
appointed within such five (5)-day period, either the Company
or the Bottler may apply to the American Arbitration
Association to make such appointment, and both parties shall
be bound by such appointment. If three Appraisers are
appointed and the difference between (x) the determination
which is farther from the middle determination and (y) the
middle determination is more than 125% of the difference
between the middle determination and the third determination,
then such farther determination shall be excluded, the
remaining two determinations shall be averaged and such
average shall be final and binding upon the Company or the
Bottler. Otherwise, the average of all three determinations
shall be final and binding upon the Company or the Bottler.
The fees and expenses of all such Appraisers and such
appraisal procedure shall be borne by the Company.
In order to properly establish the fair market value of the
Bottler's Fountain Business, the "Valuation Methodology" shall
include consideration of the rights and authorizations granted
to Bottler in Articles I and II hereof as if such rights and
authorizations were perpetual in nature. In addition, the
Valuation Methodology shall take into account the current
volume of Fountain Syrup (in gallons) manufactured, sold
and/or distributed by the Bottler in the Territories and
recent sales volume trends for each segment of the Bottler's
Fountain Business.
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,
20
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.
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
21
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;
(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
22
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.
(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.
(viii) If the Bottler or any Bottler Subsidiary shall engage
in any business other than (x) the business of
manufacturing, selling or distributing non-alcoholic
beverages or (y) any business which is directly
related and incidental to such beverage business.
(b) The Bottler covenants and agrees with the Company:
23
(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;
(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; and
(iii) to the extent the Bottler has any legal control over
changes in the ownership of the Bottler or any entity
having direct or indirect ownership or control of the
Bottler as described in Section 23(a)(iii) above, not
to initiate or implement, consent to or acquiesce in
any such change without the prior written consent of
the Company.
(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.
(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
24
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.
25
(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;
(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;
26
(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
27
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.
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;
(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,
28
(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.
(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
29
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 D 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;
(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;
30
(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.
28.
31
(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
32
applicable to such acquired territories shall continue to be
governed by the agreement that existed between the Company and
the acquired bottler on the date of its acquisition by the
Bottler (the "Pre-Acquisition Agreement"); PROVIDED, however,
that (i) the Pre-Acquisition Agreement shall be deemed to
expire five years from the date such territory was acquired
after which date this Agreement shall become applicable and
(ii) the Pre-Acquisition Agreement shall only be applicable to
those National Account Customers that were under contract with
the acquired bottler or the Company on the date of the
acquisition.
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.
33
(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.
ARTICLE XI
AUTOMATIC AMENDMENT
34
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.
35
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;
36
(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.
37
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.
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
38
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) The Existing Syrup Appointments identified on Schedule C 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
(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
39
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.
40
IN WITNESS WHEREOF, the parties have duly executed this Agreement in triplicate
effective as of the day and year first above written.
PEPSICO, INC. THE PEPSI BOTTLING GROUP, INC.
By:_________________________ By:____________________________
Title:______________________ Title:_________________________
Date:_______________________ Date:__________________________
41
