EXHIBIT 10.5
FORM OF FRANCHISE AGREEMENT
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[Company]
[State of incorporation]
[address]
Exclusive Bottling Appointment
Issued under date of _____________
_____________________, a corporation organized under the laws of the State
of __________________ with general offices in ________________________ (herein
called the "Company"), hereby appoints:
Delta Beverage Group, Inc.
Little Rock, Arkansas
(herein called the "Bottler"), as its exclusive bottler, to bottle and
distribute the carbonated beverage (herein called the "Beverage"), sold under
the trademarks ________________ and ________________ (herein collectively called
the "Beverage trademark"), in the following described territory (herein referred
to as the "Territory"), and nowhere else, bounded as follows:
See Schedule I
The Appointment being upon the following terms and conditions:
1. That the Bottler will operate a thoroughly clean and sanitary bottling
plant at Little Rock, Arkansas.
2. That the Bottler will not bottle, distribute or sell, directly or
indirectly, any other cola beverage or any other beverage with the name
Cola (other than products of the Company), or any other beverage which
could be confused with the Beverage. All trucks used in the Bottler's
operations hereunder shall be painted only with standard Beverage colors
and trademark and will be maintained at all times in good condition and
appearance. The Bottler shall provide standard Beverage uniforms for all
route salesmen.
Page 1 Exhibit 10.5
3. The Bottler will at all times have available sufficient productive capacity
at the plant or plants above listed or at other plants in the Territory
approved by the Company to enable the Bottler to meet fully his obligations
under this Appointment. It is recognized that under the foregoing it may
be necessary from time to time for the Bottler to increase the present
productive capacity of the plant or plants above listed, or to establish
additional plants in the Territory.
The equipment of each plant shall contain such water treatment and other
equipment as the Company may prescribe. The Bottler will maintain each
plant at all times in good operating condition, and will comply with any
and all local, City, County, State and Federal laws and regulations now in
effect or which may hereafter be enacted pertaining to the operation of
bottling plants, bottling, selling and handling of soft drinks.
4. That the Bottler will make no representation as to the Beverage not
previously authorized by the Company in writing, and the Beverage shall be
sold and distributed under its own name and on its own merits, and not
compared with any other Beverage without the Company's consent.
5. That the Company will sell to the Bottler, and the Bottler will purchase,
at the Company's then price or prices therefor at the time of each sale,
the Bottler's requirements of Beverage concentrates, syrups, or other
beverage bases (hereinafter called "Beverage concentrates"), for the
bottling of the Beverage, payment for same to be made by the Bottler in
advance of shipment; and all Beverage concentrates so purchased will be
used by the Bottler for the bottling of the Beverage in the Territory and
for no other purpose.
6. That the Bottler will keep on hand for the bottling of the Beverage
hereunder bottles in number adequate to meet peak seasonal demands, and of
size or sizes and design or designs prescribed by the Company; will
purchase bottles and crowns only from manufacturers approved by the
Company; will use no other bottle or crown for the bottling of the
Beverage; and will use said bottles and crowns for no other purpose. The
Bottler will also keep on hand in similar adequate supply cases, cartons
and other delivery packages of size or sizes and design or designs
prescribed by the Company, and will use same only for the marketing of the
Beverage.
7. That in the use, handling and processing of Beverage concentrates, the
bottling of the Beverage, and the filling, crowning, labeling, packaging
and selling of the Beverage the Bottler will follow precisely the
instructions of the Company given from time to time and such instructions
are hereby made terms and conditions of this Appointment as though fully
set forth herein. The Bottler will never distribute or permit the sale of
any Beverage which is in any way below the Company's requirements or
standards.
8. That the Bottler will sell the Beverage in the Territory at the Bottler's
price per case plus the deposit charge for bottles and case. The Company
may from time to time suggest to the Bottler the price per case to be
charged by him and the deposit charge.
Page 2 Exhibit 10.5
9. That the Bottler will push vigorously the sale of the Beverage throughout
the entire Territory in the ___-oz. size bottle and/or in any other size
bottle prescribed by the Company for the Territory. Without in any way
limiting the Bottler's obligation under this Paragraph 9, the Bottler must
fully meet and increase the demand for the Beverage throughout the
Territory and secure full distribution up to the maximum sales potential
therein through all distribution channels or outlets available to soft
drinks, using any and all equipment reasonably necessary to secure such
distribution; must service all accounts with frequency adequate to keep
them at all times fully supplied with the Beverage; must use his own
salesmen and trucks, (or salesmen and trucks of independent distributors,
of whom the Company approves), in quantity adequate for all seasons; and
must fully cooperate in and vigorously push the Company's cooperative
advertising and sales promotion programs and campaigns for the Territory.
In addition the Bottler will actively advertise, in all reasonable media
including adequate point-of-purchase advertising, and vigorously engage in
sales promotion of, the Beverage throughout the Territory at his own cost
and expense. The Bottler will carry Products Liability Insurance on his
operation in such amounts as the Company may recommend. All advertising
copy and media shall be subject to the Company's approval.
