HomeMy WebLinkAbout4G - Beverage Service w/Pepsi Co.
STAFF AGENDA REPORT
AGENDA NUMBER:
PREPARED BY:
SUBJECT:
4G
PAUL HOKENESS, PARKS AND RECREATION
DIRECTOR
CONSIDER APPROVAL OF RESOLUTION 98-XX
APPROVING AGREEMENT FOR BEVERAGE
SERVICES WITH PEPSI CO.
FEBRUARY 17, 1998
DATE:
INTRODUCTION:
In an effort to offset the cost of the new baseball scoreboard
at Memorial Park, the Parks and Recreation Department, in
cooperation with the Prior Lake High School Baseball
Boosters Club contacted local beverage companies to inquire
if a beverage agreement would provide funding for the new
scoreboard. Pepsi Co. and Coke have sponsored scoreboards
and were interested in submitting proposals. After
reviewing the proposals it was apparent that Pepsi Co.
provided the City with the best return. See attached memo
from Chris Esser to Paul Hokeness. The City attorney wrote
the Agreement For Beverage Services. That is the purpose of
this agenda report.
BACKGROUND:
The new scoreboard was installed in the Spring of 1997 at
Veterans Field in Memorial Park. The cost of the new
electronic scoreboard was $17,643.00. The Prior Lake High
School Baseball Boosters Club donated $7,643.00 and the
City paid the balance of $10,000.00 from the Parks Capital
Fund in accordance with the approved 1997 C.I.P. If the
Council approves this beverage agreement, Pepsi Co. will
give the City $10,000.00 which would then be deposited in
the Parks Capital fund and be used for future park
improvements. Memorial Park is the home field for the High
School baseball team and they initiated this program and idea
for a new scoreboard. The old scoreboard was over 12 years
old and in need of replacement. The City and the Prior Lake
Amateur Baseball Association (Mudcats and Jays) have
made many improvements to the field over the years, and the
Lakers High School Baseball Coach thought that helping
finance a new scoreboard would be a good way for them to
pitch in. (no pun intended).
16200 EaQJe Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
PEPSIAGN.DOC
AN EQUAL OPPORTUNITY EMPLOYER
DISCUSSION:
FISCAL IMPACT:
AL TERNA TIVES:
RECOMMENDATION:
PEPSIAGN.DOC
The contract prescribes that Pepsi Co. will be the exclusive
. supplier of soft drink beverages at Memorial Park, The
Pond's Athletic Complex, Sand Point and Watzl's Beach, the
Dance Studio, Lakefront Park, and the proposed 80 acre
athletic complex for an initial five year term with a five year
extension. The agreement sets for a fixed commission
which the City receives on beverage products sold at these
locations. The City Attorney on behalf of the City prepared
the agreement for beverages services and Pepsi Co. has
agreed to the terms of the contract.
Pepsi Co. will pay a one time sum of $10,000.00 to the City
in exchange for exclusive beverage rights at the City sites
listed above. The City will also receive commissions on net
revenue of sales, regardless of the amount of total sales and
total amount sold. Commission rates for the City, depending
on the type of beverage product, ranges from 36% to 20%.
The commissions generated will help to offset recreation
program costs and park maintenance costs. In addition, Pepsi
agrees to loan the City coolers and dispensing equipment at
no charge. A full service agreement is also included in the
contract. Through this agreement, the City will not be liable
for repairs to any Pepsi donated machines or equipment. A
copy of the Agreement for Beverage Services is attached to
this agenda report.
The alternatives are as follows:
1. Enter into contract with Pepsi Co. authorizing a one time
payment of$10,000.00 to the City, allowing Pepsi Co. to
be the exclusive beverage supplier to the City sites of
Memorial Park, the Pond's athletic complex, Sand Point
and Watzl's Beach, the Dance Studio, Lakefront Park, and
the proposed 80 acre complex for an initial five years,
with a five year extension.
2. Table this Agenda Item for a specific reason.
3. Deny this Agenda Item for a specific reason.
Staff recommends Alternative No. 1.
REVIEWED BY:
the consent agenda to enter into
Services with Pepsi Co.
