5/13/92
AMENDED AND RESTATED
PREFERRED VENDOR AGREEMENT
THIS AMENDED AND RESTATED PREFERRED VENDOR AGREEMENT is made effective as
of the 15th day of May, 1992 by and between Holiday Inns, Inc. ("HII") and
Encore Systems, Inc. ("Vendor") as an amendment to and complete restatement of
that certain Preferred Vendor Agreement between the parties hereto executed on
August 23, 1991 (the "Original Agreement").
WHEREAS, Vendor is in the business of providing automated computerized
property management systems to hotels such as the hotels owned, managed or
licensed by HII, Holiday Inns Franchising, Inc. or Affiliates (as that term is
defined herein); and
WHEREAS, Vendor desires to provide current and future hotels owned, managed
or licensed by Holiday Inns, Inc., Holiday Inns Franchising, Inc. or their
Affiliates (such hotels are referred to individually as a "Hotel" and
collectively as the "Hotels") with its property management system software by
licensing certain software and providing certain services to those Hotels and by
developing software to allow Vendor's property management system to interface
with Holidex and with certain third party systems so as to provide capabilities
to Hotels that are currently provided by HII's Hotel Management System (HMS) and
Basic Front Desk System (BFDS); and
WHEREAS, HII is willing to provide certain interface specifications to
Vendor and utilize Vendor's property management systems at Hotels pursuant to
the terms and conditions of this Agreement;
WHEREAS, HII intends to implement a program whereby HII will provide the
Hotels with a basic Property Management System, including Vendor's property
management system software and certain computer hardware and devices, and HII
desires for Vendor to provide maintenance, training and support for such
software.
NOW THEREFORE, for good and valuable consideration, including the
additional covenants and obligations of each party created under this amendment
to the Original Agreement, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
1.1 ACCEPTANCE TEST/CERTIFICATION. HII's criteria for evaluating and
approving interfaces for use with Holidex. Each specification delivered to
Vendor will include the Acceptance Test/Certification criteria for the software
to be developed pursuant to the specification. Such criteria may be modified
from time to time by HII within its reasonable discretion. The test procedures
are outlined on Exhibit 1.1.
1.2 AFFILIATE. Any person or entity that directly or indirectly controls,
is ultimately controlled by, or is under common control with HII or Holiday Inns
Franchising, Inc., the parent entity or ultimate group parent of either such
corporation (or the successors of either such corporation), as well as any
partnership, joint venture or other business organization in which HII or
Holiday Inns Franchising, Inc. or any person or entity that directly or
indirectly controls, is ultimately controlled by, or is under common control
with HII or Holiday Inns Franchising, Inc., the parent entity or ultimate group
parent of either such corporation (or the successors of either such corporation)
is the general partner, the holder of a majority of the limited partnership or
other equity interests, or a joint venturer. For purposes of this Section 1.2, a
person or entity shall be deemed to control another person or entity (and the
persons or entities which it controls) if:
(a) It holds at least twenty percent of the outstanding shares of voting
stock (or securities convertible into at least twenty percent of the
outstanding shares of voting stock);
(b) It has the ability to elect at least one-third of the members of the
Board of Directors or other governing body of the entity; or
(c) It has the right or ability to control or directly influence the
management activities or objectives of the entity.
The term "Affiliate" shall also mean any third party engaged by HII or any other
Affiliate to provide installation, training, or implementation with respect to
the System Software.
1.3 BASIC PMS SYSTEM. The hardware, software and services provided to the
Hotels by HII, or which the Hotels are required by HII to obtain, including
Vendor's front desk system software, One Way Interface, the Two Way Interface
(as those terms are defined herein), an approved Point of Sale interface, an
approved
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Call Accounting interface and support services. The Basic PMS System is more
particularly described on Exhibit 1.3.
1.4 HOLIDAY INN TELECOMMUNICATIONS NETWORK. A system of the computerized
hardware, software, satellite equipment and services, as may be modified from
time to time, owned or licensed to Holiday Inns, Inc. or its Affiliate,
including but not limited to the Holidex Reservation System. For purposes of
this Agreement, the Holiday Inn Telecommunications Network shall be referred to
as "Holidex". Holidex capabilities include, but are not limited to, the handling
of reservations (recording, modifying and cancelling), electronic funds
transfers, credit authorizations, and travel agent commission payments.
1.5 MIP (MULTIPLE INTERFACE PROCESSOR). Software owned by HII that enables
approved third party hotel automation systems to interface with certain LAN
based property management systems at Hotels so that data can be sent and
received by each system in usable form.
1.6 ONE WAY INTERFACE. A two-way communications link between Holidex and
Vendor's system that enables data to be transferred from Holidex to Vendor's
systems in a form that is usable by Vendor's System. The specifications for the
One Way Interface will be developed by HII.
1.7 PMS SOFTWARE. Vendor's Front Desk System Software, including DB/C, as
more particularly described on Exhibit 1.3.
1.8 PREFERRED VENDOR. A vendor of software, hardware and services that
meets and maintains HII requirements as set forth in this Agreement, including
software development and support requirements and HII's Customer Service
Standards. HII's Customer Service Standards are set forth on Exhibit 1.8.
1.9 REVENUE AND OCCUPANCY TRANSMISSION. Daily transmission of a data file
containing revenue and occupancy information which is produced by the night
audit process in a format specified by HII.
1.10 ROLLOUT. HII's implementation of its plan to provide a Basic PMS
System to existing Hotels, commencing on or about June 1, 1992 and continuing
thereafter for a period of approximately 28 months.
1.11 SYSTEM SOFTWARE. The Vendor software included and to be included in
the Basic PMS System distributed to the Hotels and Affiliates by HII, including
PMS Software and the interfaces and software to be developed by Vendor pursuant
to this Agreement.
1.12 THIRD PARTY INTERFACE. A two-way communications link between Vendor's
system and other vendors' systems that provide
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additional automation to hotel operational functions (e.g. Point of Sale
systems, in-room movie systems, credit card readers, energy efficiency systems).
Such Third Party Interface will enable data to be transferred to and from
Vendor's system and the third party systems in usable form.
1.13 TWO WAY INTERFACE. A two-way communications link between Holidex and
Vendor's system that enables data, including but not limited to detailed
checkout data and inventory updates data, to be transferred to and from Holidex
in a form that is usable by Holidex and by Vendor's system. Time frames for
HII's delivery of the specifications for Phase I of the Two Way Interface (for
Data Collection/Detailed Checkout) and for the joint development of the
specifications for Phase II of the Two Way Interface (for Inventory Updates) are
set forth in Article IV.
1.14 SEAMLESS INTERFACE. A communications link between Holidex and Vendor's
system that enables all required functions to be performed, including, but not
limited to, the functions performed by the Two Way Interface, and that
eliminates any and all bridging between Holidex and Vendor's system.
ARTICLE II
PURPOSE
The parties understand and agree that this Agreement has been entered into
for the two separate but related purposes described below.
2.1 PMS SYSTEM: ROLLOUT. Vendor will assist HII with the Rollout and the
distribution of the System Software by making available to HII the System
Software and services to be included within the Basic PMS System to be provided
to the Hotels by HII, and by establishing the terms and conditions pursuant to
which Vendor and HII will provide training, installation and support services to
HII and the Hotels throughout the term of this Agreement. Under this Agreement,
the above described services and assistance by Vendor shall relate to hotels
located in the United States, Canada and Mexico.
2.2 SOFTWARE DEVELOPMENT. Vendor will develop software to interface with
only certain parts of Holidex as specified by HII and only those functions that
HII may specifically provide for in this Agreement. This Agreement sets forth
the terms and conditions upon which HII will (i) supply specifications to allow
Vendor to create the interface software which will become a part of the Basic
PMS System, (ii) consult with Vendor in the development of its software, and
(iii) test and certify such software for use with Hotels.
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Vendor understands and agrees that Holidex is not only one of the most
advanced systems in the hotel industry but that it represents a substantial
investment on the part of HII and is in fact one of the primary features that
gives value to the Holiday Inn hotel license. Vendor also understands and
agrees that the integrity and proper functioning of Holidex is of the utmost
importance to HII and that damage to Holidex caused by the interconnection
and/or operation of other software or computers could cause severe financial
and other harm to HII's business. For this reason, HII will not allow such
interconnection without prior testing and written certification by HII of
the interface software.
Vendor understands that HII has not previously developed the Two Way
Interface and other specifications or testing methods being provided hereunder
and is doing so as an accommodation to Vendor.
