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Exhibit 10.24
TRAVEL MANAGEMENT SERVICES AGREEMENT
Dated as of March 15, 1996
By and Between
INTERNATIONAL CORPORATE TRAVEL SERVICES, INC.
and
XXX X. XXXXXX, INC.
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TRAVEL MANAGEMENT SERVICES AGREEMENT
AGREEMENT dated as of March 15, 1996 by and between INTERNATIONAL
CORPORATE TRAVEL SERVICES, INC., a Delaware corporation ("InterCorp")
and XXX X. XXXXXX, INC., a Pennsylvania corporation ("Weston").
Background
X. Xxxxxx desires to continue the consolidation of travel services for its
personnel within a single travel management company in order to benefit Weston,
its employees and clients through effective cost reductions.
B. InterCorp currently provides substantial travel services to Weston and
desires to participate in and assist Weston with the aforementioned
consolidation, but on an economic basis which differs from that upon which the
parties are currently operating, all as herein provided and on the terms and
conditions hereinafter set forth.
THEREFORE, in consideration of the mutual covenants set forth herein and
INTENDING TO BE LEGALLY BOUND HEREBY, the parties agree as follows:
1. Services to be Provided. Throughout the term of this Agreement,
InterCorp will provide Weston with the following services (collectively, the
"Services"):
(a) Comprehensive and inclusive 24-hour travel agency services including
airline, rail, automobile rental, hotel and lodging reservations and
modifications, delivery of tickets, itineraries, boarding passes and
any related documentation and related counseling, security and support
services;
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(b) Monthly activity reports including savings reports, organized by Weston
location, designed with Weston input to enable Weston personne1 better
manage travel costs; and
(c) Participation with Weston in negotiations with trave1 service
provider/vendors in order to obtain to the fullest extent possible
improved service levels and applicable trave1 fare, automobile rental
and lodging discounts and rebates.
2. Personnel InterCorp will provide and maintain personnel appropriately
qualified and skilled with the necessary training to perform the Services,
including staff support, office space and related facilities, and will make
such personnel reasonably available in order to meet Weston's needs for the
Services.
3. InterCorp Compensation. As compensation for the Services, InterCorp
will be entitled to payments from Weston throughout the term of this Agreement
in amounts and at intervals to be determined as follows:
(a) Management Fee. An annual management fee (the "Annual Fee") will be
paid in equal monthly installments (except for the February, 1996
installment which shall be doubled to reflect payment for January,
1996), based upon the anticipated base level of travel activity for the
year in respect of which the Services are provided, as mutually
determined by Weston and InterCorp (the "Annual Base Activity Level").
For the initial three years of the term of this Agreement, the amount
of the Annual Fee shall be $550, 000.
(b) Commission Offset. All commissions, fees and other payments received
by InterCorp from any travel service vendor/provider in respect of
Weston-related travel ("Third-Party Commissions") will serve as an
offset to the Annual Fee, up to the aggregate amount of the Third-Party
Commissions paid in respect of the initial $3.5 million of air travel,
plus all vehicle rental, lodging and other commissions related to such
travel (the "Maximum Offset Amount"). Any Third-Party Commissions in
excess of the Maximum Offset Amount will be shared between the parties
as provided in Section 4 hereof. Commission payments to InterCorp will
be reported to Weston on a monthly basis, and InterCorp will, in
applying the offset to the
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Annual Fee, advise Weston to reduce the next monthly fee payment by an
amount equal to the Third-Party Commissions received by InterCorp for the
preceding month. InterCorp will use its best efforts promptly to collect all
outstanding Third-Party Commissions payable to it; provided, however, that
there wi11 be excluded from the Maximum Offset Amount any Third-Party
Commission paid or payable in respect of services provided prior to January 1,
1996.
(c) Adjustment Payment. In addition to the foregoing, Weston at the time
of execution of this Agreement will make a one-time payment to
InterCorp in the amount of $20,000 in consideration of the
establishment of the revised arrangements contemplated by this
agreement.
(d) Maximum Return to InterCorp. Notwithstanding any provisions in this
Agreement to the contrary, in no case will InterCorp's pre-tax net
return on gross revenues received in respect of Weston travel exceed
three percent, measured on annual basis for each year of the term of
this Agreement (the "Maximum Annual Return"). Gross Revenues are
defined as the Annual Fee, excess commissions and other fees earned by
InterCorp respecting Weston travel. To the extent such return exceeds
the Maximum Annual Return in any such year, the excess shall be
promptly repaid to Weston or credited against the Annual Fee payable in
respect of the following year. InterCorp hereby represents and warrants
to Weston that its expenses (including compensation expenses)
throughout the terms of this Agreement will be reasonable, and
InterCorp's annual financial statements will be subject to the
provisions of Section 6 hereof.
