Exhibit 10.39
AMENDMENT TO THIRD PARTY PRIVATE LABEL INTERFACE AGREEMENT
THIS AMENDMENT TO THIRD PARTY PRIVATE LABEL INTERFACE AGREEMENT (this
"AMENDMENT"), is entered into as of December 15, 2002 (the "AMENDMENT DATE") by
and between Orbitz, LLC, a Delaware limited liability company ("ORBITZ"), and
Pegasus Solutions, Inc., a Delaware corporation ("PEGASUS").
RECITALS
WHEREAS, Orbitz and Pegasus entered into that certain Third Party Private Label
Interface Agreement dated effective December 15, 2000, as amended (the
"AGREEMENT"); and
WHEREAS, Orbitz and Pegasus wish to amend the Agreement as further provided
herein.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which the parties hereto hereby acknowledge, Orbitz and Pegasus hereby agree
as follows:
1. Initial capitalized terms not otherwise defined herein shall have the
meanings given such terms in the Agreement.
Section of the Agreement is hereby amended to add the following
additional definition:
"MERCHANT INVENTORY. The hotel accommodation inventory which ORBITZ, or its
designated intermediary or affiliate, sells at a marked-up rate to a
customer on a pre-paid basis, with ORBITZ or its designated intermediary or
affiliate acting as the merchant of record for the transaction."
3. Section 2.3 of the Agreement is hereby deleted and the following inserted
in lieu thereof:
"Orbitz agrees that for each month during the term of this Agreement at
least [***] percent ([***]%) of all hotel reservations on Orbitz's
Services for properties in the Online Distribution Database that are
booked through the Worldspan, Sabre, Galileo, Amadeus, Pegasus, Worldres
or Wizcom distribution systems during each calendar month shall be
processed via the Reservation Function (the "Minimum Volume"). If
Orbitz, either itself or through any third party, (a) implements any
electronic means of booking or cancelling hotel reservations (other than
through the Pegasus Services or through the Worldspan, Sabre, Galileo,
Amadeus, Worldres or Wizcom distribution systems) directly from the
Orbitz Services to the centralized computer reservations systems of any
of the Designated Entities (a "Direct Connection") and (b) uses the
Direct Connection to book or cancel hotel reservations, other than
reservations for Merchant Inventory, the Minimum Volume shall increase
to [***] percent ([***]%) while such Direct Connection is operational.
For purposes of the preceding sentence, "Designated Entities" shall
mean Cendant Corporation (excluding Resort Condominiums International,
LLC), Hilton Hotels Corporation; Hyatt Corporation; Marriott
International, Inc; Six Continents, Inc.; Starwood Hotels & Resorts
Worldwide, Inc.; and Wyndham International, Inc., but only so long as
the particular entity is participating in the Reservation Function.
Individual hotel properties operating under the name of a Designated
Entity shall not be included in the definition of "Designated Entities."
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Any calculation of the Minimum Volume commitment shall incorporate only
hotel reservations booked via the Worldspan, Sabre, Galileo, Amadeus,
Pegasus, Worldres or Wizcom distribution systems and shall not include
hotel reservations booked with respect to Merchant Inventory.
Implementation of any electronic means of booking or canceling hotel
reservations directly from the Orbitz Services to the centralized computer
reservations systems of any Designated Entities or hotel properties for the
purpose of booking or canceling Merchant Inventory shall not constitute a
"Direct Connection." Orbitz shall provide a report in a form acceptable to
Pegasus verifying the Minimum Volume on or before the 30th business day of
each month for the immediately preceding month. If Orbitz does not process
the Minimum Volume of hotel reservations for three (3) consecutive calendar
months, Pegasus shall have the right to terminate this Agreement at any
time upon ninety (90) days written notice to Orbitz.
4. Section 2.5 of the Agreement is hereby deleted in its entirety.
5. Section 2.6 of the Agreement is hereby deleted and the following inserted
in lieu thereof:
"RIGHTS TO USE ONLINE DISTRIBUTION DATABASE AND RESERVATION FUNCTION.
