Exhibit 10.1
Strategic Alliance Agreement
This Strategic Alliance Agreement is made this 8th day of October 2003,
by and between USA Technologies, Inc., a Pennsylvania corporation ("USA"), and
Conopco, Inc. dba Unilever Home & Personal Care North America, a New York
corporation ("Unilever").
Background
USA is a provider of an unattended laundry injection system known as
e-Suds, all as more fully described in Exhibit "A" hereto ("USA e-Suds System").
Unilever is a provider of laundry detergent and conditioners, all as described
in Exhibit "B" ("Unilever Products"). As more fully set forth herein, the
parties have entered into a strategic alliance pursuant to which Unilever shall
act as a supplier of Unilever Products to USA for use in the USA e-Suds System
at the point of consumption in colleges and universities across the United
States.
Agreement
NOW THEREFORE, intending to be legally bound hereby, the parties hereto
agree as follows:
1. Sale of Unilever Products. During the term of this Agreement, USA
agrees to purchase from Unilever and Unilever agrees to sell to USA the Unilever
Products for dispensing through the USA e-Suds Systems to be located in colleges
and universities across the United States. USA agrees to pay Unilever $35.36 per
5 gal. box (168 3.8oz. Doses) of laundry detergent and $138.40 per 5 gal. Box
(640 1oz. Doses) of conditioner. USA will monitor usage of Unilever Products at
the various locations and order Unilever Products as necessary. Each purchase of
Unilever Product shall be governed by Unilever's standard terms of sale. USA
shall be entitled to a 2% early payment discount calculated on the gross invoice
for payments received within 19 days for checks and within 29 days for
electronic funds transfers. Unilever agrees (at its cost) to deliver the
Unilever Products directly to the laundry operators as reasonably instructed by
USA; provided, however, each such operator shall have no more than one location.
Any damaged or unusable Unilever Products received by a laundry
operator for use with a USA e-Suds System will be returned to Unilever and
credited to USA in accordance with Unilever's Unsaleable Merchandise Policy
attached hereto as Exhibit "C".
USA agrees that the fee per box of laundry detergent and conditioner may be
increased by Unilever in the event of a price increase to Unilever by its
suppliers. The pricing will be reviewed each semester and any increase shall be
conditioned upon Unilever's production of documentation to USA that reasonably
substantiates the increase in costs to Unilever.
2. Unilever Payments.
A. Investment Payments. Subject to the provisions of this
Section 2, Unilever shall pay to USA a fee based upon the number of
injections of Unilever Products in the USA e-Suds Systems during the
term hereof as set forth below (the "Investment Payments").
Number of Forecasted
Semester Cost Per Injection Installations*
Spring 2004 $.1443 -0-
Fall 2004 $.1443 2,000
Spring 2005 $ 0.07 4,950
Fall 2005 $ 0.07 10,000
Spring 2006 $ 0.05 24,000
Fall 2006 $ 0.05 50,000
Spring 2007 $0.045 67,500
Fall 2007 $0.045 100,000
Spring 2008 $ 0.04 152,500
Fall 2008 $ 0.04 250,000
*To be installed by February 1st and September 1st of each semester.
The "Spring" semester means the four months of February through May and the
"Fall" semester means the eight months of June through January. For purposes of
the above, the cost per each injection does not change based on the product
dispensed. The cost per injection applies separately to detergent as well as
conditioner. For example, if a student injects detergent and conditioner for one
load of wash, it is counted as two (2) injections.