ARTICLE III
ROLLOUT AND DISTRIBUTION OF PMS SYSTEM
3.1 GENERAL. This Article III addresses the terms and conditions pursuant
to which HII and Vendor will cooperate to provide HII's Basic PMS System to the
Hotels, including installation and implementation of such system and training of
employees and agents of HII and the Hotels, as well as ongoing support and
maintenance of the System Software.
3.2 DISTRIBUTION OF SYSTEM SOFTWARE. Subject to the terms and conditions
set forth in this Agreement, and in addition to the rights and licenses granted
elsewhere in this Agreement, Vendor hereby grants to HII the perpetual,
exclusive right and license to (i) market and distribute site licenses and
support agreements for the System Software to itself, the Affiliates and the
Hotels, either separately or as a component of the Basic PMS System, and (ii)
copy and distribute to each Hotel and Affiliate which has executed Vendor's site
license agreement, one copy of the most recent version of the PMS Software and
all other System Software, including the software and interfaces developed
pursuant to this Agreement, any software created, licensed or owned by third
parties necessary for the use of the System Software (other than DOS, UNIX or
other operating systems, compilers other than DB/C, Novell or other LAN software
or Holidex), in machine readable object code only and on such media as HII and
the licensee deem appropriate, as well as one or more copies of the user manuals
and support documentation associated therewith, one copy of such manuals and
documentation to be furnished to HII at no additional cost by Vendor. HII
understands that its right to market and distribute the System Software is
limited to HII, the Affiliates and the Hotels and agrees not to market or
distribute the System Software to any other party without the prior approval of
Vendor.
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3.2.1 NUMBER OF SITE LICENSES. HII shall initially be entitled to market
and distribute that number of site licenses as defined and set forth on Exhibit
3.2.1 hereto, and shall be entitled to distribute additional site licenses upon
payment of the additional fees specified therefor on such Exhibit 3.2.1. HII
shall be entitled to distribute copies of the System Software to its Affiliates
involved in the training, installation or implementation of the Basic PMS System
and any copies so distributed shall not be deducted from the number of licenses
which may be distributed by HII without additional payment. Any Affiliate
receiving the System Software for HII shall execute a Site License or similar
agreement appropriately restricting its use to such purposes. Vendor's software
modules not included within the System Software and other software and
interfaces developed by Vendor pursuant to this Agreement may be licensed or
distributed by HII to the Hotels and Affiliates pursuant to the terms of the
Site License (as defined below) and upon the rates set forth in Exhibit 3.2.1.
3.2.2 LICENSE AGREEMENTS. The System Software shall be licensed pursuant to
the terms and conditions contained in Vendor's site license agreement as set
forth on Exhibit 3.2.2 hereto (the "Site License" ). The Site License specifies
the terms and conditions under which an end user receives, holds and uses the
System Software and the associated manuals and support documentation, as well as
the respective obligations of the end user and Vendor. The Site License shall
grant any and all appropriate rights to use software created, licensed or owned
by third parties, other than DOS, UNIX or other operating systems, compilers
other than DB/C, Novell or other LAN software or Holidex, that is necessary for
the use of System Software. Neither Vendor nor HII shall change or modify the
terms of the Site License without the written approval of the other, which
approval will not be withheld unreasonably. Following the approval of any
modified form of Site License, HII shall discontinue its use of the previous
form of license and shall thereafter market and distribute the System Software
only pursuant to the terms of the modified Site License. Vendor agrees to
execute and deliver Site Licenses for the Hotels and HII and the Affiliates upon
request and without payment of any additional consideration therefor.
3.2.3 RESTRICTIONS. HII shall make no representations or warranties to the
Hotels or any third party attributable to Vendor with respect to the System
Software or any other product of Vendor, except for those made expressly by
Vendor in the Site License or Vendor's published user documentation. HII
understands that any modification or addition to the System Software by HII, the
Affiliates or
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any Hotel that is not performed in accordance with Section 4.4 of this Agreement
will void Vendor's warranty for such software. Notwithstanding any provisions of
this Agreement to the contrary, HII agrees that it will not distribute or
license the System Software to any hotel other than hotels which are either
owned or leased by or which use or are licensed to use the proprietary marks or
logos of HII, Holiday Inns Franchising, Inc. or any Affiliate, unless Vendor
approves in advance of the licensing or distribution of the System Software to
such hotel, which approval shall not be unreasonably withheld, conditioned or
delayed.
3.2.4 OPTIONAL RIGHT TO SUBLICENSE TO HOTELS. It is understood and agreed
by the parties hereto that HII does not presently intend to sublicense the
System Software, but will simply be distributing the System Software to the
Hotels for the benefit of Vendor. Nevertheless, Vendor agrees that in the event
HII desires to grant sublicenses to Hotels or Affiliates for the System
Software, HII shall be entitled to do so upon advance notice to Vendor and
provided that the terms and conditions of any such sublicense contain provisions
substantially the same as those in the Site License which protect the
proprietary rights of Vendor and do not expand the scope of Vendor's obligations
beyond that included in the most recent version of the Site License and HII
otherwise complies with the terms and conditions of this Agreement.
3.2.5 CERTIFICATION OF BASIC PMS SYSTEM. Vendor has reviewed the
configuration of the Basic PMS System described on Exhibit 1.3 hereto. Vendor
represents and warrants that the System Software, when properly installed as
part of the Basic PMS System will operate substantially in accordance with the
specifications for the System Software as set forth in the System Highlights
attached as Exhibit 3.2.5 hereto and as provided in the user documentation
provided for such software. The foregoing warranty applies only to the Basic PMS
System as described on Exhibit 1.3 and the equipment listed on the schedule of
equipment set forth in Exhibit 3.2.5, which schedule may be amended from time to
time as the parties both agree, and shall not apply to any additional software
or hardware added to the system without the prior written approval of Vendor.
Except for the above-described certification, Vendor makes no representation or
warranty as to the equipment supplied by anyone other than Vendor.
3.2.6 AUTHORITY. Vendor represents and warrants to HII that it has the
right and the authority to grant to HII, the Affiliates and the Hotels, the
rights and licenses set forth in this Agreement and contemplated by the Exhibits
attached hereto.
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3.3 DELIVERIES. Within ten (10) days following HII's request, Vendor shall
deliver to HII, in machine readable form and on media acceptable to HII (i) two
copies of the complete object code for the PMS Software and those interfaces
that have passed the HII Acceptance Test and have been certified in writing by
HII in a format which will enable HII to generate sufficient copies of
executable versions of the System Software for distribution as contemplated by
this Article III, (ii) one complete copy of the most recent version or edition
of all end user documentation and manuals, and such additional copies of such
materials as HII may request (provided that HII shall reimburse Vendor for its
costs in preparing such copies), and (iii) two complete copies of all training
manuals, materials, tutorials and other documents in Vendor's possession which
are customarily used by Vendor in training new users of the PMS Software. Vendor
will deliver to HII copies of all upgrades, enhancements and modifications to
the System Software, together with one copy of any new or revised user
documentation and other materials described in this Section 3.3, prior to their
approval for general release. Vendor will provide HII with an additional copy of
the user manual, training materials and other items described in this Section
3.3, promptly following each revision or modification thereto by Vendor.
3.3.1 RETROFITTING. The parties recognize that some Hotels have
purchased property management systems from Vendor previously, and that
other Hotels and Affiliates will take delivery of the Basic PMS System from
HII prior to completion of all required interface and software development
being performed by Vendor pursuant to Article IV hereof. At the time of
development completion of each interface or other component of the System
Software, HII shall determine the most efficient manner of distribution of
the newly developed interfaces and software to Hotels and HII and the
Affiliates who have executed Site Licenses for the System Software and such
distribution shall be implemented by Vendor in cooperation with HII as a
part of its software support obligations. All such software distributed to
licensees shall become a part of the "System Software" upon receipt by the
licensee. HII will pay the cost of distribution of the newly developed
interfaces and software (but not upgrades or enhancements to the System
Software) to such Hotels and Affiliates, including telephone expenses if
distribution is accomplished via telephone. Vendor will instruct Hotels and
Affiliates on the proper installation and usage of the software and
interfaces. If on-site visits by Vendor are necessary, as determined by
HII, Vendor will perform such on-site visits and either HII or the Hotels
and Affiliates will be billed according to Exhibit 3.3.1.
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3.3.2 UPGRADES AND ENHANCEMENTS. Pursuant to the Support Agreement to
be entered into by Vendor with each of the Hotels, Vendor will agree to
provide ongoing support and maintenance of the PMS Software and other
System Software developed pursuant to this Agreement. Vendor will provide
HII with advance notice and copies of all upgrades, enhancements and
modifications to the PMS Software and other System Software distributed by
HII or developed by Vendor pursuant to this Agreement, together with any
support documentation associated therewith. Vendor will not distribute such
upgrades, enhancements and modifications to the Hotels and Affiliates until
the same has been evaluated and approved by HII or its designee. If any
upgrades, modifications and enhancements to the System Software are
approved by HII, Vendor will provide HII with two copies of such software
and all associated user documentation therefore, and shall also deliver the
source code and other requisite materials into escrow as provided below.