(i) Pegasus hereby grants, and Orbitz accepts, the limited, worldwide,
royalty-free, non-exclusive, non-transferable right to access, use
and display the Reservation Function in conjunction with the Orbitz
Services during the term of this Agreement solely for the purpose
of determining room availability for specific dates, and making and
canceling reservations, at hotels participating in the Reservation
Function.
(ii) Pegasus hereby grants, and Orbitz accepts, during the term of this
Agreement the limited, worldwide, non-exclusive, royalty-free
(except in the case of Section 3.1A(ii)), non-transferable right,
either itself or through its third party agent acting as a service
provider to Orbitz, to (a) access, use, and display information
residing in the Online Distribution Database in conjunction with
the Orbitz Services solely for the purposes of (I) displaying such
information to end user accessors of the Orbitz Services or end
user accessors of the services of Third Party Users, and (II)
facilitating the making and canceling of hotel reservations,
including hotel reservations booked for Merchant Inventory; and (b)
download information residing in the Online Distribution Database,
populate one or more Orbitz databases with such information, modify
such information to the extent directed or permitted by the entity
having the ability to grant the right to so modify, and use such
information solely as permitted in the immediately preceding
subsection (a). If Orbitz permits information downloaded by it from
the Online Distribution Database to reside on the system or network
of any third party acting as a service provider to Orbitz, Orbitz
shall ensure that such third party is subject to restrictions
regarding the use of such information at least as restrictive as
those governing Orbitz' use as defined in this Agreement.
(iii) Orbitz acknowledges and agrees that the Reservation Function and
the Online Distribution Database are the sole and exclusive
property of Pegasus or the hotels participating in the Online
Distribution Database and may not be copied, downloaded,
hyperlinked or in any manner used or redistributed in whole or in
part except as expressly permitted by this Agreement. Pegasus and
the hotels participating in the Online Distribution Database shall
retain exclusive ownership of all right, title and
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interest, including without limitation all intellectual property
rights, in and to the Reservation Function, the Online Distribution
Database and the information residing therein. Except for the
rights granted by Pegasus to Orbitz pursuant to this SECTION 2.6,
no right, title or interest of any kind in the foregoing is granted
to Orbitz pursuant to this Agreement. The rights granted to Orbitz
pursuant to this Section 2.6 shall terminate upon the termination
of this Agreement; provided, however, that to the extent Orbitz has
obtained a direct license from the entity having the right to grant
such license to use hotel information downloaded from the Online
Distribution Database and used to populate an Orbitz database, the
term of which license extends beyond the termination of this
Agreement, then Orbitz shall not be required to remove such
information from the Orbitz database upon termination of this
Agreement.
(iv) Pegasus represents that it has the authority to grant the rights
granted to Orbitz pursuant to this SECTION 2.6.
(v) Orbitz acknowledges that hotels participating in the Online
Distribution Database may remove their information from the
database and/or cease to participate in the Reservation Function at
anytime without prior notice."
6. Section 2.8 of the Agreement is hereby deleted in its entirety.
7. Section 2.9(v) of the Agreement is hereby deleted and the following
inserted in lieu thereof:
"each Agreement with a Third Party User permitting access to and use of the
Online Distribution Database and the Reservation Function must contain
Section 9.1 of this Agreement, must not contain any provision inconsistent
with this Agreement and must terminate upon the termination of this
Agreement for whatever reason."
8. A new Section 2.13 is hereby inserted into the Agreement as follows:
"PRIOR NOTICE.
(i) Each party hereto will use commercially reasonable efforts to
promptly determine whether any planned modifications or
enhancements to that party's functionality, applications, databases
or systems will result in a significant increase in (a) the message
traffic load on the Pegasus Services or (b) the number of hotel
reservations processed through use of the Pegasus Services. If such
party determines that such modifications or enhancements will have
such an impact or result in such an increase, such party shall
notify the other party (which may include notice via email) of such
determination as soon as practicable following such determination.