B. Pre-Investment Payments. In order to facilitate the
acceptance of the USA e-Suds Systems into the marketplace, Unilever agrees to
make a nonrefundable payment to USA as described below ("Pre-Investment
Payment"). USA shall distribute the Pre-Investment Payments to the various
operators to optimize the performance of the e-Suds business. USA distributions
of Pre-Investment Payments may also include but are not limited to operator
subsidies, trade events, trade advertising, and/or other pertinent market
development fees. Distributions of Pre-Investment payments will be limited to
operators who agree to allow branding of their machines with the Unilever "all"
logo. Branding will be with a sign that includes the "all" logo and the slogan
"You can have it all" that is on the order of 3 inches by 10 inches. These signs
will be provided at Unilever's expense but installed by the operators in a
manner as approved by Unilever. The Pre-Investment Payment for the injection
fees shall be paid in advance of each semester as set forth below:
Semester Pre-Investment Payment Payment Date
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Fall 2003 $ 200,000.00 12/15/2003
Spring 2004 - -
Fall 2004 $ 72,037.00 11/15/2004
Spring 2005 $ 145,530.00 03/15/2005
Fall 2005 $ 249,480.00 11/15/2005
Spring 2006 $ 519,750.00 03/15/2006
Fall 2006 $ 631,496.25 11/15/2006
Spring 2007 $ 935,550.00 03/15/2007
Fall 2007 $1,268,190.00 11/15/2007
Spring 2008 $2,079,000.00 03/15/2008
Beginning with Fall 2004 semester, the Pre-Investment Payments shall be
decreased (but not increased) by multiplying the relevant Pre-Investment Payment
by the following formula (the "Fulfillment Index"):
[# of installed washing machines on the first day of the month
in which the calculation is made times the average # of
injections per machine for the prior semester]
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[# of machines forecasted for the current semester times 693]
USA shall calculate and deliver to Unilever a detailed calculation of the
Fulfillment Index and Pre-Investment Payment, as adjusted, by each February 15th
and September 15th during the term of this Agreement.
C. Sales in Excess of Pre-Investment Payment. The
Pre-Investment Payment shall be credited towards the Investment Payment based on
the actual injections made during the applicable semester(s) at the rates set
forth in Section A, above. When the Pre-Investment Payment is entirely offset,
USA will invoice Unilever for the amount of the Investment Payment due as a
result of such excess. USA will provide such invoice on a quarterly basis with
payment due by Unilever within thirty (30) days of receipt of the invoice.
3. USA Duties. During the term of this Agreement, USA, working with
existing operators, will provide, place, network and manage new USA e-Suds
Systems in colleges and universities located in the United States. The e-Suds
services made available by USA will include:
o Processing non-cash transactions
o Selling detergent and conditioner (consumables) at the point
of consumption
o Monitoring of consumable volume to ensure efficient supply
chain management
o Monitoring of machine status to ensure machines are operating
at top performance
o Usage reporting to include consumables usage on a college and
university basis by product SKU o Online availability of
machines
o E-mail notification to student machine users when wash and dry
cycles are complete
o Prioritizing, managing and reporting of the machine
installation schedule
o Calculating the formula described in Section 2.B and the
amount of Investment Payment due each semester pursuant to
Section 2.C
o Managing initial investment fund transactions and continuing
operations with USA e-Suds systems operators
o All gang controllers included in the system will be branded
with a sign that includes the all logo and the slogan "You can
have it all" that is a maximum size of 2.5 inches by 6.75
inches. These signs will be provided at Unilever's expense but
installed by USA and/or the operators.
o All e-mail alerts for the system will be branded with a
message that includes the all logo and the slogan "You can
have it all". Unilever will provide these messages to USA.
o Using its best efforts to obtain access for Unilever to
laundry operators facilities and systems for additional
branding opportunities, at Unilever's expense, including, but
not limited to, laundry machines, websites, keycards, banners,
and liquid box packaging
o Insuring that the correct dosage of detergent is injected into
the machine as directed from time to time by Unilever
4. Unilever Duties. During the term of this Agreement, Unilever shall
perform the following:
A. Supply the Unilever Products to USA from time to time as
described in Section 1 hereof;
B. Deliver to USA the Pre-Investment Payments as set forth in
Section 2 hereof;
C. Deliver to USA the Investment Payments as set forth in
Section 2 hereof; and
D. Provide the required engineering personnel and expertise to
design and implement the cabinet and pumping lines into the washing
machines to be used by the USA e-Suds Systems covered by this
Agreement.
5. Technical Collaboration. Following the date hereof, and upon the
request of USA, USA and Unilever shall work together to integrate their
respective equipment and systems so that a seamless USA e-Suds System can
be provided to the marketplace. USA and Unilever shall have regular
meetings to discuss development plans.
6. Competition.
A. During the term hereof, Unilever shall solely and
exclusively utilize the USA e-Suds System in the college and university
market in the United States for the automated delivery of Unilever
Products to unattended laundry machines, and shall not, directly or
indirectly, in any manner whatsoever, promote, utilize or recommend any
other brand or type of service or products which are similar to the USA
e-Suds System in such market.
