EXHIBIT 10.50
USA Technologies, Inc. and Choice Hotels International, Inc.
PROMOTION AGREEMENT
This Promotion agreement ("Agreement") is made as of April 24, 1997 by and
between Choice Hotels International Inc., having an address of 00000 Xxxxxxxx
Xxxx Xxxxxx Xxxxxx, XX 00000 ("C.H.I.") and USA Technologies, Inc., having an
address of 000 Xxxxx Xxxxxx Xxxxx, XX 00000 ("USA").
RECITALS
WHEREAS, C.H.I. owns and franchises hotels under several brands, including
SLEEP(R), COMFORT(R), QUALITY(R), CLARION(R), FRIENDSHIP(R), ECONO LODGE(R),
RODEWAY INN(R) AND MAINSTAY SUITES(SM) throughout the United States.
WHEREAS, C.H.I. promotes products to its owned, franchised and licensed
properties (the "C.H.I. Properties").
WHEREAS, C.H.I. desires to secure sources of supplies and services for the
C.H.I. Properties listed in Exhibit "A" attached hereto as the same may be
modified from time to time by C.H.I. and for any non-affiliated persons or
entities as C.H.I. may determine;
WHEREAS, USA is a supplier/provider of Credit Card Activated Business
Center Products (the "Products") and desires to sell the Products to the C.H.I.
properties;
WHEREAS, "Participants" shall mean those C.H.I. Properties which elect to
engage the services of USA by entering into a separate contractual agreement
with USA for the sales of USA's Products; and
WHEREAS, C.H.I. and USA are interested in cooperating in a promotion
under which the parties agree to provide services in exchange for fees.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, promises and covenants set forth below, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. TERM OF AGREEMENT:
The "Term" of this Agreement shall be for one (1) year, commencing as of
the date set forth above, and shall automatically continue in effect from year
to year thereafter unless terminated in accordance with Section 11 of this
Agreement.
2. OBLIGATIONS OF USA:
USA will use its best efforts to produce and/or deliver in a prompt manner
the Products required by the Participants. All products supplied by USA shall be
in conformance with all C.H.I. standards and all applicable Federal, state and
local laws.
3. ORDERING AND DELIVERING OF PRODUCTS:
(a) Orders for Products, and payment for them, will be made directly by
the Participants or leasing companies to USA. All Products shall be shipped by
USA directly to the appropriate Participants at the cost of the participants.
(b) C.H.I. shall not be held liable for, or be deemed to be a guarantor
of, any obligations under such agreement including but not limited to, those
related to payment or the quality of the Products.
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4. PRICES:
(a) The prices for the Products are set forth in Exhibit "B" attached
hereto. Such prices will remain in effect for the initial 12 month period of the
Term and may be modified by mutual agreement of the parties from time to time.
On a calendar quarterly basis, USA and C.H.I. shall review the prices for the
Products for the purpose of determining whether USA's then current prices for
the Products are competitive with similar credit card activated business center
products being offered by companies other than USA. The parties agree to use
their best efforts to reach a timely consensus on what pricing adjustments, if
any, are required in order to reflect a commercially competitive price for the
Products. During this Agreement Term and any applicable renewal term, USA
warrants that the prices for the Products being offered to the Choice Properties
pursuant to this Agreement shall never exceed the prices for the Products being
offered to other individual consumers or companies. In the event USA offers
lower prices for the Products to individual consumers or companies other than
the Choice Properties, USA shall be in breach of this Agreement, whereupon
C.H.I. may do either of the following, as its option: (i) immediately terminate
this Agreement, or (ii) provide written notice to USA demanding that USA
immediately adjusts its prices for the Products being offered to the Choice
Properties so as to reflect the most favorable prices for the Products being
offered by USA to individual consumers or companies other than the Choice
Properties. Upon receipt of such notice, USA agrees to comply with such demand.
USA reserves the right to modify the prices for the products at any tune upon
written notice to C.H.I. to reflect any price increases by USA's suppliers.
(b) Unless otherwise indicated, the prices set forth in the exhibit are
exclusive of shipping, sales or use taxes which shall be paid by the
Participants.
5. CO-MARKETING FUNDS:
(a) On the last business day of each calendar quarter, USA shall pay
C.H.I. Co-Marketing Funds equal to FIVE percent (5%) of the gross
purchase price, resulting from Products sold to the Participants
during the prior calendar quarter. For the purposes of this Agreement,
Co-Marketing Funds shall be deemed earned and payable to C.H.I. when
USA is paid for the Products.