4. Gain Sharing Incentives. In an effort to maximize opportunities to
promote cost savings and service enhancements and efficiencies for Weston
travelers, in excess of the maximum offset amount the parties will share in the
manner hereinafter set forth the following elements associated with the
Services:
(a) Third-Party Commissions in excess of the Maximum Offset Amount which
are earned in respect of travel in excess of the Annua1 Base Activity
Leve1 contemplated by Section 3 of this Agreement wi11 be shared in the
ratio of 40% to Weston and 60% to
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InterCorp for the first $1 million of such excess, and in the ratio of 20%
to Weston and 80% to InterCorp thereafter;
(b) Fare rebates resulting from negotiated arrangements with travel
service vendor/providers over the term of the Agreement will be shared in the
ratio of 80% to Weston and 20% to InterCorp; provided, however, that Weston
shall have both the authority and the obligation to specify the alternative of
(i) rebates or (ii) discounts as the principal objective in InterCorp' s
negotiation of fare or charging structures with travel service vendor/providers;
and
(c) Third-Party Commissions from new sources negotiated over the term
of the Agreement (e.g., commissions on rental vehicles or lodging booked at a
"government" rate) will be shared in the ratio of 50% to each party.
5. Cash Flow Management Procedures. InterCorp will use its best efforts
in effecting travel arrangements on behalf of Weston travelers to reduce or
minimize to the fullest extent practicable the time interval between the
payment by Weston of travel costs advanced on behalf of a Weston client and the
reimbursement of such costs by the client (or receipt of credit in the case of
cancellation) or of such cost by Weston for its own account and the time of the
travel (or receipt of credit in the case of cancellation).
6. Records and Inspection. InterCorp will maintain complete and accurate
records sufficient to reflect the payment of all Third-Party Commissions and
travel rebate and discounts. Such records will be preserved for a period of at
least three years after the end of the year to which they relate. InterCorp
will permit an independent third party selected by Weston upon reasonable
request, to have full access to such records for the purposes of verifying the
reports submitted by InterCorp to Weston and InterCorp's annual pre-tax net
return as contemplated by Section 3 hereof.
7. Most Favored Client Status. If at any time and from time to time during
the term of this Agreement Intercorp obtain from travel vendor/providers on
behalf of one or more of its clients other than Weston, in circumstances or
situations comparable to those of Weston travelers, terms and conditions
(economic or other) more favorable than those then in
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effect for Weston, InterCorp will use its best efforts to obtain
comparable terms and conditions for Weston and will promptly advise Weston of
any refusal by or limitation imposed by any vendor/provider in extending to
Weston any such more favorable terms and conditions. In addition, InterCorp
will not use the volume and/or terms of travel arrangements effected on behalf
of Weston travelers as a basis for extracting concessions from travel service
vendors/providers for or on behalf of other InterCorp clients, nor will
InterCorp provide services comparable in scope or volume to those provided to
Weston to such clients on terms more favorable than those arranged for or
extended to Weston and/or Weston travelers.
8. Weston Oversight. Management oversight and responsibility for travel
services at Weston, including the Services and the Weston-InterCorp
relationship, will be concentrated in a single individual designated by
Weston's Chief Executive Officer and approved by InterCorp.
9. Terms and Termination. The term of this Agreement shall be deemed to
have commenced as of January 2, 1996 and will extend for three years,
terminating on December 3l, 1998, unless renewed for an additional period by
agreement of the parties prior to such date.
10. Annual Review. The parties hereby acknowledge that any material
modification or changes made in this Agreement and an analysis of the quality
of the services provided by InterCorp hereunder will be the subject of an
annual report to be made by Weston management to the Audit Committee of the
Board of Directors of Weston throughout the term of this Agreement.
11. Miscellaneous.
(a) Communications. All notices, requests, demands and other
communications hereunder hall be in writing and shall be deemed to have been
duly given (i) if personally delivered, (ii) sent by facsimile transmission
(with transmission confirmed), (iii) sent by overnight courier (with delivery
confirmed) or (iv) mailed by United States first-class, certified or registered
mail, postage prepaid, to the other party at the following addresses (or at such
other address as shall be given in writing by either party to other):
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(i) If to InterCorp, to:
International Corporate Travel Services, Inc.
P. O. Xxx 000
Xxxxxx, XX x0000
Fax No.: 000-000-0000
Attention: Xx. Xxxxxxxxx Xxxxxx,
President
(ii) If to Weston, to:
Xxx X. Xxxxxx, Inc.
Xxx Xxxxxx Xxx
Xxxx Xxxxxxx, XX 00000
Fax No. 000-000-0000
Attention : Xxxxxx X. Xxxxxx
(b) Successors and Assigns. This Agreement and all rights granted and
obligations created hereby will bind and inure to the benefit of the
parties hereto and their respective successors and assigns.
(c) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Pennsylvania applicable
to agreements made and to be performed wholly within such jurisdiction,
without regard to the conflicts of laws provisions thereof.
(d) Headings. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference,
and shall not constitute part of this Agreement, nor shall they affect
its meaning, construction or effect.
(e) Amendment and Waiver. Weston and InterCorp may by mutual written
agreement amend this Agreement in any respect, and each may also extend
the time for or waive the performance of any of the obligations of the
other. To be effective, any such
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amendment or waiver must be signed by an authorized representative of the
party against whom enforcement of the case is sought.
(f) Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be termed an original and all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of
the date first above written.
INTERNATIONAL CORPORATE TRAVEL
SERVICES, INC.
By: /s
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Xxxxxxxxx Xxxxxx
President
XXX X. XXXXXX, INC.
By: /s
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Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
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