B. During the term hereof, USA shall solely and exclusively
utilize Unilever Product for the USA e-Suds System in the college and
university market in the United States for the automated delivery of
laundry detergents and conditioners to unattended laundry machines, and
shall not, directly or indirectly, in any manner whatsoever, promote,
utilize or recommend any other brand or type of product which are
similar to Unilever Products in such market.
7. Trademarks.
A. During the course of its performance of this Agreement, USA
shall be entitled to use the trademarks of Unilever only as
specifically provided in this Agreement or as otherwise approved in
writing by Unilever in advance. USA acknowledges that Unilever is the
exclusive owner of such names and marks. USA further acknowledges that
USA has no other license or similar right with respect to such marks
and names, and covenants that it will neither claim nor assert any such
right by reason of this Agreement or otherwise.
B. During the course of its performance of this Agreement,
Unilever shall be entitled to use the trademarks of USA only as
specifically provided in this Agreement or as otherwise approved in
writing by USA in advance. Unilever acknowledges that USA is the
exclusive owner of such names and marks. Unilever further acknowledges
that Unilever has no other license or similar right with respect to
such marks and names, and covenants that it will neither claim nor
assert any such right by reason of this Agreement or otherwise.
8. Confidentiality.
A. 1. Except as expressly permitted by this Agreement,
Unilever shall not, directly or indirectly, at any time from and after
the date hereof, make any use of, exploit, disclose, or divulge to any
other person, firm or corporation, any trade or business secret,
information, documents, know-how, data, software, samples,
specifications, formulae, technical descriptions, method or means, or
any other confidential information concerning the business or policies
of USA, or the USA e-Suds System, that Unilever learned as a result of,
in connection with, through its association with, or through its
affiliation with USA, whether or not pursuant to this Agreement.
2. Except as expressly permitted by this Agreement,
USA shall not, directly or indirectly, at any time from and
after the date hereof, make any use of, exploit, disclose, or
divulge to any other person, firm or corporation, any trade or
business secret, information, documents, know-how, data,
samples, specifications, formulae, manufacturing processes,
technical descriptions, method or means, or any other
confidential information concerning the business or policies
of Unilever, or the Unilever Products, that USA learned as a
result of, in connection with, through its association with,
or through its affiliation with Unilever, whether or not
pursuant to this Agreement.
3. The restrictions set forth in subsections 1 and 2
above shall not apply to the extent that such confidential
information either:(i) was known to the recipient prior to the
disclosure thereof by the disclosing party as shown by written
records; or (ii) is, or hereafter becomes, other than through
the fault of the recipient, generally available to the public;
or (iii) is disclosed to the recipient by a third party in
under no obligation to keep such information confidential; or
(iv) is developed by the recipient independently of any
disclosures made hereunder, as evidenced by the recipient's
written records.
B. Except relating to the design and implementation of cabinet
and pumping lines into washing machines to be used by the USA e-Suds
Systems and as otherwise expressly agreed to between USA and Unilever,
all documents, data, know-how, designs, inventions, names, method or
means, materials, software programs, hardware, configurations,
information, or any other materials or data of any kind furnished to
Unilever by USA, or developed by Unilever on behalf of USA or at USA's
direction or for USA's use, or otherwise devised, developed, created,
or invented in connection with Unilever's affiliation with USA, jointly
or otherwise, and which relate to the USA e-Suds System or USA's
network technology, are and shall remain the sole and exclusive
property of USA, and Unilever shall have no right or interest
whatsoever thereto, including but not limited to any copyright or
patent interest whatsoever. Unilever shall if requested, execute any
legal instruments deemed necessary by USA to carry out the foregoing.
Except as otherwise expressly agreed to between USA and Unilever all
documents, data, know-how, designs, inventions, names, method or means,
materials, software programs, hardware, configurations, information, or
any other materials or data of any kind furnished to Unilever by USA,
or developed by Unilever on behalf of USA or at USA's direction or for
USA's use, or otherwise devised, developed, created, or invented in
connection with Unilever's affiliation with USA, jointly or otherwise,
and relating to the design and implementation of cabinet and pumping
lines into washing machines to be used by the USA e-Suds Systems, are
and shall remain the sole and exclusive property of Unilever, and USA
shall have no right or interest whatsoever thereto, including but not
limited to any copyright or patent interest whatsoever. USA shall if
requested, execute any legal instruments deemed necessary by Unilever
to carry out the foregoing. Notwithstanding anything else set forth
herein, in no event shall USA have any right, title or interest in or
to any formulations or product material relating to the Unilever
Products.
