1. State DHL’s position regarding its contractual obligations to CI’s successor upon ceasing its U.S. domestic operations.

2. State the Cyphermint view of what was owed to it under the contract with DHL upon its ceasing U.S. domestic operations.

3. What rule of contract interpretation did the court apply in this case? State the court’s decision.

C.A. Acquisition Newco LLC is a successor in interest to Cyphermint, Inc. (or “CI”), a New York corporation specializing in software development for self-service kiosks. DHL Express (USA), Inc., is an Ohio corporation with a principal place of business in Florida. It is a division of DHL International GmBH, a Deutsche Post Company and express carrier of documents and freight. Until 2008, DHL provided express pick-up and delivery, including same-day air delivery of letters and packages throughout the United States. DHL entered into an agreement with Cyphermint, hoping to expand its customer base by offering domestic shipping services in retail locations, such as Walgreens and OfficeMax, via kiosks, or “Shipping Spots.” Customers were able to use the kiosks’ touch screen to pay for shipping costs and print shipping labels. The contract provided for an initial three-year term (August 1, 2006, through July 31, 2009) that automatically renewed for two more years unless either party gave notice of its election not to renew 90 days before the end of the initial contract. Under the contract, Cyphermint agreed to provide interactive software enabling customers to use DHL’s services from the shipping spots. Section 10.5 of the contract governs termination fees: There shall be no termination fees for any termination by either party, irrespective of the reason for such termination, except for a “Material Breach” or as provided pursuant to the “Statement of Work” (SOW). The SOW contains the following provision concerning termination fees:

Should DHL terminate this agreement for any reason other than a material breach by Cyphermint before its termination date DHL agrees to compensate CI in the amount of $50,000 per month for each month remaining in the initial term. In November 2008, DHL decided to end all domestic delivery service within the United States. CI requested early termination fees under Section 10.5 of the contract of $413,333.33. DHL refused to pay, contending that Section 2.8 of the contract gave DHL the discretion to control the number and placement of the shipping spots, and when it ended U.S. domestic operations, it exercised its discretion to reduce shipping spots to zero.

JUDICIAL OPINION

PONSOR, J.… Plaintiff argues that Defendant breached the Contract by ceasing all shipments under the Contract prior to its expiration and failing to pay the resultant termination fees pursuant to Section 10.5. Under Section 10.5, termination fees only arise in case of “a ‘Material Breach’ or as provided pursuant to the ‘Statement of Work.’” The SOW states, “[s]hould DHL terminate this agreement for any reason other than a material breach by Cyphermint before its termination date DHL agrees to compensate Cyphermint in the