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EXHIBIT 10.36
HCC PARTICIPANT AGREEMENT
This Agreement (the "Agreement") is entered into by and between THE
HOTEL CLEARING CORPORATION, a Delaware corporation ("HCC"), and CHOICE HOTELS
FRANCHISING, INC. ("Participant"), to be effective the 1st day of December,
1997.
SECTION 1. DEFINITIONS
1.1 For purposes of this Agreement, the following definitions
shall apply:
(i) Commissionable Reservations. Commissionable
Reservations within a particular time period equals
the number of reservations (both voice and
electronic) processed through the HCC System within
such time period that are identified as
"commissionable" or "partially commissionable" on the
transaction records provided by Participant to HCC
and for which a travel agent commission is paid
pursuant to this Agreement.
(ii) HCC System. The HCC System is HCC's automated
clearinghouse system to provide for the coordination
of reservation information, transfer of hotel
reservation commissions and ancillary services to
Travel Agents and Participating Entities.
(iii) Participating Entity. A Participating Entity is an
operator of a hotel reservation system that has
executed a HCC Participant Agreement.
(iv) HCC Travel Agents. An HCC Travel Agent is a travel
agency who has executed an HCC Subscriber Agreement.
A list of current HCC Travel Agents will be
periodically provided by HCC to Participant.
(v) HCC Travel Agent Commissions. HCC Travel Agent
Commissions are the commissions paid by Participant
to HCC Travel Agents pursuant to this Agreement. HCC
Travel Agent Commissions will be based on commission
rates provided by Participant to HCC.
SECTION 2. THE HCC SYSTEM
2.1 Duties of HCC. HCC will provide and operate the HCC System
for the use and benefit of Participant, its franchisees and
affiliates, and other Participating Entities. HCC will
provide all reasonable and necessary technical support,
* Confidential Treatment Requested by Pegasus Systems, Inc.
INFORMATION CONTAINED IN THIS AGREEMENT HAS BEEN OMITTED SUBJECT TO A
CONFIDENTIAL TREATMENT REQUEST AND HAS BEEN FILED SEPARATELY WITH THE
COMMISSION.
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hardware and software, except as otherwise provided herein,
and modifications to the HCC System to provide clearinghouse
services to Participant and its franchisees and affiliates as
described below. Upon compliance with the terms of this
Agreement by Participant, its franchisees and affiliates, and
subject to Section 5 hereof, HCC will provide the following
clearinghouse services to Participant and its franchisees and
affiliates:
(i) identify Participant to travel agents as being a HCC
System Participating Entity;
(ii) provide billing statements for * costs and expenses
to Participant no laterthan the fifteenth (15th)
business day after the end of each month as provided
in Section 3 below;
(iii) distribute collected HCC Travel Agent Commissions
received from Participant and its affiliates and
franchisees to the appropriate HCC Travel Agents as
set forth in the HCC Travel Agent Commission
information provided by Participant;
(iv) provide no later than the fifteenth (15th) business
day of each month reports to Participant and HCC
Travel Agents reflecting HCC Travel Agents'
reservation transactions with Participant and HCC
Travel Agent Commissions owed based upon the data
provided to HCC by Participant and its affiliates and
franchisees who are participating in the HCC System;
and
(v) provide telephone customer support services from 8:00
a.m. to 5:00 p.m., U.S. Central time, Monday through
Friday, exclusive of legal holidays.
The procedures of the HCC System are subject to changes for enhancements from
time to time as determined by HCC, provided that no such changes will have a
significant adverse impact on the clearinghouse services described above.
2.2 Duties of Participant. Participant shall diligently and in
good faith do the following:
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(i) Cooperate reasonably with HCC personnel with respect
to the implementation of the HCC System between HCC
Travel Agents and Participant and its affiliates and
franchisees;
(ii) Provide HCC with all that is reasonably required by
HCC to process all reservations (including all
reservations made electronically or by voice, through
the use of a central reservation "800" phone number,
inclusive of no-shows, cancellations and
non-commissionable transactions) made by HCC Travel
Agents with Participant and, subject to 2.2(iv), its
affiliates and franchisees no less often than on a
semi-monthly basis such data being complete and
accurate to the best of Participant's knowledge and
ability and inclusive of all of the information to
permit HCC to provide the clearinghouse services
described in Section 2.1 hereof and, without
limitation, being such information as set forth on
Exhibit A hereof; and permit and authorize HCC to
obtain and use such data concerning such reservations
made with Participant and, subject to 2.2(iv), its
affiliates and franchisees except such data
designated as confidential pursuant to Section 7
hereof. The foregoing shall be subject to receipt by
Participant from HCC of the instructions,
specifications, directions, information, assistance,
and cooperation reasonably required by Participant to
provide the foregoing.