(b) On the last business day of each calendar quarter USA shall pay C.H.I.
Co-Marketing Funds equal to TWO - THREE percent (2 - 3 %) of all
revenues (net of taxes, credit card charge-backs, and returns)
generated from Products sold to the Participants at any time during
the term of this Agreement. For the purposes of this Agreement,
Co-Marketing Funds shall be deemed earned and payable to C.H.I. when
USA is paid for the Products and/or receives revenues from the
Products. The percentages will be based upon the number of
Participants as described below.
1 to 200 Participants @ 2%
201 to 500 Participants @ 2.5%
501 or more Participants @ 3%
(c) On the last business day of each calendar quarter USA shall pay C.H.I.
Co-Marketing Funds equal up to $100.00 for each fully executed leasing
arrangement, resulting from Products sold to the Participants during
prior calendar quarter. For the purposes of this Agreement,
Co-Marketing Funds shall be deemed earned and payable to C.H.I when
USA is paid for the Products by the leasing company on behalf of the
Participant. The Co-Marketing Funds will be based upon as described
below.
$25.00 on a lease up to $4,000
$50.00 on a lease up to $7,000
$75.00 on a lease up to $10,000
$100.00 on a lease up to $13,000 or more
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(d) On the last business day of each calendar quarter USA shall pay C.H.I.
Co-Marketing Funds equal to FIVE TO TEN percent (5 - 10%) of the USA
required monthly administrative fees, resulting from Products sold to
the Participants at any time during the term of this Agreement. For
the purposes of this Agreement, Co-Marketing Funds shall be deemed
earned and payable to C.H.I. when USA is paid for the Products. The
percentages will be based upon the number of Participants as described
below.
1 to 200 Participants @ 5%
201 to 500 Participants @ 7.5%
501 or more Participants @ 10%
(e) USA shall be use reasonable efforts to collect fees and revenues for
its Products on a timely basis from the Participants.
6. REPORTING:
On or before the 15th day following the end of each calendar quarter, USA
shall deliver to C.H.I. a report listing the name, address, and telephone number
of each Participant which engaged in a transaction with USA during the prior
period and setting forth the items purchased, the unit price, the total sales
price, and the Co-Marketing Funds due to C.H.I. Final totals for all
transactions during the period shall also be included in the report. The report
shall be certified by the controller or chief financial officer of USA.
7. AUDITING:
USA shall permit C.H.I. to examine its account and sales records to verify
all transactions. Said examination shall occur not more than two (2) times each
calendar year upon reasonable notice to USA and shall take place at such time
and place as the parties may agree. (or at USA's office if the parties do not
otherwise agree). If, as a result of such examination, C.H.I. determines that
additional Co-Marketing Funds are due to it, USA shall pay C.H.I. the amount of
such additional Co-Marketing Funds and USA shall reimburse C.H.I. for the cost
of the audit. All such books and records shall be preserved for a period of at
least (3) years after the expiration of each term year.
8. TRADEMARKS:
Unless authorized in writing by C.H.I., USA shall not use C.H.I.
designated service marks, trademarks, trade names, designs or copyrights
(collectively "X.X.X. Xxxxx") in USA advertising or promotional materials or any
other materials (collectively, "Promotional Materials"). In the event C.H.I.
grants the right to use any X.X.X. Xxxxx to USA during the agreement term, USA
will submit to C.H.I. for its prior approval, not to be unreasonably withheld,
artwork and copy for the Promotional Materials which include the X.X.X. Xxxxx.
For the portion of materials that are supplied by each party, that the party
will insure, and indemnify the other party against any claims, actions, or
expenses, that such portion complies with all applicable laws and that it does
not infringe on any trademark, copyright or other property interest of any third
party. USA will insure and indemnify C.H.I. from and against any claims,
actions, expenses, that the Promotional Materials containing the X.X.X. Xxxxx
will comply with all applicable laws. C.H.I. will promptly review and provide
USA with comments or approval of the Promotional Materials or the other
materials containing the X.X.X. Xxxxx. C.H.I. will use its best efforts to
approve the Promotional Materials within 10 business days of C.H.I.'s receipt.
If C.H.I. does not notify USA of any objections within 10 business days of said
receipt of the Promotional Materials or the other materials containing X.X.X.
Xxxxx, then USA may consider the Promotional Materials which include the X.X.X.