ACTION REQUIRED:
PEPSIAGN.DOC
RESOLUTION 98-XX
RESOLUTION ALLOWING PRIOR LAKE TO ENTER INTO AN AGREEMENT
FOR BEVERAGE SERVICES WITH PEPSI CO.
MOTION BY: SECOND BY:
WHEREAS, in an effort to offset the cost of a new baseball scoreboard at Memorial
Park, in cooperation with the Prior Lake High School Baseball Boosters
Club, the beverage companies of Pepsi Co. and Coca-Cola were
interested in beverage partnership proposals
WHEREAS, Pepsi Co. provided the best return of profit offer accompanied by a
$10,000.00 lump sum payment
WHEREAS, Pepsi Co. will be the exclusive beverage supplier to the City sites of
Memorial Park, the Pond's athletic complex, Sand Point and Watzl's
Beach, the Dance Studio, Lakefront Park, and the proposed 80 acre
complex for five years with a five year extension
WHEREAS, the City must enter into an Agreement For Beverage Services contract
with Pepsi Co.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR
LAKE, enter into contract with Pepsi Co. authorizing a one time payment of $10,000.00
to the City, allowing Pepsi Co. to be the exclusive beverage supplier to the City sites of
Memorial Park, the Pond's athletic complex, Sand Point and Watzl's Beach, the Dance
Studio, Lakefront Park, and the proposed 80 acre complex for an initial five years with a
five year extension.
FURTHER,
The Mayor and City Manager are authorized to execute the contract on
behalf of the City.
Passed and adopted this
day of
,1998.
16200 $IDt>m~ES\@on::., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
{ Seal}
PEPSIRES.DOC
I Mader
I Kedrowski
Schenck
Petersen
I Muellner
YES
Mader
Kedrowski
Schenck
Petersen
Muellner
City Manager
City of Prior Lake
NO
{ Seal}
PEPSIRES.DOC
I Mader
Kedrowski
Schenck
Petersen
I Muellner
YES
Mader
Kedrowski
Schenck
Petersen
Muellner
City Manager
City of Prior Lake
NO
PRIOR LAKE PARKS AND RECREATION
MEMORANDUM
TO:
Paul Hokeness, Parks and Recreation Director
Chris Esser, Recreation supervisor@
FROM:
RE:
Beverage Partnership Proposal
DATE:
October 10,1997
As you know, our department has solicited the beverage companies of Pepsi and Coca-
Cola to propose a beverage partnership with the City of Prior Lake. The upfront funding
from the accepted beverage proposal will help to subsidize cost for the new scoreboard
recently installed at Memorial Park.
Both beverage companies have submitted formal proposals. The sites contained in each
proposal includes; Memorial Park, Pond's Park, Sand Point Beach, Watzl's Beach,
Lakefront Park, and the Dance Studio. Summaries of each respective proposal is listed
below:
PEPSI
COCA-COLA
10 year contract:
$10,000
5 year contract:
$5,000
Commissions:
36% on 200z. soft drinks
25% on All Sport brand
20% on cans
Commissions:
36% on 200z. soft drinks
15% on Powerade brand
Cans not included in proposal
Case Prices:
$13.05 = 24, 200z. bottles
$ 6.85 = 24, 120z. cans
Case Prices:
$14.65 = 24, 200z. bottles
$ 7.44 = 24, 120z. cans
Unit Prices:
$0.54 per 200z. bottle
$0.285 per 120z. can
Unit Prices:
$0.61 per 200z. bottle
$0.31 per 120z. can
As you can see by the numbers, Pepsi is less expensive than Coca-Cola. I have a copy of
both proposals for your review. If you have any other questions, please let me know.
c: Frank Boyles, City Manager
BEVERAGE.DOC2/1 0/98
AGREEMENT FOR BEVERAGE SERVICES
This Agreement is .made this
day of
, 1998
by and between the CITY OF PRIOR LAKE, a Minnesota municipal corporation
("City") and PEPSI-COLA COMPANY, a Minnesota corporation ("Pepsi").
RECITALS
WHEREAS, the City desires to make beverages available at Memorial Park, The
Pond Athletic complex, Sand Point and Watzl's Beach, the Dance Studio, Lakefront Park
(existing and new complex) and a proposed 80 acre athletic complex; and
V\' ~REAS, the City sought competitive proposals for beverage partnerships; and
WHEREAS, the City has determined that the Pepsi proposal is the most
advantageous to the City; and
WHEREAS, the City and Pepsi desire to set out the terms and conditions of their
relationship.
