The goal that lies in our foundation is to make the “ACM,” or Automated Charging Machine, as accessible and commonplace as ATMs in our modern society. In order to achieve this goal, Hercules is partnering with the most talented and capable distributors (from this point referenced as “partners”) around the country. Our program is designed for entrepreneurs and for companies currently in the ATM or vending businesses. With that said, Hercules does not partner with any person or company interested. We are careful in our partnering decisions to ensure the best image for Hercules and the ACM brand.

All of Hercules’s partners have the opportunity to purchase ACM’s at a discounted rate, and immediately begin placing ACM’s in their given areas. Partners decide how much they prefer to charge, per charge (normally $2 to $3), and where exactly to put the machines. Hercules will provide partners with all necessary contracts and useful marketing materials to get started. In addition, Hercules will help in figuring out where to place ACM’s in order to earn maximum revenue.

Our program is comparable to a franchise model, except that whereas a McDonald’s franchise would pay an upfront fee of $100,000, Hercules charges absolutely no upfront fee. This is simply our way of letting our partners know – we are absolutely certain about the quality of our product.

ACM’s generate two sources of revenue – charging and advertising. The split between Hercules and all distributors is as follows:

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Deciding on a Location

ACM’s, much like vending machines and ATM machines, do best in high traffic locations where people spend time. See ‘Where are ACM’s found?' for examples.

If you don’t own the property that you intend to deploy the ACM’s to, you will most likely be dealing with business owners.

Most business owners are happy to house ACM’s for no cost, as they provide a convenient charging service, which attracts customers. In some cases, however, you will need to negotiate with a business owner to place an ACM at their location. As a general rule, we suggest you not offer more than 10% of total revenue, as this amount comes from your share. Note that this is very rare, and that most property owners will gladly accept a free ACM.

Placing the ACM’s

Once you have arrived at an agreement with the property owner, ask them to sign an ACM Placement Contract with you. The contract (provided by Hercules) gives you the right to keep the ACM at their location for 5 years. 5 years is the standard contract length in the kiosk industry and we recommend not going below 5 years.

When you place an ACM, take a picture of it so that Hercules Networks enter the location into its database of available inventory.

ACM Maintenance

It is your responsibility to service and maintain your ACM so that it is always in the best condition. An ACM’s condition reflects on your company, and maintaining your ACM will ensure that the location owner will continue to house your machine.

As the owner of your ACM’s, you should have someone visit each location every 2 weeks to collect cash and to make sure no tips have been damaged. If they have, you should have spare tips stored in the back of the machine to change it on-site. You can expect 1-2 tips per month to be damaged due to use.

Advertising Space

Each ACM plays a 10-minute loop of video (sometimes longer). Those 10 minutes are typically broken down into 5 minutes of entertaining content (provided by CBS) and 5 minutes of commercials. Commercials are sold as 15, 30, and 60 second spots. Advertising rates vary, and depend on a number of variables, including:

• the advertising market
• the ACM’s location
• the competition in the advertising marketplace

Therefore, Hercules and its sales team cannot predict how much advertising will be sold.

Location Owners

Location owners typically do not request a percentage of advertising revenues. In some cases, you may need to offer a 30 second spot to promote their company. If you absolutely must offer a share of advertising revenue, we strongly recommend that you don’t offer more than 10%. Again, be cautious, as that percentage comes from your share of revenue.

Advertising Sold by Hercules Networks

Distributors are guaranteed 25% of advertising revenues brought in by Hercules, just for keeping the ACM in a specific location and assuring advertisements are played in their respective times.

Hercules ad sales staff talks with major brands and agencies weekly and constantly updates them with our available locations. When your locations appear on the list of places they want to advertise on, Hercules will send you the commercials to upload into the ACM as well as the amount that you will receive from each commercial. For accounting purposes, checks to ACM partners go out quarterly.

Advertising Sold by Distributing Partner

Partners also receive 75% of the revenue they obtain from advertising they sell. If you decide that you want to sell advertising on a local basis, Hercules will provide you with all of the necessary contracts and marketing materials and you will be able to sell to local businesses. The important thing to note is that the greater your network, the more you will make from advertising. So as your business grows, your advertising revenue will grow.

As described, there is a 75-25 revenue share on charging revenue. The partner must send the 25% payment to Hercules by the 5th of every month, and Hercules is to receive no later than the 10th of every month. The payment is to reflect the 1st of the month to the last day of the month (30th or 31st).

Example: June 1st – June 30th, 2009 Total Revenues = $200 Partner sends check to Hercules Networks by July 5. $200 x .25(%) = $50

If payment is late, Hercules Networks charges partners a $25 late fee.

We are confident in the quality of and demand for our products. The best way we can prove this to all of our partners is offering a full money back guarantee. In the event that partners do not make all of their investment back within 18 months of placing their machines, Hercules Networks will credit the partner the difference between what they paid for the ACM and what they made over the 18 month period. The partner may keep the ACM in the said location, and continue running their business. The 18 months in the mentioned guarantee begins when an ACM is placed.

There is no deception involved – we are just very confident in our product.

1. John purchases 2 ACM’s for $2,500 each on May 1st, 2009. He gets the ACM’s on May 20th, 2009. John places the first ACM on June 1st, 2009. John places the second ACM on June 10th, 2009.
2. When John places each ACM, he takes a picture and sends it to proof(at)herculesnetworks.com. The DATE that John sends the picture is the date that is recorded, so John is sure to take and send the picture the same day that he places the ACM.
3. John collects cash from the ACM routinely and sends Hercules Networks a check for 25% of the total by the 5th of every month.
4. The first check for John would go out June 5th, 2009 for his two ACM’s. Meanwhile, Hercules is working to sell advertising on the ACM’s John has. Hercules sends John a check every quarter for his percentage of advertising revenues. The reason for quarterly payments: Advertisers are always slow to pay. They like to run a campaign first before they pay, so we need to take that into account before we can pay our distributors.
5. If John prefers, he will be working to sell advertising as well. In this case, Hercules will train him and give him all the materials he needs. John’s payments to Hercules for advertising that he has sold are also quarterly.
6.