(ii) Orbitz will use commercially reasonable efforts to provide advance
notice to Pegasus of each lodging-related advertising campaign or
promotion undertaken by Orbitz during the term of this Agreement;
provided that such notice may be provided via email at the same
time Orbitz circulates notice of such advertising campaign or
promotion internally and such notice shall constitute reasonable
advanced notice.
(iii) Prior to conducting any test involving the Interface, Orbitz shall
determine if in its reasonable discretion, such test will have a
material negative impact on Pegasus'
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systems. In the event that Orbitz determines that such test could
cause such an impact, then it will provide Pegasus with at least
three (3) days prior notice of its desire to conduct such a test.
Orbitz will abide by any reasonable restrictions placed on such
testing by Pegasus with respect to the time, date and duration of
any such test."
9. Section 3.1 of the Agreement is hereby deleted and the following inserted
in lieu thereof:
"NET RESERVATION FEE. Subject to the provisions of Exhibit A-1 hereto under
the heading "Orbitz Transactional Efficiency", Pegasus shall pay a Net
Reservation fee for each Net Reservation processed during a given calendar
month as follows:
(i) Beginning on December 15, 2002, and continuing through
May 15, 2003, U.S. [***] per Net Reservation; and
(ii) Beginning on May 15, 2003, and for each month thereafter during
the term hereof, U.S. [***] per Net Reservation."
10. A new Section 3.1 A is hereby inserted into the Agreement as follows:
"FAILURE TO FULFILL MINIMUM VOLUME. Notwithstanding Section 3.1 hereof,
during any calendar month in which Orbitz fails to achieve the Minimum
Volume set forth in Section 2.3 above, Pegasus shall not pay any amount to
Orbitz pursuant to Section 3.1 hereof with respect to that calendar month.
Pegasus' rights under this Section 3.1 A shall constitute Pegasus' sole and
exclusive remedy with respect to any failure by Orbitz to meet the Minimum
Volume, subject to Pegasus' termination right set forth in Section 2.3
above, which if exercised shall be Pegasus' sole and exclusive remedy for
Orbitz' refusal or failure to maintain the Minimum Volume."
11. A new Section 3.1B is hereby inserted into the Agreement as follows:
"TECHNICAL/PROFESSIONAL SERVICES FEE. If Orbitz submits a written request
for Pegasus to perform technical or professional services for any purpose
other than support and maintenance of the then-current Pegasus Services,
Pegasus shall create a statement of work for such services and upon
agreement to and execution by the parties of such statement of work, Orbitz
shall pay Pegasus on a time and materials basis at Pegasus' then-standard
hourly rate for such technical and/or professional services (not to exceed
[***] per hour) for each hour expended by Pegasus personnel, plus actual
expenses incurred (at cost and without xxxx-up) by Pegasus, in performance
of such statement of work."
12. A new Section 3.1C is hereby inserted into the Agreement as follows:
"TRANSACTIONAL EFFICIENCY PAYMENTS. Orbitz shall pay to Pegasus the
amounts, if any, due from Orbitz in accordance with the provisions of
Exhibit A-1 hereto".
13. A new Section 3.1D is hereby inserted into the Agreement as follows:
"VOLUME-BASED RIGHT TO TERMINATE. If the number of Net Reservations is less
than [***] during each of three (3) consecutive calendar months, Pegasus
shall have the right to terminate the rights granted to Orbitz pursuant to
Section 2.6(ii) of this Agreement at any
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time upon ninety (90) days written notice to Orbitz."
14. Section 3.2 of the Agreement is hereby amended to include the following
additional provisions:
"In addition to Orbitz' termination rights under Section 5.1, payment of
the aforementioned service level fees shall be Orbitz' sole and exclusive
remedies with respect to any failure by Pegasus to meet any of the service
level requirements set forth on Exhibit A."