Distribution to the Hotels and Affiliates of all upgrades, enhancements and
modifications approved by HII shall be performed by Vendor as a part of its
support obligations described in Section 3.5 below; provided, however, that
if such upgrade, enhancement or modification requires on-site installation
or training, Vendor shall provide such services only at the specific
request of HII at the rates set forth in Exhibit 3.3.1. Vendor shall
provide annually a minimum of one upgrade to the System Software.
3.3.3 ESCROW ARRANGEMENT. At the time of execution of this Agreement,
Vendor will place with an escrow agent acceptable to HII, to the extent
such materials are available, copies of all components of the System
Software consisting of the full source code language of each component of
the System Software, including, but not limited to, utilities and
interfaces in magnetic tape or other media specified by HII, together with
complete system programming, maintenance documentation, including, but not
limited to, system documentation describing the interrelationships and
functions of each module and component, and all other necessary and
available information which will enable a reasonably skilled computer
programmer or analyst to reconstruct, maintain, or enhance the System
Software without the aid of Vendor or any other person or reference to any
other materials. Similar materials relating to the interfaces and other
software developed by Vendor pursuant to this Agreement, and all upgrades,
modifications, enhancements and corrective releases shall be delivered to
the escrow agent promptly following acceptance by HII, but no later than
the next quarterly deposit date following the date of general release or
release to the Hotels. The foregoing information and materials are
hereinafter referred to as the "Materials". The Materials will be held in
escrow
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by the escrow agent pursuant to the terms of the escrow agreement in the
form attached as Exhibit 3.3.3 hereto (the "Escrow Agreement"). The escrow
agent may from time to time inspect and test the Materials to ensure that
the Materials are sufficient to allow a reasonably skilled computer
programmer or analyst to reconstruct, maintain, or enhance the System
Software without the aid of Vendor or any other person or reference to any
other materials. If the Materials deposited by Vendor are insufficient for
such purpose, Vendor shall deposit such additional Material as HII or the
Escrow Agent may request, regardless of whether or not such material is
readily available to Vendor or must be specifically created. Upon the
occurrence of any of the events described in Section 2(a) or Section 3 of
Article V of the Escrow Agreement, HII shall be entitled to obtain the
Materials from Vendor (at no cost to HII) or the escrow agent (pursuant to
the terms of the Escrow Agreement), and HII shall be entitled to use the
Materials as it may deem necessary or desirable in order to exercise any of
the rights and benefits afforded to HII, the Affiliates or the Hotels under
this Agreement or the Escrow Agreement. HII will pay the reasonable cost of
maintaining the Materials in escrow and will have title to the copies of
the Materials and full rights to use and license the System Software in
executable code to Hotels and Affiliates upon the occurrence of any of the
events set forth in Section 2(a) or Section 3 of Article V of the Escrow
Agreement; provided, however, in the event HII does license the System
Software, HII shall be required to pay the license fees set forth on
Exhibit 3.2.1 (for additional Site Licenses above the number for which HII
has prepaid), provided that Vendor has continued as a going concern or its
successor continues to fully support the System Software.
3.4 INSTALLATION AND TRAINING. Installation, implementation and training
with respect to the System Software and the Basic PMS System will be performed
either by Vendor or HII (or its subcontractors or other designees) in accordance
with the following procedures.
3.4.1 INITIAL TRAINING BY VENDOR. In addition to services provided by
Vendor pursuant to Sections 3.4.2 and 3.4.4 below, commencing with the
beginning of the Rollout and continuing thereafter through the completion
of the training of HII personnel contemplated by Section 3.4.5 (but in any
event through January 31, 1994), Vendor will install and implement the
Basic PMS System, including the equipment and the System Software, and
train the designated employees of the Hotels and Affiliates in the use of
the Basic PMS System, but only for those Hotels and Affiliates designated
in writing by HII. Vendor acknowledges that such Hotels may consist of (i)
Hotels that were existing Holiday Inn brand
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hotels on March 31, 1992 and obtained the Basic PMS System from HII
pursuant to the Rollout ("Existing Hotels"), (ii) Hotels that become
Holiday Inn brand hotels after March 31, 1992 ("New Hotels"), and (iii)
Hotels that have obtained equipment and PMS Software from Vendor prior
to the date of this Agreement ("Vendor Supplied Hotels") but for which
installation, implementation and training has not yet commenced.
Vendor's installation, implementation and training services shall
include those services described in Exhibit 3.3.1 hereto and comply with
HII's service standards as set forth in Exhibit 1.8 to this Agreement.
Vendor will be available to provide installation, implementation and
training at the Hotels and Affiliates designated by HII in accordance
with a schedule established by HII and reasonably acceptable to Vendor.
The services provided by Vendor to Existing Hotels and Vendor Supplied
Hotels shall be billed to HII at the Special HII Rates set forth on
Exhibit 3.3.1. Vendor shall not charge any Existing Hotel or Vendor
Supplied Hotel for its installation, implementation and training
services, unless such services are approved in advance and in writing by
HII with respect to each such Hotel. Installation, implementation and
training at New Hotels shall be performed at the Special HII Rates set
forth on Exhibit 3.3.1 hereto and shall be billed directly to the
appropriate Hotel.
3.4.2 TRAINING BY HII. Beginning with the completion of the training
of HII personnel described below in Section 3.4.4 and continuing throughout
the duration of the Rollout, installation, implementation and training with
respect to the Basic PMS System at Existing Hotels will be primarily the
responsibility of HII. Nevertheless, Vendor will provide training and
implementation for the Hotels and Affiliates designated by, and on a
reasonable schedule acceptable to, HII to enable HII sufficient time to
develop its own training methods. Installation, implementation and training
at the New Hotels during this same period may be performed either by HII or
by Vendor at the rates set forth on Exhibit 3.4.2 hereto, as determined by
each New Hotel. Vendor shall provide such support and assistance as may be
requested by HII in support of HII's installation, implementation and
training services, with such assistance and support being charged to HII at
the rates set forth on Exhibit 3.4.2 hereto. HII and Vendor acknowledge
that such continuing assistance by Vendor is meant only as backup technical
support for HII's or its contractor's training efforts and that Vendor is
not required to provide routine "help desk" support in connection with the
training and installation efforts of HII and its contractors. HII
will provide to Vendor at no charge one copy of all training materials and
any extraordinary equipment required to utilize such materials properly,
solely for the use by
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Vendor in providing training, maintenance and support services to Hotels
and Affiliates (but to no other party), and Vendor shall not reproduce,
market, distribute or otherwise utilize training materials developed by HII
or its contractors (other than Vendor) with respect to any party other than
Hotels and Affiliates.
3.4.3 CERTIFICATION OF HII TRAINING. Following the execution of this
Agreement, HII intends to contract with a third party to develop a training
program for use of the System Software and the Basic PMS System. At the
request of HII, Vendor will review and evaluate HII's training program to
determine whether or not such training is, in Vendor's reasonable opinion,
equivalent to the training routinely provided by Vendor. If Vendor
determines that the training program developed by HII and its contractors
(the "HII Training Program") is not so equivalent, it shall notify HII in
writing within 10 days following its evaluation of the HII Training
Program, which notice shall clearly describe the reasons why the HII
Training Program is not equivalent to the training routinely provided by
Vendor. The foregoing evaluation process shall be repeated until Vendor has
certified the HII Training Program as being equivalent to training
routinely made available by Vendor. The foregoing notwithstanding, the HII
Training Program shall be deemed the equivalent of Vendor's training if the
majority of any group of persons selected by HII and trained under the HII
Training Program score as high or higher as any group of persons selected
by HII and trained by Vendor on any test developed by HII to measure the
effectiveness of training methods for the System Software. Any person who
completes the HII Training Program after it has been certified by Vendor
shall be deemed to have received sufficient and Vendor equivalent training
for all purposes of this Agreement and the Support Agreement between Vendor
and the Hotel or Affiliate where such person is employed. Regardless of
whether or not the HII Training Program has been "certified" by Vendor, any
person who scores at least seventy percent on any test developed by HII to
measure the effectiveness of training methods for the System Software shall
be deemed to have received training equivalent to that provided by Vendor.