C. Upon the termination or expiration of this Agreement, or at
such earlier time as either party may request, each party shall return
to the other party such confidential information within its possession
or control.
D. Each party agrees that it will make available the other
party's confidential information to persons within its organization
only on a "need to know" basis and that all persons to whom such
confidential information is made available will be made aware of the
strictly confidential nature of such confidential information and the
restrictions placed hereunder on the use thereof.
9. Proprietary Software.
A. Unilever acknowledges and agrees that the computer
programs, computer software, electronic images, computer codes,
computer configurations, and sounds ("Software") contained in or
utilized by the USA e-Suds System are proprietary and confidential to
USA and protected under United States copyright law. USA shall retain
all right, title and interest in and to the Software and the USA e-Suds
System. Unilever shall not copy, modify, adopt, translate, merge,
reverse engineer, decompile, or disassemble, the Software or the USA
e-Suds System, or create any derivative works based on the Software or
the USA e-Suds System.
B. Unilever shall retain all right, title and interest in and
to the Unilever Products. USA shall not copy, modify, adopt, translate,
merge, reverse engineer, decompile, or disassemble, the Unilever
Products, or create any derivative works based on the Unilever
Products.
10. Expenses. Unless otherwise specifically agreed to by the parties,
any and all expenses, costs, obligations, or liabilities whatsoever incurred by
the parties in connection with the performance of this Agreement shall be borne
solely and exclusively by the party incurring such expense, cost, obligation or
liability.
11. Term.
A. This Agreement shall commence on the date hereof and
terminate upon the expiration of the 2008 Fall semester. Notwithstanding
anything else set forth herein, if and whenever any party hereto shall default
in the performance of any of the provisions of this Agreement, and the default
shall continue unremedied for a period of sixty-days after receipt of written
notice by the party in default, then upon the expiration of said sixty-day
period, the party giving said notice may, at its option, terminate this
Agreement by written notice of termination to the defaulting party. In addition,
Unilever may terminate this Agreement immediately if the Fulfillment Index is
equal to or less than 0.90 for two consecutive semesters. Any failure to
terminate hereunder shall not constitute a condonation or waiver of subsequent
defaults. In the event of any such termination, other than any payment otherwise
due hereunder which is attributable to the period prior to such date of
termination, and except as provided otherwise hereunder, this Agreement shall be
null and void and of no further effect. The termination of this Agreement shall
not limit, modify or affect any cause of action that may otherwise exist for any
breach of this Agreement by either party hereto.
B. Rights of First Refusal. If at any time within five years
following the expiration of this Agreement pursuant to subsection A. above, USA
shall desire to have any person or entity other than Unilever (the "Third
Party"), supply products similar to the Unilever Products for use in the USA
e-Suds System in colleges and universities across the United States, then USA
shall give prompt written notice (referred to in this Section as the "Notice")
of that desire to Unilever, together with a copy of a bona fide binding written
proposal. Unilever shall have the right, but not the obligation, within thirty
(30) days after receipt of the Notice, to elect to be the supplier of Unilever
Products to the USA e-Suds System upon the terms and at the prices set forth in
the proposal. In the event Unilever desires to exercise its right of first
refusal, Unilever must provide written notice of that election to USA within
said thirty (30) day period after the receipt of the Notice. Non-delivery of
written notice by Unilever within the thirty (30) day period shall be conclusive
of the fact that Unilever chooses not to exercise its rights hereunder;
provided, however, such failure to exercise such right shall not extinguish
Unilever's right of first refusal for subsequent periods during the five year
period following the expiration of this Agreement. In the event Unilever fails
to exercise its option, then USA may proceed with the proposal only pursuant to
the price and upon all of the terms and conditions thereof. This subsection B
shall not be applicable if this Agreement is terminated pursuant to subsection A
due to a breach by Unilever hereby.
C. Notwithstanding anything else set forth herein, all of the
terms and conditions of Sections 7, 8, 9 11.B, 13 and 17 hereof shall survive
the expiration or termination of this Agreement.