(iii) Pay, pursuant to this Agreement, all Travel Agent
Commissions reported to HCC for processing pursuant
to this Agreement within two (2) business days of
receipt of the billing statement described in Section
3.4 hereof;
(iv) Use its reasonable efforts to cause each of its
franchisees and affiliates to fully and timely
participate in the HCC System pursuant to this
Agreement;
(v) Permit HCC to use its name as an entity participating
in the HCC System.
2.3 Modification or Enhancement of the HCC System or Participant
System. HCC may in its sole discretion modify the operation
or enhance the capability of the HCC System, and Participant
agrees to cooperate reasonably with HCC to the extent
reasonably necessary to effectuate modifications and
enhancements of the HCC System. If Participant determines
that such modification or enhancement is likely to require
Participant to make significant modifications to its central
reservation system (any such modifications to be at
Participant's sole expense), HCC will provide at least ninety
(90) days' prior notice to Participant of such modification or
enhancement and Participant may, at its option, terminate this
Agreement upon sixty (60) days notice to HCC.
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SECTION 3. FEES, COSTS, AND PAYMENTS
3.1 Fees for Processing HCC Travel Agent Commissions.
(a) For the first 50,000 Commissionable Reservations
processed each month, Participant shall pay HCC a
transaction fee ("HCC Transaction Fee") each month of
U.S. * processed. For any month wherein the total
of Commissionable Reservations is * shall be due *
for each such Commissionable Reservation over 50,000
but less than 75,000.
(b) For each Commissionable Reservation * processed
each month, * each month (the * as follows:
For any month wherein the total of Commissionable
Reservations processed are * for each
Commissionable Reservation between *
For any month wherein the total of Commissionable
Reservations processed are * for each
Commissionable Reservation between *
For any month wherein the total of Commissionable
Reservations processed are * for each
Commissionable Reservation between *
For any month wherein the total of Commissionable
Reservations processed are * for each
Commissionable Reservation * ;and
Provided however, notwithstanding the preceding
provisions of this 3.2(b), the total * paid per
month shall * There are *
3.2 Commission Payments. HCC shall pay HCC Travel Agent
Commissions in the travel agent's local currency or the
currency requested by the travel agency. All travel agent
commission payments which have not been negotiated by a travel
agent ("Returned Commission Payments") shall be returned (less
the HCC or Participant Transaction Fee) to Participant by July
31 of each year for those Returned Commission Payments which
were transmitted in the latter half of the immediately
preceding year and by December 31 of each year for those
Returned Commission Payments which were transmitted during the
first six (6) months of that year. Upon payment to
Participant of the Returned Commission Payments, Participant
shall be solely and exclusively responsible for complying with
all laws and regulations relating to the treatment of such
returned funds.
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3.3 Disputed Commissions. HCC will provide Participant and HCC
Travel Agents with periodic reports indicated under Section
2.1(iv) that will indicate any exceptions to HCC Travel Agent
Commissions, based on discrepancies between information given
HCC by Participant compared to other information available to
HCC. With respect to all exceptions as to which Participant
provides supporting documentation, HCC will forward such
documentation to the appropriate HCC Travel Agent(s), and the
HCC Travel Agents involved may pursue such dispute directly
with Participant('s) franchisees, but HCC will not have any
liability to either Participant or any travel agent (HCC or
non-HCC) with respect to the resolution of any disputed
commission. No dispute concerning any travel agent
commissions will in any way affect or reduce the obligations
of Participant to (i) timely pay all other HCC Travel Agent
Commissions reported to HCC for processing and (ii) timely pay
to HCC all Transaction Fees and other fees, costs and
additional expenses owed by Participant under this Agreement;
nor shall any such dispute in any way affect or reduce the
obligations of HCC to timely pay Participant all Participant
Transaction Fees due under this Agreement.
3.4 Billing Statements. Based upon the information provided HCC
by or with respect to Participant pursuant to Section 2.2,
above, HCC will provide Participant a monthly billing
statement detailing (i) HCC Travel Agent Commissions to be
paid by Participant for the period covered by such billing
statement; (ii) HCC Transaction Fees to be paid by
Participant, based on Commissionable Reservations for the
period covered by such billing statement; (iii) * and (iv)
all other costs and fees owed by Participant pursuant to this
Agreement. All fees and costs shall be paid in U.S. dollars.