3.4.4 AFTER ROLLOUT. Following the completion or expiration of the
Rollout and continuing throughout the term of this Agreement, installation,
implementation and training may be performed by either HII (or its
designees) or Vendor, as selected by each Hotel. In the event a Hotel
selects Vendor to provide such services, Vendor will make its services
available at the rates set forth on Exhibit 3.4.2 and will comply with
HII's applicable service standards.
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Throughout the term of this Agreement, Vendor shall provide support and
assistance to HII as described in Section 3.4.2 above and at the rates set
forth on Exhibit 3.4.2 then in effect.
3.4.5 TRAINING OF HII PERSONNEL. Promptly following the execution of
this Agreement, Vendor and HII shall implement a formal training program
whereby qualified employees of Vendor will train and instruct the employees
and other persons designated by HII in the installation, implementation
and use of the PMS Software and methods of training Hotel personnel in the
proper use of the System Software and the Basic PMS System. Such training
shall be conducted at times and locations reasonably requested by HII and
at no additional cost to HII (other than costs associated with the
transportation, lodging, meals and other travel expenses of its personnel
attending such training). The training will continue until HII has a
sufficient number of personnel available to conduct the end user training
at the Hotels; provided, however, that any training by Vendor in excess of
720 hours (which may be divided into such increments as HII or its
contractors deem necessary) will be compensated by HII based upon Vendor's
reasonable costs in providing such additional training. Similar training
will be made available at no additional cost with respect to upgrades,
enhancements and modifications to the PMS Software and following delivery
and acceptance of each interface and other software component of the System
Software being developed by Vendor hereunder.
3.5 SOFTWARE SUPPORT. Throughout the ten (10) year term of this Agreement,
Vendor hereby agrees to make available to each Hotel and Affiliate which has
licensed the PMS Software, and received or agreed to receive training by Vendor,
HII or HII's designees, whether pursuant to the Rollout or otherwise, its
software maintenance and support services in accordance with the terms and
conditions of its software support agreement set forth as Exhibit 3.5, attached
hereto and incorporated herein by this reference (the "Support Agreement").
Vendor covenants and warrants that such support and maintenance services shall
be performed in a manner consistent with the Service Standards attached as
Exhibit 1.8 and the terms and conditions of the Support Agreement between Vendor
and each Hotel and Affiliate. Vendor's fees for software support and maintenance
pursuant to the Support Agreement shall, for a period of one year beginning with
the date hereof, be no more than $1.25 per room per month. Thereafter, Vendor
may increase the software support fees as may be necessary as a result of costs
incurred by Vendor in providing such support; provided, however, that Vendor
shall not increase the support fees more than one time during any calendar year
and that Vendor shall not increase its software support fees by more than five
(5) percent during the second and third years under
13
this Agreement, six (6) percent during the fourth and fifth years under this
Agreement and seven (7) percent per year thereafter for the remainder of the
term of this Agreement. Any modifications to the form of Support Agreement shall
be handled in the same manner as described in Section 3.2.2 with respect to Site
Licenses. If, in Vendor's reasonable judgement, a Hotel has not received
installation and training by HII or HII's designees, Vendor shall so notify HII
and shall have the option to refer usage and operation questions from that Hotel
to HII until such time as HII confirms to Vendor that HII or HII's designees
have provided training to the appropriate individual at the Hotel.
3.6 BILLING SERVICES. As part of its monthly invoicing process for Holidex
Reservation System fees and other fees, HII will invoice the Hotels for software
support fees and other charges due Vendor pursuant to Support Agreements between
Vendor and each Hotel which has entered into a Site License and Support
Agreement. Provided that Vendor supplies HII with the following information on
such charges and Hotel by the fifth (5th) day of a month in a mutually agreeable
format on a diskette or other suitable computer readable media or by means of
telecommunications network, HII will cause the amount of such charges to be
deposited by wire transfer into the account of Vendor on or before the fifteenth
(15th) day of such month:
(a) Hotel five-character Holidex code,
(b) Hotel name and address,
(c) Services provided,
(d) Amount of telephone charges, including any late charge or penalty
to be invoiced, and
(e) Any other supporting information that HII may reasonably request.
3.6.1 NON-PAYMENT BY HOTELS. The amount of payments received for
software support fees shall be forwarded to Vendor each month with a
statement indicating the amount received from each Hotel. If HII receives
only partial payment from a Hotel, HII will forward payment in full to
Vendor for the software support fees due for that particular month and
shall advise Vendor of the Hotel's failure to make full payment. In such
circumstance, HII shall have the right to require Vendor to declare the
Hotel in default of the Site License and/or Support Agreement. In the event
HII notifies Vendor to declare the Hotel in default, HII's billing and
payment obligation to Vendor shall terminate 30 days after such notice
unless the Hotel has cured the default by paying HII all amounts HII has
invoiced to such Hotel. Notwithstanding the foregoing, if a Hotel makes no
14
payment of the software support fee or does not pay the amount invoiced for
Vendor's services due to a dispute with Vendor, HII shall notify Vendor of
such non-payment but shall not be required to pay Vendor the amount due
from the Hotel until such time as Vendor and the Hotel have resolved such
dispute and HII has received all amounts previously withheld by the Hotel.
Furthermore, Vendor acknowledges that HII will be making payment of the
support fees and other charges to Vendor in advance of payment to HII from
the Hotels, and if any Hotel fails to pay amounts owed after the exercise
of normal collection efforts by HII (which shall not require formal legal
action or termination of any franchise agreement with such Hotel), Vendor
will reimburse HII for the amounts uncollected.
3.6.2 BILLING CHARGE. In exchange for the billing services to be
provided Vendor by HII hereunder, Vendor shall pay to HII an amount equal
to three dollars ($3.00) per month for each Hotel for which HII acts as the
billing agent. Vendor and HII acknowledge that as of the date of this
Agreement, HII estimates that an amount equal to five dollars ($5.00) per
month for each Hotel reflects fairly the costs which will be incurred by
HII in providing such billing services. Notwithstanding such current
estimate, HII has agreed to provide the billing services for $3.00 per
month for each Hotel in order to facilitate the performance of this
Agreement. Vendor and HII further agree that HII shall be entitled to
increase such charge in order to reflect the actual costs incurred by HII
as follows: after the second year under the Agreement, an increase to $3.50
per month for each Hotel; after the fourth year, an increase to $4.00 per
month for each Hotel; after the sixth year, an increase to $4.50 per month
for each Hotel; and after the eighth year, an increase to $5.00 per month
for each Hotel. The billing charge shall be setoff against amounts
otherwise due Vendor as calculated by HII from the Hotels and shall be
reflected on the monthly statements delivered to Vendor hereunder. Vendor
shall be responsible for remitting to the appropriate authorities any and
all sales taxes due on the Software Support fees and other charges
collected by HII.
3.6.3 TERMINATION. In the event Vendor determines to terminate the
Site License and/or Support Agreement with a Hotel due to the Hotel's
default under the Site License or Support Agreement, Vendor shall provide
HII with 15 days' prior written notice of such determination and may
exercise any rights it may have under existing agreements with the Hotel,
including the right to disable Vendor's Front Desk System Software or other
software provided by Vendor to the Hotel, provided that in no event shall
Vendor take any action that prevents the Hotel's access to Holidex through
software provided by HII or that otherwise will adversely
15
affect Holidex or Holidex services to or at the Hotel or other Hotels. HII
will provide Vendor with instructions describing the manner in which the
System Software may be disconnected from Holidex. Except as set forth
above, HII shall in no event be responsible for the enforcement of Vendor's
rights under the Support Agreement, or for collection of unpaid or
partially paid invoiced amounts. In the event Vendor elects to disable or
otherwise interfere with any party's use of the System Software it will
indemnify and hold HII and its Affiliates harmless from and against any and
all claims, demands, costs and expenses resulting from such action.
3.6.4 REPRESENTATION. Vendor hereby represents and warrants to HII
that the software support fee to be charged to the Hotels is substantially
equivalent to the fees charged to parties other than the Hotels which have
purchased software support services from Vendor for the PMS Software and
are based upon the costs and expenses Vendor reasonably anticipates in
making such support services available to the Hotels.