12. Relationship of Parties. USA, on the one hand, and Unilever, on the
other, acknowledge and agree that each of them are independent contractors
hereunder, and that nothing contained in this Agreement shall deem to have made
them partners, joint venturers, or otherwise. In this regard, except as
specifically provided otherwise herein, neither of their respective officers,
employees, or agents shall be employees, officers, or agents of the other, and
neither party shall have the power or the authority to obligate or bind the
other.
13. Indemnification.
A. USA agrees to reimburse, indemnify and hold Unilever (as
well as its employees and agents) harmless from and against all losses, claims,
attorney's fees, liabilities, costs, damages, judgements, settlements, and/or
expenses which Unilever (or its employees or agents) sustains or incurs as a
result of the breach of this Agreement by USA, and/or from the negligent or
willful acts or omissions of USA in the performance of this Agreement, and/or
arising from or in connection with the use by a location of USA's e-Suds System.
USA's obligations under this Section shall survive the termination of this
Agreement.
B. Unilever agrees to reimburse, indemnify and hold USA (as
well as its employees and agents) harmless from and against all losses, claims,
attorney's fees, liabilities, costs, damages, judgements, settlements, and/or
expenses which USA (or its employees or agents) sustains or incurs as a result
of the breach of this Agreement by Unilever, and/or from the negligent or
willful acts or omissions of Unilever in the performance of this Agreement,
and/or arising from or in connection with the use by a location of Unilever
Products. Unilever's obligations under this Section shall survive the
termination of this Agreement.
14. Good Faith, Inspection Rights.
A. USA and Unilever shall cooperate with each other in good faith to
attempt to resolve any business issues which may arise in the future from time
to time. In this regard, the parties shall take any appropriate actions and
execute and deliver any appropriate documents which may be necessary or
appropriate to carry out the transactions contemplated by this Agreement.
B. From time to time during the term of this Agreement, Unilever or its
designee, upon prior written notice to USA and during regular business hours at
USA's offices, may inspect and make copies of all records maintained by or under
the control of USA relating to USA's books, records and systems in order to
audit USA's compliance with this Agreement, including the prices charged to
Unilever hereunder; provided, however, such inspections shall not take place
more than once every ninety (90) days.
15. Notices. Any notices or consents required or permitted by this
Agreement shall be in writing and shall be deemed delivered if delivered in
person or national overnight courier or sent by certified mail, postage prepaid,
return receipt requested, as follows, unless such address is changed by written
notice hereunder:
If to USA:
USA Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn. President
If to Unilever:
Unilever Home & Personal Care North America
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn. President
With a copy to:
Conopco, Inc.
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn. General Counsel
16. Applicable Law. The substantive laws of the Commonwealth of
Delaware (without regard to its conflicts of laws rules) shall govern the
construction of this Agreement and the rights and remedies of the parties
hereto. The headings of the Sections of this Agreement are for convenience only;
they form no part of this Agreement and shall not affect its interpretation. If
any provision of this Agreement is held to be invalid, the same shall not affect
the remaining provisions of this Agreement which shall continue in full force
and effect.
17. Arbitration. All disputes, controversies, or misunderstandings
whatsoever arising out of or in connection with this Agreement, shall be settled
and resolved by binding arbitration pursuant to the Commercial Arbitration Rules
of the American Arbitration Association. The arbitration shall be convened in
the City of Wilmington , Delaware and shall be conducted by a single arbitrator.
The costs and expenses of the arbitration, as well as the arbitrator's
compensation shall be paid by the parties as shall be determined by the
arbitrator. The parties intend that this Section shall survive the termination
of this Agreement. The decision and award of the arbitrator shall be final and
binding upon the parties and judgment may be entered on the award in any court
of competent jurisdiction.
18. Binding Effect. This Agreement shall inure to the benefit of, and
shall be binding upon, the respective permitted successors and assigns of the
parties hereto; provided, however, that neither USA nor Unilever shall assign
this Agreement in whole or in part without the prior written consent of the
other. This Agreement constitutes the entire agreement between the parties
hereto, and may only be amended or modified by a writing signed on behalf of the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
USA TECHNOLOGIES, INC. CONOPCO, INC.
dba Unilever Home & Personal Care
North America
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Name: ▇▇▇ ▇▇▇▇▇▇▇
Title: President Title:General Manager, Laundry
and Homecare