10. That the Bottler will at all times cooperate to the full extent required by
the Company with the Company's Product Control programs, field
laboratories, and field, territorial and other representatives; will permit
the Company's agents to conduct field checks in the Territory and to enter
the Bottler's plant or plants at any time during working hours and inspect
the facilities, equipment and materials used in preparing, bottling,
selling and distributing the Beverage; and to check operations and methods,
and take with them samples of the Beverage, water and Beverage
concentrates. The Bottler will submit to the Company products and water
samples as required by the Company, and upon any request by the Company for
specific information concerning his bottling and distribution of the
Beverage will immediately furnish same in the form requested.
11. That upon the happening of any one or more of the following events, in
addition to all other rights and remedies, including the Company's right to
damages sustained, if any, the Company shall have the right to cancel or
terminate this Appointment by written notice to the Bottler:
(a) The failure of the Bottler to perform or comply with any one or
more of the terms or conditions of this Appointment;
(b) Any sale, transfer or other disposition, without the prior
written consent of the Company, including any such transfer by
operation of law:
(i) Of all or part of the Bottler's bottling business; or
Page 3 Exhibit 10.5
(ii) Of more than ten per cent (10%) of the stock of the Bottler,
if the Bottler be a corporation; or of any of its stock, if
sold in a public offering; or
(iii) Of any interest in a partnership or the withdrawal of a
partner, if the Bottler be a partnership;
(iv) The merger or consolidation of the Bottler with any other
Company; or the dissolution of the Bottler.
(c) The discontinuance by the Bottler for any reason of the bottling
of the Beverage for a period of thirty days, except as provided
in Paragraph 18 hereof; or
(d) The insolvency of the Bottler as that term is defined in either
the bankruptcy or equity sense; or an assignment by the Bottler
for the benefit of creditors; or the filing of a voluntary
petition under any Chapter of the Bankruptcy Act, as now enacted
or as may hereafter be amended; or the failure of the Bottler to
vacate an involuntary bankruptcy or reorganization petition filed
against him, within sixty (60) days from the date of such filing;
or the failure of the Bottler to vacate the appointment of a
receiver or a trustee for the Bottler, or any part or interest of
his business, within sixty (60) days from the date of such
appointment.
Upon the happening of any one or more of the foregoing events the Company
shall also have the right to discontinue supplying the Bottler with
Beverage concentrates and/or other Beverage materials, for such length of
time as the Company may in its sole judgment deem necessary, without
thereby cancelling or terminating this Appointment and without thereby
prejudicing the Company's other rights and remedies including the right to
terminate this Appointment for the same cause or for any one or more other
causes.
12. That, in addition to and not in limitation of the foregoing, if, in the
reasonable opinion of the Company, the Bottler should at any time fail to
push vigorously the sale of the Beverage or secure full coverage therefor
in any segment of the Territory, whether defined geographically or by type
of market or outlet, the Company may call the Bottler's attention to such
failure by written notice to the Bottler, specifying the segment of the
Territory involved, and suggest remedial steps therefor. If, in the
reasonable opinion of the Company, said failure shall not have been
corrected within three months after the giving of such written notice the
Company shall thereupon have the right, upon written notice to the Bottler
to that effect, to remove such segment from the Territory covered by this
Appointment and eel with it as the Company sees fit, without thereby
cancelling or terminating this Appointment and without thereby prejudicing
the Company's other rights and remedies hereunder.
Page 4 Exhibit 10.5
13. That upon the death of the Bottler, if the Bottler is not incorporated,
this Appointment will be transferable to the heirs of the deceased,
provided the active management of the bottling operation continues
satisfactory to the Company. Upon the death of the largest stockholder, if
the Bottler is incorporated, this Appointment will continue in effect
provided the active management of the bottling operation continues
satisfactory to the Company.
14. That the Bottler will pay and discharge, at his own expense, any and all
expenses, charges, fees and taxes arising out of or incidental to the
carrying on of his business, including, without limiting the generality of
the foregoing, all workmen's compensation, unemployment insurance, and
social security taxes levied or assessed with respect to the employees of
the Bottler, and the Bottler will indemnify and save harmless the Company,
against any and all claims for such expenses, charges, fees and taxes.
15. That the Company is the owner of the Beverage trademark and will defend and
protect same and save harmless the Bottler in the use of same except for
such acts as shall be the fault of the Bottler. Nothing herein contained
shall be construed as conferring upon the Bottler any right or interest in
said trademark, or any designs, copyrights, patents, trade names, signs,
emblems, insignia, symbols and slogans, or other marks, used in connection
with the Beverage.
16. That the Bottler shall not have the right to use the Beverage trademark as
part of a trade name or the name of a partnership or corporation unless he
first obtains the written consent of the Company, which reserves the right
to specify the terms and conditions under which such name may be used.