3.6.5 VENDOR'S FAILURE TO PROVIDE SUPPORT. In the event Vendor fails
to provide support and maintenance of the System Software in the manner
contemplated by this Agreement and the Support Agreements with the Hotels,
then HII shall be entitled to withhold all or any portion of the support
fees and other charges collected by HII from the Hotels and Affiliates
under the Support Agreement. Any amounts so withheld by HII shall be paid
to Vendor upon substantial completion of its support and maintenance
obligations; provided, however, that HII shall be entitled to retain an
amount equal to its costs and expenses in performing support and
maintenance services which Vendor was obligated to provide, including the
costs of obtaining the Materials from escrow and the fees and expenses of
third parties retained by HII to perform Vendor's support and maintenance
obligations. HII shall notify Vendor promptly in the event it intends to
withhold any portion of the amounts collected pursuant to the Support
Agreements due to a failure by Vendor to provide support and maintenance of
the System Software, and afford Vendor a reasonable opportunity (not to
exceed 30 days) to perform its obligations. If Vendor has not corrected
such failure within the time afforded, then HII, upon five (5) days advance
written notice may withhold the amounts collected pursuant to this Section
3.6. The withholding of funds pursuant to this Section 3.6.5 shall be in
addition to and not in lieu of any other rights and remedies of HII. The
withholding of funds by HII shall not relieve Vendor of any of its
obligations under this Agreement or the Support Agreements with the Hotels
and Affiliates.
16
3.6.7 TERMINATION OF BILLING ARRANGEMENT. Either party shall be
entitled to terminate the billing arrangement described in the this Section
3.6 upon not less than 60 days advance written notice; provided, however,
that Vendor shall not be entitled to terminate such arrangement (i) within
28 months following execution of this Agreement, (ii) if Vendor has
received a notice from HII that it intends to withhold payment within the
90 days prior to Vendor's request to terminate the arrangement, or (iii) if
HII is currently withholding payments due Vendor pursuant to Section 3.6.5.
3.7 TRANSITIONAL SALES: REBATES. HII acknowledges that prior to the date
hereof, Vendor has been engaged in the business of selling property management
systems to hotels, including the Vendor Supplied Hotels as defined in Section
3.4.1. Attached as Exhibit 3.7 hereto is a list (including the name of the
Hotel, a description of all items purchased and the purchase price paid for such
items) of all Vendor Supplied Hotels who purchased a property management system
from Vendor after October 1, 1991 and prior to the date hereof. Vendor
acknowledges that under the Rollout, HII intends to provide the Basic PMS System
without charge to Existing Hotels. In order to minimize disruption to the
Hotels, and to make available to certain Vendor Supplied Hotels some of the
benefits afforded through the relationship between Vendor and HII, Vendor and
HII agree upon the following procedures.
3.7.1 PREVIOUS SALES BY VENDOR. With respect to each the Hotels listed
on Exhibit 3.7, HII will reimburse the Hotel for the cost of certain
equipment and training fees and, in consideration therefor, will pay to
such Hotel an amount equal to the sum of (i) the purchase price paid to
Vendor for that equipment sold to such Hotel by Vendor which HII determines
to comprise a Basic PMS System for such Hotel, (ii) the amount of the
license fees charged by Vendor for the use of all items of computer
software included within the Basic PMS System, and (iii) the reasonable
charges of Vendor for the installation, implementation and training
associated with each of the foregoing (excluding travel, lodging and
related out-of-pocket expenses of trainers, implementation consultants and
Hotel personnel). HII shall notify Vendor of each payment to the
aforementioned Hotels and Vendor shall rebate to HII an amount equal to the
fees received by Vendor from such Hotels for front office software,
standard interfaces and DB/C licenses by crediting to HII such amount
against the final amount due Vendor from HII as set forth in Exhibit 3.2.1.
In the event a Hotel does not accept an amendment or novation to Vendor's
existing agreement(s) with the Hotel to conform to the arrangements
contemplated by this Agreement (including Sections 3.2.2 and 3.5 hereof),
then Vendor shall so notify HII and HII shall not make any payments as
17
described in this Section to such Hotel and in which case, Vendor shall
have no obligation to make any rebates to HII, unless and until such Hotel
does execute such amendment or new agreement and HII authorizes such
payment.
3.7.2 PENDING AND FUTURE SALES BY VENDOR. After the date of this
Agreement, Vendor shall direct all inquiries regarding the purchase of
property management systems received from Hotels to HII and shall not
thereafter make the System Software available to any Hotel, except through
HII or the Affiliates. Vendor shall be entitled to complete the pending
sales identified on the list delivered pursuant to Section 3.7, provided
that such sales are consummated prior to the date of execution of this
Agreement. Pending sales which are consummated within the aforementioned
time period shall be handled through the same rebate procedure employed
with respect to prior sales as described in Section 3.7.1.
3.7.3 NO THIRD PARTY BENEFICIARIES. The provisions of this Section 3.7
concerning the payments to be made by HII and Vendor are intended solely
for the benefit of HII and Vendor and shall not give rise to any right to
payment in favor of any third party, including any Hotel or any third party
licensor of software or equipment sold to a Hotel, the parties hereto
agreeing that there are no intended third party beneficiaries of the
obligations set forth in this Section 3.7.
3.7.4 SALES OF COMPLEMENTARY PRODUCTS. HII acknowledges that Vendor
may, from time to time, offer software products in addition to the System
Software. Except as expressly provided herein, this Agreement shall not
serve to limit the sale or licensure by Vendor of such additional products
to the Hotels, provided that such additional products meet HII standards
for such products which may then be in effect.
3.8 TERMINATION OF SITE LICENSE AND SUPPORT AGREEMENTS. Vendor
acknowledges and agrees that each Site License and Support Agreement distributed
by HII in accordance with this Agreement shall automatically terminate upon the
expiration (without renewal) or earlier termination of the Franchise Agreement
pursuant to which such Hotel operates as a Hotel. Vendor agrees to take such
reasonable action as HII may request to ensure that the Site License and Support
Agreement is terminated upon the expiration (without renewal) or earlier
termination of the Franchise Agreement and that the Hotel ceases to use the
System Software. In the event a Site License is terminated for any reason, such
Site License shall automatically be added to the number of Site Licenses which
have been purchased by HII and shall be available for distribution to any other
Hotel without the payment of any additional fee to Vendor or any of Vendor's
18
licensors, unless the license to use the System Software is not re-issued within
12 months following the date on which the particular Site License was
terminated.
3.9 CUSTOMER SERVICE STANDARDS. Vendor shall comply with HII's customer
service standards as set forth on Exhibit 1.8.
ARTICLE IV
SOFTWARE DEVELOPMENT
4.1 DELIVERY OF SPECIFICATIONS. The parties acknowledge that HII has
provided interface specifications to Vendor as set forth below:
(a) One Way Interface - previously delivered.
(b) Phase I of the Two Way Interface - delivered approximately 10 days
after the execution of the Original Agreement.
(c) Phase II of the Two Way Interface - specifications were developed
jointly by HII and Vendor within approximately 10 days after the execution
of the Original Agreement.
(d) MIP - No Specification will be delivered. Development will occur
as set forth in Section 4.2.6.
Vendor shall obtain specifications for Unix-based third party interfaces in
accordance with Exhibit 4.1.
Upon completion of the mutually agreed upon specifications, such
specifications shall become a part of this Agreement and attached hereto as
Exhibit 4.1.
HII hereby grants to Vendor the following:
(a) a license to use specifications provided to Vendor by HII or
jointly developed by Vendor and HII for the sole purpose of developing and
testing the Two Way Interface and Vendor's other software to work with
Holidex at Hotels, including establishing Software-Holidex interfaces; and
(b) a license to use MIP software for the sole purpose of connecting
approved third party hotel automation systems with the Basic PMS System at
the Hotels.
4.2 SOFTWARE DEVELOPMENT. Vendor agrees to develop interfaces that conform
to the specifications as are attached as Exhibit 4.1 and to develop other
software to levels acceptable to HII pursuant to the following requirements:
19
4.2.1 ONE WAY INTERFACE. Vendor will complete all work necessary to
provide a One Way Interface no later than 60 days following the execution
of the Original Agreement. At such time and thereafter, Vendor shall
provide the One Way Interface as a part of the System Software at no
additional charge to HII, Affiliates or the Hotels. Vendor warrants that
the One Way Interface will enable HII and the Hotels to perform the
following functions on the Basic PMS System:
- Receive reservations as and when delivered by Holidex;
- Automatically update each Hotel's System with reservations data
as the reservations occur;
- Receive Holidex Administrative Messages (e.g. modifications,
additions, and deletions to reservations).
4.2.2 TWO WAY INTERFACE-PHASE I. Vendor will develop and provide a Two
Way Interface for Data Collection/Detailed Checkouts pursuant to HII
specifications. The parties currently intend that such development be
completed within 60 days of the delivery of the specifications to Vendor.