NOW THEREFORE in consideration of the mutual promises, covenants and
consideration set forth herein, the sufficiency of which is not disputed, the parties agree
as follows:
1. The recitals set forth above are incorporated herein as if fully set forth.
2. Term,. This Agreement is for an initial term of five (5) years commencing
on January 1, 1998 and ending on December 31, 2002. This Agreement will be extended
for an additional five (5) year period beginning on January 1,2003 and ending on January
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1, 2008.
3. Consideration. ~ontemporaneously with the execution of this Agreement,
Pepsi will make a one (1) time payment to the City in the amount of $10,000.00. In
exchange for this consideration, the City agrees to the terms and conditions of this
Agreement.
4. Exclusivitv. The City agrees that, during the TI;u.u. of this Agreement,
Pepsi shall be its exclusive supplier of soft drink beverages. Such soft drink beverages
shall include, but are not limited to, carbonated soft drinks, waters, isotonic drinks, iced
teas, fruit juices and fruit juice drinks (the "Products").
5. Vending. All vending at the above referenced locations shall be 20 oz.
bottles unless mutually agreed to by the parties hereto.
6. Commissions. Pepsi agrees to pay commissions on net revenue of sales to
the City in the following amounts, regardless of the amount of the total sales and
regardless of the total amount of product sold.
Items
Commission Rate
Vend Price
20 oz. bottles
(carbonated soft drinks and waters)
16 oz. cans
Juice cans
20 oz. bottles
(isotonics (Le. All Sport))
36%
20%
20%
$1. 00
$0.75
$0.75
$1.00
25%
Pepsi agrees to pay commissions on net sales to the City on the dates specified in
the schedule attached hereto as Exhibit "A".
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7. Eauinment. Pepsi will install vending machines and postmix fountain
dispensing equipment at the Fasilities as requested by the City throughout the Term (the
"Equipment"). The Equipment shall bear a sticker identifying the unit as the property
of Pepsi-Cola Company. All Equipment shall at all times remain the sole property of
Pepsi. At its sole cost and expense, Pepsi will repair, clean and maintain the Equipment,
and agrees to keep the Equipment in good working order and condition at all times. The
City agrees to promptly notify Pepsi of any need for repair or service. The City shall not
itself, and shall not permit any other party to repair, replace, relocate, move or remove
any Equipment. Notwithstanding the foregoing, the City agrees to use reasonable efforts"
to keep the Equipment in clean and sanitary condition, wholly free of all advertising or
other City materials, at all times. At all times during the Term, the Equipment shall be
used solely for the purpose of distributing the Products.
Prior to installation, Pepsi and the City will agree upon the locations and the
number of vending machines to be installed at the Facilities and Pepsi will not remove
or replace any machines without giving prior notification to the City, except for
replacement of a machines for maintenance purposes. Pepsi will use reasonable efforts
to keep the machines fully stocked at all times during the Term. The City, at is expense,
agrees to provide the necessary electricity supply for the vending machines installed at
the Facilities.
8. Service. Pepsi agrees to provide twenty-four (24) hour service coverage,
seven (7) days a week and all holidays.
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9. Selection,. Pepsi agrees to provide its complete flavor and product selections
to the City and agrees to hopor reasonable reql,lests from the City for the selection
offerings at each location within the City.
10. Contract and Contract Document~. This Agreement and the documents
attached hereto shall be referred to as the "Contract Documents", all of which shall be
taken together as the contract between the parties as if they were set out verbatim and in
full herein.
11. Liabilitv Insurance and Indemnity. Prior to installing Equipment at the
Facilities, Pepsi will furnish City with a certificate of current public liability and property.. .
damage insurance naming City as a co-insured and providing coverage in amount not less
than City's limits of liability under Minnesota law. In addition to the liability insurance,
and not in lieu thereof, Pepsi hereby indemnifies and agrees to hold City harmless of any
from all claims, demands and litigation arising from or growing out of Pepsi's
installation, operation, maintenance, servicing removal of the Equipment and Pepsi's
performance of its obligations under this Agreement.
