The following items are attached for your review and consideration:
- Financial analysis of the contract
- Current product price list
- YTD volume report detailing purchases by locations
- Analysis of Coca Cola's use of allotted special event permits and sampling permits
- Coca Cola Agreement
Additionally, our legal department was asked to give analysis of the contract terms pertaining to termination. Per their analysis, the Agreement does not contain a termination for convenience clause. In the event that the City wanted to terminate prior to the normal expiration of the term above, it would have to be for cause—i.e. an event of default—and Coca Cola would have 30 days to cure.
If the City were to stop performing its obligations under the Agreement, Coca Cola would be entitled to terminate (following the same 30 day cure period). Coke’s remedy for termination would require the City to (1) return Coke’s equipment including vending machines and fountain dispensing equipment they’ve installed throughout City facilities; as well as (2) pay Coca Cola the earned portion of any prepaid sponsorship fee, and other fees or payments, due in the Agreement year in which the termination occurs.
The annual sponsorship fee under the Agreement is $325,000 per year that Coke pays the City, plus the purchase of a minimum of 22,500 cases of Coke products bottles/cans per year as well as vending commissions of approximately $40,000 per year.