15. A new Section 3.A is hereby inserted into the Agreement as follows:
"Following any month with respect to which Pegasus owes service level
fees, Pegasus may, subject to availability of placements on the Orbitz
Services as determined in Orbitz' sole reasonable discretion, select
advertising placements at a price that is [***] percent ([***]%) off
Orbitz' then-current rate card (an "Ad Purchase"), and shall be entitled
to apply the amount of the service level fees owed toward an Ad Purchase
for a period of not more than ninety (90) days following the end of the
month to which such service level fees are attributable."
16. The words "9% or 3/4% per month" in Section 3.6 shall be replaced with the
words "12% or 1% per month."
17. Section 4. of the Agreement is hereby deleted and the following inserted in
lieu thereof:
"TERM OF AGREEMENT. The initial term of this Agreement, unless earlier
terminated pursuant to the provisions of this Agreement, shall continue
through December 15, 2004."
18. Section 5.1 of the Agreement is hereby amended to add the following
additional provision
"If (i) Pegasus fails to meet the System Availability requirement set forth
on Exhibit A hereto for three consecutive months or (ii) System
Availability falls below [***] in any month, Orbitz shall have the right to
terminate this Agreement at any time upon thirty (30) days written notice
to Pegasus."
19. The third sentence of Section 7.2 of the Agreement is hereby deleted in its
entirety.
20. Section 6.1(iii) is hereby deleted in its entirety.
21. Section 10.3 of the Agreement is hereby amended to include the following
additional provision:
"Notwithstanding the foregoing, if a Pegasus Change in Control occurs,
Orbitz may terminate this Agreement upon thirty (30) days prior written
notice. For purposes of this provision "Pegasus Change in Control" means an
event in which Pegasus becomes controlled by, or an affiliate of, an Orbitz
Competitor. For purposes of this provision "controlled" by means the
possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, or by contract).
For purposes of this provision "Orbitz Competitor" means Amadeus Global
Travel Distribution S.A., Sabre Inc. (including Easy Sabre, Travelocity,
Site59 and GetThere), Xxxxxx.xxx, Expedia Inc. (including Travelscape), and
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Cendant Corporation (including XxxXxxx.xxx, XxxxxXxxxxxx.xxx, and Galileo
International), and all subsidiaries and affiliates of, and any successor
entity to, any of the foregoing."
22. Section 10.9 of the Agreement is hereby deleted and the following inserted
in lieu thereof:
"INSURANCE. At no cost to Orbitz, Pegasus shall obtain and maintain
commercial general liability insurance ("CGL Insurance") from one or more
companies having an A.M. Best's Rating of A-VII or better. The CGL
Insurance maintained by Pegasus shall have minimum limits of $2,000,000
bodily injury and property damage per occurrence; shall be occurrence
based; and shall include personal injury coverage.
23. Exhibit A of the Agreement is hereby deleted and the new Exhibit A,
attached hereto, inserted in lieu thereof.
24. The parties intend to terminate the Pegasus Commission Processing
Membership Agreement, effective as of December 15, 2000 and attached
as Exhibit B to the Agreement, subject to the negotiation and execution
of a replacement agreement covering the subject matter thereof (the
"Replacement Agreement"). At a minimum, the Replacement Agreement shall
include the concept that any fees or other amounts owed to Orbitz by any
hotel (including any Participant Hotel) as a result of such hotel's
participation in the Orbitz' merchant hotel program (which includes the
relationship between Orbitz and Travelweb) may be designated by Orbitz
as outside the scope of the Replacement Agreement, with the result that
such fees and other amounts are excluded from the definition of Orbitz
Commissions and Pegasus does not provide services pursuant to the
Replacement Agreement with respect to such fees and other amounts.
25. REVOCATION OF TERMINATION. Upon execution of this Amendment, the notice of
termination of the Agreement provided by Orbitz to Pegasus on October 15,
2002 shall be revoked and shall have no effect.
26. CONTINUING EFFECT. Except as amended or modified by this Amendment, the
Agreement and its provisions shall continue in full force and effect as
originally executed.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of date first above written.
ORBITZ, LLC PEGASUS SOLUTIONS, INC.