If the work required by the specifications cannot reasonably be completed
within such 60 day period, the parties will mutually and in good faith
agree on a work plan for completion of the development. Vendor must then
complete development according to the work plan. At such time and
thereafter, Vendor shall provide such Two Way Interface to HII or to the
Hotels as part of the System Software at no additional charge to HII or to
the Hotel. Vendor warrants that the Two Way Interface will enable HII and
the Hotels to perform the following functions on the Basic PMS System:
- Transmit detailed checkout data to Holidex per specifications,
including but not limited to Travel Agent Commission Payables
(TACP);
- Transmit Electronic Data Transmission (EDT) to Holidex per
specifications;
- Transmit revenue and operating statistics as may be required by
HII to Holidex;
- Allow for Credit Authorization via magnetic card reader.
4.2.3 TWO WAY INTERFACE-PHASE II. Vendor will develop and provide the
Two Way Interface for Inventory Updates within approximately 180 days after
the completion of the
20
joint development of the specification as set forth in Section 4.1(c)
above. The 180 day period may be extended for a reasonable period of time,
as may be mutually agreed upon by HII and Vendor. At the time of completion
of development of the interface and thereafter, Vendor shall provide such
Inventory Updates Two Way Interface to HII, and Vendor and HII shall
cooperate in distributing such interfaces as set forth above in
Section 3.3.1. Vendor warrants that the Inventory Updates Two Way
Interface will enable HII and the Hotels to perform the following functions
on the Basic PMS System:
- Full inventory conditions synchronization between each Hotel's
Basic PMS System and Holidex
- Transmit and receive additions, modifications or deletions from
the Basic PMS System to Holidex;
- Transmit and receive administrative messages and broadcasts;
- Current day and future inventory related events are synchronized
with Holidex;
4.2.4 CCA/EDT. Vendor will establish CCA/EDT independent of Holidex
with Citibank and with one other bank as required by HII by no later than
60 days following the date on which Vendor receives the specifications from
such banks. Such timing may be mutually extended by the parties.
4.2.5 UNIX THIRD PARTY INTERFACES. Vendor will complete all work
necessary to provide the Third Party Interfaces listed on Exhibit 4.2.5 on
Unix no later than 60 days after the execution of the Original Agreement,
provided, however, such time period may be mutually extended for a
reasonable amount of time. At the time of completion and thereafter, Vendor
shall provide Unix based Third Party Interfaces listed on Exhibits 4.1 and
4.2.5 to Hotels and Affiliates as a part of the System Software at no
additional charge to HII and as a part of Vendor's obligations under the
Support Agreement with each Hotel. When available, the Unix based Third
Party Interface may be included as a part of the System Software
distributed by HII, at the rates for such interfaces set forth on Exhibit
3.2.1. Vendor warrants that the Third Party Interfaces will enable HII and
the Hotels to perform the following functions on the Basic PMS System:
collection of and processing of data from third party systems required by
HII.
4.2.6 MIP THIRD PARTY INTERFACE. HII will provide Vendor with all
information possessed by HII that may be required in developing an
interface between the System
21
Software and the MIP and will assist Vendor in developing such interface.
Vendor will develop a MIP interface that will enable the Basic PMS System
to send and receive information to and from third party systems listed on
Exhibit 4.2.5 in usable form. Such development shall be completed within 60
days of the execution of the Original Agreement or within a reasonable
extension time period as may be mutually agreed upon.
4.2.7 ROOM TYPES. Vendor will develop the capability for the System
Software to allow four (4) character room types and allow the total
number of room types as specified by HII in Exhibit 4.1 to be used as the
sole identifier of rooms in the Basic PMS System. The parties acknowledge
that such development has been completed and is available for use by Hotels
and Affiliates as part of the System Software and shall be distributed to
the Hotels at no additional charge to HII or to the Hotels.
4.2.8 REVENUE AND OCCUPANCY TRANSMISSION CAPABILITIES. Vendor will
work with HII in developing Revenue and Occupancy Transmission capabilities
between the System Software and HII and will implement the capabilities in
the System Software once developed. Such development shall begin at such
time in the future as HII deems appropriate after giving Vendor at least 30
days notice of HII's desire to proceed and shall be completed by a mutually
agreed upon reasonable date.
4.2.9 SEAMLESS INTERFACE. Vendor will work with HII to develop the
Seamless Interface. The specifications and design of the Seamless Interface
shall be completed jointly by HII and Vendor. Such development shall be
completed within 12 to 24 months following the execution of this Agreement,
and the total fee charged by Vendor and paid by HII for Vendor's services
relating to the Seamless Interface shall not exceed cost plus five (5)
percent.
4.2.10 UPGRADES AND ENHANCEMENTS. Vendor will exercise reasonable
diligence in developing software upgrades and enhancements that may be
requested from time to time by HII. Unless otherwise agreed by the parties,
software upgrades and enhancements custom developed for HII shall be the
property of Vendor but shall become a part of the System Software and shall
be licensed to the Hotels and Affiliates pursuant to the Site License to be
used exclusively with Holidex at Hotels and Affiliates, and Vendor will not
license or otherwise distribute such software upgrades and enhancements to
any other party. Notwithstanding the foregoing, HII shall retain an
unrestricted right to use and to provide to third parties any ideas,
know-how, methods, techniques or technical
22
information that is provided to Vendor by HII or that HII assists Vendor in
developing. Except as may be specifically agreed by the parties, if Vendor
develops upgrades and enhancements for general release and HII is not
required to pay for substantially all of the development costs of such
upgrades and enhancements, and the upgrades and enhancements are not able
to interface with or otherwise provide access to Holidex, then the
exclusivity restriction set forth above shall not apply to such general
releases.
4.2.11 DELAYS AND EXTENSIONS. The parties acknowledge that the time
limits established above for the completion of development (with the
exception of the One Way and Third Party interfaces) are dependent on
Vendor receiving correct specifications for the interfaces and on HII
making internal coding changes to Holidex so that Holidex can receive
transmissions from the Basic PMS System. If any delays are caused by HII,
the completion dates established herein shall be extended for a time period
equal to the delay period caused by HII. Additionally, if HII delivers a
specification containing an error or omission which requires changes to be
made in the interface, the parties will mutually agree upon a reasonable
extension of the completion time limit.
4.3 DEVELOPMENT EXPENSES.
4.3.1 ONE WAY INTERFACE. Vendor shall bear all costs and expenses
connected with the development of the One Way Interface.
4.3.2 TWO WAY INTERFACES. HII will provide and pay the salaries of up
to five (5) qualified software developers who will work under the direction
and control of Vendor in developing the Two Way Interface described in this
Agreement and any two way interfaces or enhancements to the two way
interfaces that may be required by HII in the future. Such developers shall
be provided to Vendor no later than August 31, 1991. Vendor shall be
responsible for the activities of such personnel within the scope of their
interface development activities. Vendor will provide a project leader and
all other personnel necessary to the development of the Two Way Interface
within the time limits set forth in this Agreement. Vendor will also
provide such personnel in the development of any interfaces that may be
required by HII in the future. Each party will bear all costs and expenses
incurred by that party and its employees during the development of the
interfaces, except that HII will pay the hotel room costs of Vendor
personnel who must travel to a location designated by HII and will allow
Vendor to use HII equipment that is directly necessary to the development
requirements set forth in this Agreement.
23
4.3.3 REVENUE AND OCCUPANCY TRANSMISSION CAPABILITIES. Payment for
Vendor's services in developing Revenue and Occupancy Transmission
capabilities shall be at a mutually agreed upon cost plus fee, with
Vendor's fee not to exceed cost plus five (5) percent. Cost shall include
the cost of reasonable previously established employee benefits and
reasonable costs directly attributable to such development, but shall not
include office overhead or other costs that would be incurred by Vendor
regardless of such development. HII shall reimburse Vendor for all
adequately documented ordinary and reasonable expenses directly incurred by
Vendor in developing the Revenue and Occupancy Transmission capabilities.
4.3.4 SOFTWARE ENHANCEMENTS. If HII requires software enhancements to
the interfaces, HII will pay the cost of developing the enhancements,
except, however, if an upgrade or enhancement requirement was caused by
Vendors negligence or a malfunction of Vendor-supplied software or
hardware, Vendor shall pay such development costs. Cost as used in this
paragraph shall have the same definition as used in Section 4.3.3 above.
4.3.5 OTHER CAPABILITIES. Cost of required interface and software
development not otherwise specifically provided for herein shall be
Vendor's responsibility (e.g. CCA/EDT, four character room type
development).
4.3.6 FUTURE DEVELOPMENT NOT SET FORTH IN THIS AGREEMENT. The cost of
software development not required by this Agreement that may be (a)
requested by individual Hotels and (b) approved in advance in writing by
HII shall be borne as may be agreed between Vendor and the Hotel.