Xxxxx approved. C.H.I.'s approval of the Promotional Materials or any other
materials which include the X.X.X. Xxxx indicates that the materials comply with
C.H.I.'s standards and do not constitute infringing uses of the X.X.X. Xxxxx or
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C.H.I.'s copyrighted materials. C.H.I. will provide USA with proper specimens of
certain X.X.X. Xxxxx for USA's limited use during the Agreement Term.
USA further agrees that upon termination of this Agreement, USA shall
immediately cease and discontinue all use of X.X.X. Xxxxx.
9. CONFERENCES:
"During each year of this Agreement, USA agrees to participate in various
C.H.I. sponsored activities at a minimum expense of $5,000.00 "Participation
Fees"). USA agrees to pay these Participation Fees within thirty days of the
commencement date of this Agreement. In the even this agreement is renewed for a
second year, USA agrees to participate in various C.H.I. - sponsored activities
at a minimum expense of $10,000.00. USA agrees to pay these Participation Fees
within thirty (30) days of the anniversary of the commencement date of this
Agreement. In the event this Agreement is renewed for a third year, USA agrees
to participate in various C.H.I.- sponsored activities at a minimum expense of
$15,000. USA agrees to pay these Participation Fees within thirty (30) days of
the second anniversary of the commencement date of this Agreement. Thereafter,
in the event this Agreement is renewed for any additional one yew terms, USA
agrees to pay a Participation fee to be mutually agreed upon by the parties
within thirty days of the anniversary date of the commencement date of this
Agreement. USA agrees to pay these Participation Fees within thirty (30) days of
the anniversary date of this Agreement. In no event shall the revised
Participation Fee be less than the prior year's Participation Fee. Upon paying
these Participation Fees to C.H.I., USA shall be entitled to receive the
following from C.H.I., at no additional expense."
(i) a single vendor booth space at the annual C.H.I. Convention;
(ii) a list of the current C.H.I. Properties, updated on a periodic
basis, including mailing labels containing the addresses for the
C.H.I. Properties;
(iii) inclusion of USA's Products advertisement in C.H.I.'s direct
order vendor brochure;
(iv) Written or verbal notification from C.H.I. or new C.H.I. Properties;
and
(v) a letter from C.H.I. which endorses the Products, with such
endorsement letter to be distributed to C.H.I. Properties through
C.H.I. member mailings.
10. IDEMNIFICATION AND INSURANCE:
(a) Independent of its obligation to procure and maintain insurance as
specified below, USA shall indemnify, defend and hold harmless C.H.I.; its
subsidiaries affiliates, successors and assignees, and each of their officers,
directors, employees, agents, and shareholders; and each successors, assigns,
heirs and legatees (collectively referred to as "Indemnities") from and against
to the fullest extent permitted by law, any and all claims, actions, damages,
legal costs and other expenses (including, but not limited to, attorneys' fees)
arising in any way out of any negligent act or omission of, or breach of any
contract, warranty or law by, USA (or any person or party associated or
affiliated with USA), or any defect in any Product.
(b) During the Term and for a period or not less than six (6) months
thereafter, USA shall maintain commercial general liability insurance
(including, but not limited to contractual and product liability insurance
contractors coverage). The policy of insurance shall: (i) be written by an
insurance carrier approved by C.H.I.: (ii) have combined single limits or not
less than One Million Dollars ($1,000,0000) per occurrence: Three Million
Dollars ($3,000,000) in the aggregate; (iv) be on an occurrence basis, (v) be
endorsed with a statement that the coverage may not be canceled, altered or
permitted to lapse
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or expire without at least thirty (30) days advance written notice to C.H.I.;
(vi) provide primary coverage and that any insurance carried by C.H.I., its
parent, subsidiary and sister companies, is excess and non-contributory, and
(vii) name C.H.I. as an additional insured on such policy. Prior to the
commencement of this Agreement, annually thereafter, and each time a change is
made in the insurance carrier or policy, USA shall furnish to C.H.I. a
certificate of insurance evidencing that such insurance coverage is in effect.
Notwithstanding anything to the contrary stated above, C.H.I. reserves the
right to change the types, forms and amounts of insurance required upon
providing at least sixty (60) days advance written notice to USA.