17. That immediately upon the cancellation or termination of this Appointment,
however caused, the Bottler will eliminate the Beverage trademark from his
company or firm name, if it is there, and will cease using in any manner
whatsoever, the Beverage trademark and any of the Company's trade names,
symbols, slogans, emblems, insignia or other designs used in connection
with the Beverage. The Company shall have the right to elect to purchase
from the Bottler, and the Bottler will, upon such election by the Company,
sell to the Company, any or all of the Bottler's Beverage bottles, cases
and Beverage concentrates at the invoice price thereof to the Bottler, and
other articles bearing the Beverage trademark, less a reasonable allowance
for depreciation on the bottles and cases.
18. That neither party to the Appointment shall be held liable for failure to
comply with any of the terms of this Appointment when such failure has been
caused solely by fire, labor dispute, strike, war, insurrection, government
restrictions, force majeure or act of God beyond the control and without
fault on the part of the party involved, provided such party uses due
diligence to remedy such default.
19. That this Appointment is personal. It cannot be transferred, assigned,
pledged, mortgaged or otherwise disposed of by the Bottler, in whole or in
part.
Page 5 Exhibit 10.5
20. That this Appointment expresses fully the understanding, and that all prior
understandings are hereby cancelled, and no future changes in the terms of
this Appointment shall be valid, except when and if reduced to writing and
signed by both the Bottler and the Company, by legally authorized
officials.
21. That the failure by the Company to enforce at any time or for any period of
time any one or more of the terms or conditions of this Appointment, shall
not be a waiver of such terms or conditions or of the Company's right
thereafter to enforce each and every term and condition of this
Appointment.
22. That this Appointment and all its terms and conditions shall be governed by
and interpreted under the laws of the State of __________________.
WITNESS the signature of ___________________, this the date above written.
[COMPANY]
BY
-----------------------------------------
[title]
This Appointment accepted
and agreed to:
DELTA BEVERAGE GROUP, INC.
By
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Page 6 Exhibit 10.5
SCHEDULE I
Delta Beverage Group, Inc.
Little Rock, Arkansas
"The COUNTIES of ASHLEY, CHICOT, DREW, GARLAND, HOT SPRING, ▇▇▇▇ ▇▇▇▇▇, SALINE,
▇▇▇▇, ▇▇▇ BUREN, CLEBURNE, WHITE, FAULKNER, CONWAY, PERRY, PULASKI, LONOKE and
JEFFERSON; DESHA COUNTY with the exception of that portion lying east of the
White River; LINCOLN COUNTY; and that portion of ▇▇▇▇▇▇▇ COUNTY lying north and
east of the two intersecting straight lines, the first running due south from
the northern boundary of said County through a point three (3) miles west of the
locality known as ▇▇▇▇▇▇ to the point where said line is intersected by the
second line running ▇▇▇ ▇▇▇▇ from the eastern boundary of said County through a
point three (3) miles south of the locality known as ▇▇▇▇▇▇ (the locality known
as ▇▇▇▇▇▇ to be included in this territory); ▇▇▇▇▇▇▇▇▇▇ COUNTY with the
exception of that portion thereof lying west and north of two intersecting
straight lines; the first of said lines running from the northern boundary of
said ▇▇▇▇▇▇▇▇▇▇ County due south through the intersection of present ▇.▇.
▇▇▇▇▇▇▇ #▇▇▇ and present State Highway #88 to the point where said line is
intersected by the second of said lines running due east from the western
boundary of said ▇▇▇▇▇▇▇▇▇▇ County through the present southernmost point in the
locality known as Pine Ridge (the localities known as Pine Ridge and Sock City
to be excluded from this territory, and the locality known as ▇▇▇▇ to be
included therein); GRANT COUNTY with the exception of that portion lying south
of a line drawn due east and west across said County through a point one (1)
mile north of the present junction of ▇▇▇▇▇ ▇▇▇▇▇▇▇ #▇▇ ▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇ #▇▇▇;
that portion of CLEVELAND COUNTY lying northeast of a line drawn across said
County parallel to and one (1) mile northeast of present State Highway #35 (the
locality know as Rison to be excluded from this territory); that portion of YELL
COUNTY lying east and north of a line commencing at a point on the boundary line
common to Yell and Perry Counties, and running due north through the present
easternmost point of the locality known as Ola to a point due east of the
present northernmost point of the locality known as ▇▇▇▇▇▇▇, and running thence
▇▇▇ ▇▇▇▇ to the present northernmost point of the locality know as ▇▇▇▇▇▇▇, and
running thence due north to the northern boundary of Yell County (the localities
known as Ola and ▇▇▇▇▇▇▇ to be excluded from this territory, and the localities
known as Chickalah and ▇▇▇▇▇▇ to be included therein); all in the STATE of
ARKANSAS.
Page 6 Exhibit 10.5