SECTION 4. TERM
4.1 Term of Agreement. The initial term of this Agreement shall
begin on the effective date set forth at the beginning of this
Agreement and, unless earlier terminated pursuant to the
provisions of this Agreement, shall expire on the last day of
the sixtieth (60th) month after the date of this Agreement.
However, this Agreement will be automatically renewed and
extended for additional twelve (12) month periods unless, at
least sixty (60) days prior to the expiration of the initial
term of this Agreement or any additional twelve (12) month
period, either party provides written notice to the other of
its decision not to renew and extend.
SECTION 5. TERMINATION
5.1 Termination Upon Default. Upon the occurrence of an Event of
Default (as defined below) by either party and the failure of
such party to cure such default
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after notice and opportunity to cure as provided by Section 6.3
below, the nondefaulting party may terminate this Agreement at
any time.
5.2 Suspension of Status. Upon the occurrence of an Event of
Default by Participant and the failure of Participant to cure
such default after notice and opportunity to cure as provided
by Section 6.3 below, then, if HCC does not terminate this
Agreement under Section 5.1, until such time as such Event of
Default is cured HCC shall have the right to suspend the
status of Participant as a Participating Entity and to notify
all HCC Travel Agents of such default and suspension through
central reservation systems or otherwise.
SECTION 6. DEFAULT
6.1 Events of Default. Subject to Section 6.2 below, any one of
the following will be considered an Event of Default:
(i) The failure of either party to pay any amount due
hereunder within the time required;
(ii) The failure of Participant or HCC to satisfy the
obligations set forth in this Agreement;
(iii) The refusal or failure of either party to perform
diligently and in good faith each and every material
provision of this Agreement;
(iv) The commencement by either party of a voluntary case
under Chapter 11 or 7 of the United States Bankruptcy
Code, as from time to time in effect, the
commencement against either party of an involuntary
case under said Chapter 11 or 7, either party seeking
relief as a debtor under any applicable law, other
than said Chapter 11 or 7, of any jurisdiction
relating to the liquidation or reorganization of
debtors or the modification of the rights of
creditors, the entry of a court order adjudging the
party bankrupt or insolvent, ordering its liquidation
or reorganization or assuming custody or appointing a
receiver or other custodian of its property, or its
making an assignment for the benefit of, or entering
into a composition with, its creditors.
Any such Event of Default shall not relieve the defaulting party from any
of its obligations hereunder, and the non-defaulting party shall, except as
provided in this Agreement, be entitled to whatever remedies at law or in
equity are available to it.
6.2 Force Majeure. It will not constitute an Event of Default if
such event listed in Section 6.1 is caused by or results from
acts of God, fire, war, civil unrest, accident, power
fluctuations or outages, telecommunication fluctuations,
outages or delays, utility failures, mechanical defects, or
other events beyond the control of the defaulting party.
However, if any such occurrence results in any of the events
described in Section 6.1, and the same continues for more than
thirty (30)
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consecutive days, either party may terminate this Agreement
by providing notice as required herein.
6.3 Cure Period. Upon the occurrence of an Event of Default, the
non-defaulting party will give written notice to the
defaulting party specifying the alleged default. In the case
of a monetary default by either party, the defaulting party
will only be allowed to cure such default within two (2)
business days after receipt of such notice, by delivering that
amount owed to HCC in good funds into the non-defaulting
party's bank account. In all other instances, the defaulting
party will be entitled to fifteen (15) days from receipt of
notice within which to cure the default.
SECTION 7. CONFIDENTIALITY
7.1 Proprietary Information. During the term of this Agreement,
it is acknowledged by Participant and HCC that each may
receive confidential and proprietary information that is the
property of the other party. All such confidential and
proprietary information will be marked or otherwise identified
as such and will be treated as confidential and proprietary
subject only to disclosure where required by law. Such
designation may be removed by each party making the
designation. Participant acknowledges that it will have no
access to and will not use the HCC System or related property,
other than as specifically provided for in this Agreement, and
that such system and related property is confidential and
proprietary property of HCC. Any use of HCC service marks or
trade names by Participant is subject to prior written
approval of HCC, provided, that Participant may describe the
HCC System contemplated by this Agreement in its franchise
offering circular and other materials as required by state or
federal law. Unless otherwise provided herein, any use of
Participant's service marks or trade names by HCC is subject
to prior written approval of Participant. The provisions of
this Section 7.1 will remain binding and in force and effect
as long as such information remains confidential (other than
by breach of this Agreement), notwithstanding the expiration
or termination of this Agreement at any time. Except as is
necessary in connection with the performance of this Agreement
and HCC's business, information regarding the reservations and
other transactions of Participant processed by HCC shall be
treated as confidential whether or not so marked or otherwise
identified as confidential.