12. Indemnification.
a. Pepsi will indemnify and hold the City harmless from and against
any and all suits, actions, claims, demands, losses, costs, damages,
liabilities, fmes, expenses and penalties (including reasonable
attorney's fees) arising out of:
(i)
Its breach of any representation, warranty, term or condition
of this Agreement; and
(ii)
The use or consumption of Pepsi's Products.
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b. The City will indemnify and hold Pepsi harmless from and against
any and all suits, actions, claims, demands, losses,. costs, damages,
liabilities, .' fines, expenses and penalties (including reasonable
attorney's fees) arising out of:
(i) Its breach of any representation, warranty, term or condition
of this Agreement; and! or
(ii) The acts, oniissions or errors of the City or those under it in
connection with the performance herein.
13. Default and Terminatio~. In the event of a breach or default of any
material term or condition of this Agreement by either party, the non-defaulting party
shall promptly notify the other party of the alleged breach, and the other party shall
promptly take all reasonable steps necessary to cure the alleged breach. If after a period
of thirty (30) days the party to whom the notice of breach was sent has not cured or taken
reasonable steps to cure the alleged breach, or otherwise remedied the situation to the
reasonable, commercial satisfaction of the non-defaulting party, the non-defaulting party
may terminated the Agreement effective immediately.
14. Renresentations and Warrants..
a. Pepsi represents and warrants that:
(i) It has the requisite power and authority to enter into and carry
out the terms and conditions set forth herein; and
(ii) It will comply with all laws, ordinances, codes, rules and
regulations bearing on the conduct of its work under this
Agreement.
b.
City represents and warrants that:
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(i) It has full right, power and authority to enter into this
Agreement and to grant to Pepsi all of the rights, privileges,
tenps and conditions set forth herein;
(ii) All approvals and/or resolutions required in connection with
the execution of this Agreement by state, county or local law
have been obtained; and
(iii) The execution of and performance of the terms and conditions
under this Agreement is not prohibited by or in conflict with
any rights granted by City to any other parties.
15. Relationshin of the Parties.. The parties are independent contractors with
respect to each other; nothing contained in this Agreement will be deemed or construed
as creating a joint venture or partnership between the parties.
'.
16. No Waiver. A waiver by either party of any of the terms and conditions
of this Agreement at any instance shall not be deemed or construed to be a waiver of such
term or condition for the future or of any subsequent breach thereof.
17. Confidentialitv.Except as may be otherwise required by law or legal
process, neither party shall disclose to any third party the terms and conditions of this
Agreement.
18. Entire Ae:reement. This Agreement sets forth the entire agreement between
the parties. This Agreement cannot be modified, altered, terminated or otherwise
changed except by means of a writing signed by both parties.
19. Governim! Law. This Agreement shall be construed in accordance with
and shall be governed by the laws of the State of Minnesota.
20.
Notices. All notices required to be given hereunder shall be properly given
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if in writing and sent be certified mail or registered mail, postage prepaid, or by generally
recognized prepaid overnight ~~livery service to the respective addresses of the recipient
thereof set forth at the commencement of this Agreement or such other address as may
be designated in writing by the parties hereto.
21. Miscellaneous,. Pepsi's records concerning sales of Products through
Equipment at the Facilities will be made available to the City's authorized representatives
for inspection and copying at Pepsi's Burnsville, Minnesota office, at reasonable times
upon reasonable prior notice.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be.-
executed by an officer being thereunto duly authorized, all as of the day and year first
above written and intending to be legally bound hereby.
CITY OF PRIOR LAKE
By:
Its: Mayor
By:
Its: City Manager
STATE OF MINNESOTA )
) ss.
COUNTY.OF SCOTT )
The foregoing instrument was acknowledged before me this day of
.' 1998, by Wes Mader and by Frank Boyles, respectively the Mayor
and City Manager of the City of Prior Lake, a Minnesota municipal corporation, on
behalf of the corporation and pursuant to the authority granted by' its City Council.
Notary Public
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~lf
PEPSI-COLA COMPANY
By:
Its:
By:
Its:
STATE OF MINNESOTA )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this
.' 1998, by . the
Pepsi-Cola Company, a Minnesota corporation, on behalf of the corporation.
Notary Public
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day of .-.
of