4.4 OWNERSHIP. Vendor shall own any and all copyrights and patent rights in
and to any software that emanate from and are attributable to Vendor as a result
of Vendor's development of the software. Vendor's copyrights, patent rights and
other proprietary rights shall not extend to the specifications or to any ideas,
concepts or information provided by HII. If HII provides an idea, know-how,
method, technique or technical information to Vendor during the term of this
Agreement or assists Vendor in the development of same, HII will retain the
unrestricted right to use and to provide to third parties the ideas, know-how,
methods, techniques or technical information during and after the termination of
this Agreement notwithstanding any proprietary rights Vendor may have in any
software developed under this Agreement. Further, all specifications, software,
and technical data provided by HII and all information concerning the MIP are
owned and are trade secrets of HII to be used by Vendor solely as set forth in
this Agreement. Notwithstanding any other provision hereof, nothing contained
herein shall be construed to grant to Vendor ownership
24
of, or any right or title in any software product that HII has developed outside
of this Agreement. Each party shall retain ownership of any and all copyrights,
trade secrets and patent rights in and to any software, algorithms, formulas,
ideas, know-how, methods, techniques and the like which that party had the right
to prior to the execution of this Agreement and the other party shall use and
disclose same only as allowed in this Agreement.
4.4.1 INTERFACES, ENHANCEMENTS AND MODIFICATIONS, GENERALLY. In the
event HII desires to have developed any interfaces, including the Unix
Third Party Interfaces and the Seamless Interface, and any modifications,
enhancements and upgrades to the System Software, and so long as this
Agreement shall remain in effect, HII shall first offer Vendor the
opportunity to develop such product, and Vendor shall use its reasonable
best efforts to perform and complete such development work, at the
consultant rate of fifty dollars ($50.00) per hour (adjusted annually
based upon the percentage change, during such period, in the Cost of Living
Index published by the Bureau of Labor Statistics). Vendor will keep HII
informed as to the progress and costs incurred towards developing the
interfaces, modification, upgrades or enhancements requested by HII.
Except with respect to the interfaces which Vendor has agreed to develop by
specific reference in this Agreement, Vendor shall perform such development
work on a schedule reasonably acceptable to HII and Vendor. In the event
that Vendor fails to complete such work (including the development work set
forth in this Agreement) on the terms agreed with HII, HII shall be
entitled to cause alternative contractors to perform or complete such
development upon thirty (30) days advance written notice to Vendor, and
Vendor will cooperate with HII and its contractors, at the expenses and to
the extent requested by HII, in completing the development effort refused
or not completed by Vendor. So long as HII is an authorized Vendor
licensee for Vendor proprietary products, and subject to Vendor's right of
first refusal to perform the development work requested, HII shall retain
the right to modify and enhance the System Software and its components,
modules and interfaces, by itself, or through any outside consultants that
it chooses to retain. Vendor shall provide to HII the source code for the
System Software as HII may reasonably request to enable HII or HII's
consultants to perform the development work required and to provide
continuing support to the Hotels for such interfaces, upgrades,
modifications and enhancements. Any such interfaces, upgrades, enhancements
or modifications created by HII or its consultants shall be the property of
HII and shall be considered to be outside the terms of this Agreement and
the Support Agreements with the Hotels for the purposes of maintenance of
such modifications or
25
enhancements. At such time as Vendor has certified such modification or
enhancement for use with the System Software, which certification shall not
be unreasonably withheld, conditioned or delayed, HII shall license the
modification or enhancement to Vendor, solely for distribution to HII,
Affiliates and the Hotels pursuant to this Agreement and the Site Licenses.
In connection with Vendor's certification procedures, HII shall deliver to
Vendor the source code and other information Vendor may reasonably request.
Each party agrees that any consultants retained by it shall be bound by the
terms and conditions of the Confidentiality Agreement dated January 19,
1991, and signed by the parties. If HII modifies or enhances the software
without Vendor's assistance or involvement, any such modifications or
enhancements, if identified by HII as proprietary, shall not be reproduced
or marketed by Vendor without the express written permission of HII, but
nothing contained herein shall be construed to prevent Vendor from
independently developing any of its own modifications or enhancements even
if functionally equivalent to HII's modifications or enhancements.
4.5 LICENSES GRANTED BY VENDOR. Vendor hereby grants to HII an exclusive,
perpetual and fully paid license to use all the software, source codes, object
codes, manuals, file layouts, designs and other documentation included among the
Materials for the software developed by Vendor pursuant to this Agreement or the
Original Agreement (provided, however, such exclusivity does not apply to the
four digit room type and the third party interfaces that are Unix based) and a
perpetual nonexclusive license to use all software, source codes (if any),
object codes, manuals, file layouts, designs and other documentation included
among the Materials for all other components of the System Software. The
exclusive nature of HII's license to use software other than the One Way
Interface, the Two Way Interface and any other software developed in the future
by HII and Vendor shall expire one year after all such software has passed the
HII Acceptance Test for such software; thereafter the license to use such
software shall be non-exclusive. HII's right to use the Materials relating to
the System Software shall be limited to (i) the right to use, test and evaluate
the System Software, (ii) send and receive information to and from Hotels and
Affiliates via such software, (iii) to use any and all training, installation
and implementation materials in connection with the installation and
implementation of the System Software at the Hotels and Affiliates and the
training of their personnel, and (iv) subject to the obligation to offer
Vendor the opportunity to develop future enhancements or modifications to the
System Software described in Section 4.4.1, to develop or have developed,
modifications and enhancements to the System Software and to support and
maintain such modifications and enhancements (and the other components of the
System Software following
26
expiration of this Agreement or its earlier termination by HII as a result of
Vendor's default), provided, however, HII also shall have the right to use,
market, distribute and sublicense the System Software and object code versions
of any other software, including modifications and enhancements to the System
Software developed by Vendor or HII or its consultants, and the right to
support and maintain modifications and enhancements to the System Software
developed by HII or its consultants pursuant to Article III and Section 4.4.1 of
this Agreement and as provided in the Escrow Agreement. All of the foregoing
rights and licenses shall survive the termination or expiration of this
Agreement.
4.6 MODIFICATIONS IN SPECIFICATIONS. HII reserves the right to modify the
specifications at any time without prior notice to Vendor. Upon receipt of such
modifications to the specifications, Vendor shall promptly quote time and cost
estimates for making changes in the System Software to reflect such changes.
Upon receipt of written approval of HII, Vendor shall diligently develop the
capabilities for implementing the modifications and shall make such
modifications to the System Software to HII's satisfaction within a reasonable
amount of time after receiving notification of the modifications to the
specifications. If such modifications require changes in Vendor's interface or
other software, equipment, or system architecture, all such changes shall be
Vendor's sole responsibility and shall be at Vendor's sole cost and expense;
provided, however, HII shall provide up to five (5) qualified software
developers to Vendor to be directed by Vendor in making such modifications and
HII shall pay for the cost of distribution of the modified software; and
provided further, that if additional equipment or third party software is
necessary at Hotels to accommodate the modifications, Vendor shall not be
responsible for the cost of such equipment or software.
4.7 MODIFICATIONS OF HOLIDEX. HII reserves the right to modify Holidex,
including but not limited to changes in line protocol and format, at any time at
HII's sole discretion. Vendor understands that this may require changes in the
specifications and subsequent changes in Vendor's HII interfaces or other
software, equipment or system architecture in order for the Basic PMS System to
interface with Holidex and that all such changes shall be Vendor's sole
responsibility and shall be at Vendor's sole cost and expense, provided,
however, HII shall provide up to five (5) qualified software developers to
Vendor to be directed by Vendor in making such modifications and HII shall pay
for the cost of distribution of the modified software. Notwithstanding the
foregoing, if HII requires new equipment or operating systems (Novell, DOS or
Unix) at Hotels as a result of such modification to Holidex, Vendor shall not be
responsible for the cost of such additional equipment.
27
4.8 TESTING. All software developed by Vendor pursuant to this Agreement
must pass an HII Acceptance Test which will have been defined with the
specifications. Vendor shall provide its software and software documentation to
the location of HII's Information Technology division for preliminary acceptance
testing and preliminary written certification by HII prior to interfacing the
System Software to Holidex and its or Hotel's site for on-line final testing and
final written certification. While the preliminary testing and certification
processes are ongoing, Vendor agrees to send to the premises of HII qualified
systems development and operations personnel, who are familiar with Vendor's
software, so that problems with Vendor's interface software uncovered during
testing can be corrected immediately.