SECTION 8. INDEMNIFICATION
8.1 Indemnification in the Event of Certain Losses. Participant
agrees to indemnify and hold harmless HCC and HCC's
affiliates, directors, officers, employees and stockholders,
from and against any losses, claims, liabilities, damages or
expenses (including reasonable attorney's fees) occurring as a
result of or arising out of a material breach of this
Agreement on account of Participant's (or its franchisees)
fault, to the extent not caused by the fault of HCC ("HCC's
Losses"). HCC agrees to indemnify and hold harmless
Participant, and Participant's affiliates, directors,
officers, employees and stockholders, from and
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against any losses, claims, liabilities, damages or expenses
(including reasonable attorney's fees) ("Participant's
Losses") occurring as a result of or arising out of a material
breach of this Agreement on account of HCC's fault to the
extent not caused by the fault of Participant. Promptly after
receipt by an indemnified party of notice of the commencement
of any action or the presentation or other assertion of any
claim which could result in any indemnification claim pursuant
to this Section 8.1, such indemnified party will give prompt
notice thereof to the indemnifying party and the indemnifying
party will be entitled to participate therein or, to the
extent that it wishes, assume the defense thereof with its own
counsel. If the indemnifying party elects to assume the
defense of any such action or claim, the indemnifying party
shall not be liable to the indemnified party for any fees of
other counsel or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof,
other than reasonable costs of investigation and preparation,
unless representation of both parties by the same counsel
would be inappropriate due to actual or potential differing
interests between them. The parties agree to cooperate to the
fullest extent possible in connection with any claim for which
indemnification is or may be sought under this Agreement.
Whether or not the indemnifying party elects to assume the
defense of any such action or claim, the indemnifying party
shall not be liable for any compromise or settlement of any
such action or claim effected without its consent (which shall
not be unreasonably withheld).
SECTION 9. DISCLAIMER OF WARRANTIES
9.1 Waiver of Warranties. EXCEPT TO THE EXTENT RESULTING FROM
HCC'S BREACH OF THIS AGREEMENT OR ITS GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT, HCC WILL NOT BE RESPONSIBLE OR LIABLE FOR
ANY FALSIFICATIONS OR INACCURACIES IN THE DATA OR THE
INFORMATION PROCESSED BY OR THROUGH THE HCC SYSTEM NOR WILL IT
HAVE ANY LIABILITY FOR ANY ACT OR FAILURE TO ACT WITH RESPECT
TO THE DATA OR THE PAYMENT OF COMMISSIONS UNLESS EXPRESSLY SET
FORTH HEREIN. ALL WARRANTIES, EXPRESS OR IMPLIED, STATUTORY
OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY, GOOD AND
WORKMANLIKE PRODUCT OR SERVICE OR OTHERWISE, ARE DISCLAIMED BY
HCC AND WAIVED BY PARTICIPANT.
9.2 No Consequential Damages. Except with respect to the
indemnification provisions set forth in Section 8.1 hereof,
neither party will be liable to the other for any
consequential damages caused or resulting from any breach of
this Agreement or arising out of the performance of this
Agreement, and each party hereby expressly waives such
damages.
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SECTION 10. MISCELLANEOUS
10.1 Arbitration of Disputes. Any controversy or claim arising out
of or relating to this contract, or the breach thereof, will
be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. There shall
be a panel of three arbitrators. Each party will select one
arbitrator within thirty (30) days of notice of the dispute,
and the two (2) arbitrators selected shall select a third
neutral arbitrator within thirty (30) days after the second
arbitrator is chosen. All reasonable and necessary costs and
fees (including attorney's fees) incurred in connection with
the arbitration will be borne by the losing party or assessed
in the award as otherwise deemed appropriate by the
arbitrators. If the demand for arbitration is initiated by
Participant, venue of the arbitration proceedings will be
determined by HCC. If the demand for arbitration is initiated
by HCC, venue of the arbitration proceedings will be
determined by Participant.
10.2 Non-Exclusive Agreement. Each party acknowledges that this is
not an exclusive agreement with respect to reservations
commissions clearinghouse services and that each party may
contract with other parties providing same or similar
services.