(c) USA understands and agrees that C.H.I. does not own and operate all of
the C.H.I. Properties. USA understands that each of C.H.I.'s
franchises is required to carry its own liability insurance and that
neither C.H.I. nor USA will be liable for any damages, claims, losses,
suits, judgements, costs and expenses, including but not limited to
reasonable attorney's fees, arising out of the use of the facilities
of C.H.I.'s franchisee. USA also understands and agrees that C.H.I.
requires its franchisees to indemnify suppliers of
promotional services to C.H.I. 's system from loss, including
reasonable attorney's fees, arising from or connected with the
business of the franchised hotel, except where such loss is solely
caused by the negligence of the indemnified party.
11. TERMINATION:
(a) Either party shall have the right to terminate this Agreement under
the following circumstances: at the end of the first twelve months of
the Term or any successive 12 month period upon providing at least
(30) days prior written notice of termination to the other party,
(ii) upon the material breach of this Agreement by the other party, if
such other party fails to remedy such breach within thirty (30) days
of having been notified thereof, (iii) at any time with or without
cause, upon providing at least sixty (60) days prior written notice of
termination to the other party.
(b) Effects of Termination. USA will pay C.H.I. all Co-Marketing Funds (as
described in in Paragraph 5 above) for all Products orders and related
revenue received by USA within one (1) year of the effective date of
termination. Agreement termination or expiration will not terminate or
affect any of either party's obligations or liabilities to the other
party which may accrue before such termination or expiration. In the
event USA terminates this Agreement prior to the end of the initial
term of this Agreement or any applicable renewal term, USA shall not
be entitled to receive any refund of any Participation Fees unless the
cause of such termination is due to the willful breach of this
Agreement by C.H.I.
12. NON-EXCLUSIVE:
The parties agree that this Agreement is non-exclusive and that either
party may enter into similar agreements with other enities, and with other
providers of goods and services to the public, respectively,
13. RELATIONSHIP OF PARTIES:
USA is an independent contractor. Neither party is the legal
representative or agent of, or has the power to obligate the other for any
purpose whatsoever. C.H.I. and USA expressly acknowledge that no partnership,
joint venture, or agency relationship is intended or created by reason of this
Agreement.
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14. PARTIAL INVALIDITY:
Should any provision of this Agreement, for any reason, be declared to be
invalid, such declaration shall not affect the remainder of the Agreement which
shall be given full force and effect.
15. SUCCESSORS AN ASSIGNS:
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, their successors and permitted assigns. Notwithstanding the
above, USA may not assign this Agreement without the prior consent of C.H.I.
16. GOVERNING LAW/JURISDICTION:
This Agreement shall be governed by and construed in accordance with the
Substantive laws of the State of Pennsylvania without regard to its conflicts
laws rules.
18. CONFIDENTIALITY:
Both parties will keep strictly confidential and not use any information
either learns regarding the other's business affairs which is not generally
known to the public or which is not required to be disclosed by law. Upon
termination of the Agreement, USA shall return to C.H.I. any non-public
documents and materials received from C.H.I. Upon termination of the Agreement,
C.H.I. shall return to USA any non-public documents and materials received from
USA. This paragraph shall survive for 1 year beyond Agreement termination.
19. ATTORNEY'S FEES:
In the event any action or proceeding is commenced with regard to the
subject matter of this Agreement, the prevailing party in such action or
proceeding shall be entitled to have its reasonable attorney's fees incurred in
such action or proceeding reimbursed by the non-prevailing party.
20. NOTICE:
Both parties will send any fees or notices required under this Agreement
via a reputable overnight carrier, such as FedEx, UPS Next Day Air, or Airborne
Express, to the other party at the address below, or to such other address as a
party may indicate by like notice. Notice is effective upon the next business
day after receipt of the notice by the receiving party.
To C.H.I. To USA
Choice Hotels International, Inc. USA Technologies, Inc.
00000 Xxxxxxxx Xxxx 000 Xxxxx Xxxxxx
Xxxxxx Xxxxxx, XX 00000 Xxxxx, XX 00000
Attn: General Counsel Attn: Xxxxxxx X. Xxxxxxx
21. COMPLETE AGREEMENT:
This Agreement, together with all exhibits attached hereto, constitutes
the entire agreement of the parties hereto with the respect to the matters set
forth herein and supersedes all prior agreements or understandings pertaining to
such matters, whether oral or in writing.
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IN WITNESS WHEREOF, the parties hereto have set forth their signatures as of the
date set forth above.
Choice Hotels International, Inc. USA Technologies, Inc.
By: /s/ xxxxxx By: /s/ xxxxxx
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Title: xxxxxx Title: President
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Date: 4-24-97 Date: 4/25/97
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