By: /s/ XXXXX XXXXXX By: /s/ XXXXX X. SHORT
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Name: XXXXX XXXXXX Name: XXXXX X. SHORT
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Title: Exec. Vice President Title: Sr Vice President
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EXHIBIT A
SERVICE LEVEL REQUIREMENTS
SYSTEM AVAILABILITY
Requirement: System Availability will be [***] measured by calendar month.
Definitions: "System Availability" is defined as (a) the number of hours
during the relevant month during which the Reservation
Function and the Online Distribution Database are accessible,
and transaction and request throughput to the Reservation
Function and Online Distribution Database is not significantly
degraded, from the point at which the Pegasus data center
local area network intersects with the wide area network over
which transmissions between the Pegasus Services and Orbitz's
Services occur, divided by (b) Scheduled Hours of Operation
for the relevant month.
"Scheduled Hours of Operation" is defined as twenty-four (24)
hours per day, seven (7) days per week, less all time during
the relevant period during which the Reservation Function and
the Online Distribution Database are not accessible due to (a)
scheduled downtime that does not exceed four (4) hours per
calendar month; (b) acts or omissions of Customer, its
employees, contractors, suppliers or agents; (c) failure or
malfunction of equipment, applications, wide area networks,
systems, internet provider facilities and peripherals not
provided by or controlled by Pegasus; or (d) instances of
force majeure (as described in Section 6.2 of this Agreement).
Measurement: System Availability is to be measured continually and averaged
over each calendar month.
Scheduled: Pegasus will notify Orbitz of time and duration of any
scheduled downtime at a minimum of 5 days in advance of the
occurrence of the same, and will make commercially resonable
efforts to schedule such downtime during non-peak operating
periods.
SERVICE LEVEL FEES
If System Availability is less than [***]% during any calendar month, Pegasus
shall pay to Orbitz with respect to such month an amount equal to $[***]
multiplied by the number of Net Reservations attributable to such month.
PROBLEM RESOLUTION PROCEDURES:
Severity levels shall be designated by Orbitz in good faith.
Severity System down completely or transaction or request throughput is
significantly degraded- 30 minute response time, commitment to
fix in 2 hours. Pegasus will update the Orbitz POC (Point of
Contact - NOC) at a minimum of every 30 minutes. Within 5
business days of resolution, Pegasus will deliver to Orbitz a
written analysis detailing the causes of the incident.
Severity 2: Serious business impact - e.g., message returns not meeting
these service levels (1 hour response time, commitment to fix in
4 hours and confirmation when resolved). Pegasus will update the
Orbitz POC (Point of Contact - NOC) at a minimum of every 60
minutes. Within 5 business days of resolution, Pegasus will
deliver to Orbitz a written analysis detailing the causes of the
incident.
Severity 3: Nuisance - e.g., unable to retrieve non-critical backup
information (same day response time, commitment to resolve in one
week, with daily updates). All non-emergency types of requests
submitted to customer service will be acknowledged and responded
to with a turnaround time within 2 business days. Escalation for
items not acknowledged or resolved would be to contact the
account manager.
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EXHIBIT A-1
ORBITZ TRANSACTIONAL EFFICIENCY
For any calendar month in which the ratio of (a) total messages transmitted
by Orbitz's Services to the Reservation Function, to (b) Net Reservations,
exceeds [***], then the Net Reservation fee payable by Pegasus to Orbitz
pursuant to Section 3.1 of this Agreement with respect to each Net
Reservation processed during such month shall be reduced in accordance with
the following table:
Ratio of (I) total messages transmitted Reduction in Net Reservation Reduction in Net Reservation
by Orbitz's Services to the Reservation fee payable by Pegasus to fee payable by Pegasus to
Function, to (II) Net Reservations Orbitz prior to May 15, 2003 Orbitz on or after May 15, 2003
More than [***] but not more than [***] [***] [***]
More than [***] but not more than [***] [***] [***]
More than [***] but not more than [***] [***] [***]
More than [***] but not more than [***] [***] [***]
More than [***] but not more than [***] [***] [***]
More than [***] [***] [***]
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