10.3 Status of Parties. This Agreement will not constitute a
partnership, joint venture or similar arrangement. The
parties hereto are separate and distinct entities
independently contracting with each other at arms length. HCC
will not be deemed by this Agreement to be granting a license
to Participant with respect to the HCC System or any software
or service xxxx related thereto, or otherwise, this being a
contract for the use and rendering of services only.
10.4 Assignment. This Agreement is not assignable by HCC or
Participant without the prior written consent of the
non-assigning party, and such consent shall not be
unreasonably withheld or delayed provided that Participant may
assign this Agreement to a wholly-owned subsidiary or in
connection with the sale of its reservation system or
franchise system and either party may assign this Agreement
without consent in the event of a merger, consolidation, or
sale of substantially all of its assets.
10.5 Notices. All notices and other communications contemplated
hereby must be in writing (except in the case of
electronically transmitted data) and (a) personally delivered,
(b) deposited in the United States mail, first-class,
registered or certified mail, return receipt requested, with
postage prepaid, (c) sent by overnight courier service (for
next business day delivery), shipping prepaid, (d) sent by
telecopy or facsimile with confirmation of receipt to the
number indicated, or (e) transmitted directly to the recipient
by electronic data transmission pursuant to arrangements made
between the parties. Such notices and other communications
(except in the case of electronically transmitted data) shall
be addressed as follows:
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If to HCC: If to Participant:
0000 Xxxxxx Xxxxx Xxxx. 00000 Xxxxxxxx Xxxx
Xxxxx 0000 Xxxxxx Xxxxxx, XX 00000
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxx, III Attn: General Counsel
If by telecopy/facsimile to: If by telecopy/facsimile to:
000-000-0000 000-000-0000
cc: Xxxx Xxxxx
or such persons or addresses as any party may request by
notice duly given hereunder. Except as otherwise specified
herein, notices will be deemed given and received when
received.
10.6 Controlling Law. This Agreement will be interpreted pursuant
to the laws of the State of Texas without reference to its
conflict of laws principles. Subject to the agreement to
arbitrate and the jurisdiction and venue provisions set forth
in Section 10.1 hereof, any action brought relating to or
arising out of this Agreement must be brought in the state or
federal courts situated in the county and state of the
residence or principal place of business of the party against
whom the action is brought (or any of them, if more than one).
10.7 Entire Agreement. This Agreement and the Exhibits attached
hereto constitute the entire agreement between HCC and
Participant with respect to the provision of services under
the HCC System and supersedes and replaces any and all other
agreements and representations, verbal or written, with
respect to the subject matter of this Agreement. Upon full
execution of this Agreement, that certain HCC Participant
Agreement between HCC and Choice Hotels International, Inc.
effective March 31, 1995 and any amendments thereto is hereby
terminated. There are no representations, warranties or
agreements made or relied upon by either party with respect to
the subject matter of this Agreement that are not contained in
this Agreement.
10.8 Successors and Assigns. This Agreement will be binding upon
and will inure to the benefit of the legal representatives,
successors and duly authorized assigns of each party whether
resulting from merger, acquisition, reorganization or
assignment pursuant to the terms hereof.
10.9 Confidentiality of the Agreement. The parties agree that the
terms and provisions of this Agreement will be kept
confidential and shall be disclosed only to those persons and
entities as required by law or as permitted by the other party
hereto. The parties may, however, disclose the existence of
this Agreement to any person or entity.
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AGREED to as of the date first written above.
THE HOTEL CLEARING CORPORATION CHOICE HOTELS FRANCHISING, INC.
By: /s/ M. Xxxxxxxx Xxxx By: /s/ Bay X. Xxxxx
------------------------- ------------------------
Its: Its:
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EXHIBIT A
Initial Information to be Provided by Participant to HCC
The fields in each commission record are the following:
-Record identifier required validated
-Chain record number required check for duplicates
-Chain/Brand code required validated
-Booking source required validated
-Property ID required validated
-PNR Number optional no checks
-Confirmation number required validated presence
-Cancellation number optional no checks
-Corporate ID number optional no checks
-Subscriber IATA number required validated HCC User
-Group/Guest last name required validated presence
-Group/Guest first name optional no checks
-Status code required validated
-Reason code optional if present, validate
-Arrival date required validated, no future
-Departure date required validated, no future
-Number of nights required validated presence
-Number of rooms required validated presence
-Commissionable revenue required validated, no neg.
-Gross Commission required validated, no neg.
-Adjustment amount required validated presence
-Net Commission due required validate computation
-Currency code required validated
-Comments optional no checks
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