4.9 CERTIFICATION AND INTERCONNECTION. Upon final written certification,
Vendor or Hotels will be authorized to maintain an on-line connection to
Holidex. Such final written certification shall be subject to a continuing
condition that Vendor's software not cause at any time any Holidex integrity or
operating problems or any loss of or damage to Holidex. In the event any such
problems occur, HII shall notify the President of Vendor of the problem with all
available relevant information that Vendor may request. If the problem does not
involve a risk of loss of use or of proper operation of Holidex, Vendor shall
have 30 days from the date of notice to correct the problem. If the problem
could, in HII's sole reasonable judgment, cause a loss of use or of proper
operation of Holidex if not immediately corrected, HII shall have the right
to withdraw certification of Vendor's software and disconnect the Basic PMS
System-Holidex interface prior to giving notice to Vendor. Further, HII shall
have the right to take all other steps reasonably necessary to prevent
further problems, losses or damages including, but not limited to, notifying
third parties of the withdrawal of certification, disconnection, or
difficulties encountered. Vendor hereby releases HII, Holiday Inns
Franchising, Inc., their parent and subsidiary corporations and Affiliates
and all their respective officers, employees, directors and agents from any
and all liability arising out of or relating to such withdrawal of
certification, disconnection, or notification to third parties and any other
steps taken by HII to prevent further problems, losses or damages to Holidex
or any system.
Vendor shall have reasonable access to the HII Holidex testing facility to
verify any problems HII has found to exist.
4.10 VENDOR REPRESENTATIVE. At all times that Vendor's System Software is
interfaced with Holidex, Vendor shall have a designated representatives
available by telephone on a 24-hour per day, seven day per week basis so that
HII may notify such representatives of any Holidex integrity or operating
problems. Such representatives shall cooperate fully in locating, isolating and
correcting such problems, however, HII reserves the right at
28
all times to disconnect the Basic PMS System-Holidex connection as provided
above. For the purposes of this Agreement, Vendor's representatives shall be:
Xxxxx Xxxxx
Xxxxx Xxxxxxx, President
all at the following address:
Encore Systems, Inc.
000 Xxxxxx 00 Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
(000) 000-0000
Vendor shall immediately notify HII in writing of any change in its
designated representative, address or phone number.
4.11 LIMIT OF RESPONSIBILITY. HII shall be responsible for providing
correct specifications to Vendor and Vendor shall have the right to rely on the
accuracy of the specifications. Notwithstanding HII's agreement and efforts to
provide specifications, consulting and testing services, Vendor is exclusively
responsible for developing the interface software and the use of such software
with Holidex. HII shall not be responsible for the Basic PMS System-Holidex
interface. In no event shall HII be liable for indirect, incidental,
consequential, punitive or exemplary damages including, but not limited to, any
lost profits or lost savings.
NO SERVICES PERFORMED BY HII SHALL BE DEEMED A WARRANTY OF VENDOR'S
PRODUCTS, INCLUDING THE SYSTEM SOFTWARE FOR ANY PURPOSE WHATSOEVER.
4.12 WARRANTY DISCLAIMER. HII MAKES AND VENDOR AND ITS SUBSIDIARIES
RECEIVE, NO WARRANTY, EXPRESSED OR IMPLIED, PARTICULARLY NO WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AGAINST
INFRINGEMENT. ALL INFORMATION AND MATERIALS SUPPLIED BY HII HEREUNDER IS
SUPPLIED "AS IS" AND "WITH ALL FAULTS."
4.13 NON-EXCLUSIVE AGREEMENT. It is HII's intent that during the
development of the two way and third party interfaces, and for up to one year
following the date of execution of this Agreement (or 180 days after completion
of Phase II of the Two Way Interface, whichever occurs first), HII will work
solely with Vendor in the development of interfaces that fulfill the needs of
the Holiday Inn hotel system, as determined by HII and subject to any legal
restrictions that may exist or be imposed. During this development period, HII
will name Vendor as the HII Preferred Vendor for property management systems.
Vendor acknowledges, however, that nothing herein shall preclude HII from
supplying any specifications to any other party or from approving
29
interfaces between Holidex and any other system or naming other Preferred
Vendors of property management systems.
ARTICLE V
GENERAL PROVISIONS
5.1 ASSIGNMENT. This Agreement may not be assigned or performance
delegated by Vendor without the prior written approval of HII, which approval
shall not be unreasonably withheld or delayed, provided such potential
assignee demonstrates the capability to fulfill the obligations of this
Agreement. Any attempted assignment or delegation of this Agreement or duties
hereunder without such written approval shall be void. Purchase of more than
50 percent of the ownership interest of Vendor by a third party shall be
deemed an assignment for purposes of this Agreement. In no event shall
this paragraph prohibit any sale by Vendor's of Vendor's company. HII may
assign any or all of its rights or benefits hereunder and delegate any
performance due to any Affiliate, provided that such assignment or delegation
will not relieve HII of its obligations hereunder, unless expressly agreed to
in writing by Vendor.
5.2 RELATIONSHIP OF PARTIES. This Agreement is not intended to nor does
it create or establish an agency, partnership or joint venture relationship
between HII and Vendor. Each party to this Agreement is an independent
contractor. Neither party is the legal representative or agent of or has the
power to obligate the other for any purpose whatsoever.
5.3 INDEPENDENT DISCRETION. Except as otherwise provided for herein,
this Agreement is not intended to and shall in no way prevent Vendor from
exercising its independent discretion in selection of customers or from
selling at whatever price it deems necessary to any party in its sole
discretion. This is not an exclusive agreement. Although HII does not
intend to provide development assistance to other vendors of property
management systems, HII may provide the services and status to other vendors
as are provided under this Agreement, subject to the restrictions set forth
in this Agreement.
5.4 TERM. This Agreement shall be for a term of ten (10) years,
commencing with the date of execution hereof; provided, however, (i) HII may
terminate this Agreement at any time by giving Vendor notice of such
termination at least 90 days in advance and (ii) either party may terminate
this Agreement as a result of the default of the other party as provided in
Section 5.5 below. The respective obligations of the parties hereto with
respect to the Escrow Agreement, and the Escrow Agreement itself, shall
survive any such termination of this Agreement unless expressly agreed in
writing by HII following such termination.
30
All obligations of Vendor and all rights and licenses granted to HII, the Hotels
and Affiliates pursuant to the Site Licenses, Support Agreements or other
license/equipment sales agreements with Hotels shall continue as set forth
therein, without regard to any termination of this Agreement.
5.4.1 RIGHTS UPON EXPIRATION OR TERMINATION BY HII. Upon the
expiration of the term of this Agreement and nonrenewal by the parties of
the Agreement or upon the earlier termination of the Agreement by HII as a
result of any default by Vendor, HII shall have a perpetual, non-exclusive,
fully-paid and royalty-free right and license to use the most-recent
version of the Materials relating to the System Software at that time,
solely to enable HII or its consultants to continue to provide the System
Software to the Hotels or the Affiliates and to support, maintain, upgrade,
enhance and modify the System Software. HII shall be entitled to sublicense
and/or distribute the System Software as contemplated by this Agreement,
provided HII pays the license fees required for additional Site Licenses as
contemplated by Section 3.2.1 and the Exhibits referenced therein;
provided, however, that HII shall not be required to pay any license or
other fees in the event Vendor or its successor ceases doing business as a
going concern, or following the twenty-fifth (25th) anniversary of the
expiration or earlier termination of this Agreement. Unless and until the
expiration or earlier termination of this Agreement as a result of any
default by Vendor (as defined in Section 5.5 below), and except as provided
in the Escrow Agreement, Vendor shall have the exclusive right to provide
software maintenance services with respect to the System Software.
5.4.2 RIGHTS UPON TERMINATION BY VENDOR. Upon the termination of this
Agreement by Vendor as a result of any default by HII, HII shall not be
entitled to purchase any additional Site Licenses for the System Software,
however such termination shall not limit HII's ability to distribute or
sublicense any copies of the System Software it has previously purchased
under Site Licenses for which it has paid. The rights and licenses granted
to HII pursuant to Article IV of this Agreement, including, without
limitation, the right to possess, use, license, distribute, modify and
support the software and interfaces developed by Vendor pursuant to such
Article IV, as well as the respective rights and obligations of the parties
hereto pursuant to Section 3.3.3 hereof and the Escrow Agreement, shall
survive any such termination of this Agreement, unless HII elects to
terminate the Escrow Agreement following termination of this Agreement. No
termination of this Agreement shall in any way affect the rights and
licenses granted to HII, its Affiliates or the Hotels pursuant to the Site
Licenses, the
31
Support Agreements, or serve to relieve Vendor of its obligations
thereunder.
5.5 DEFAULT. Should a party fail to perform any of its obligations, fail to
fulfill any conditions of this Agreement or should any of the representations or
warranties of a party prove to be untrue (any of which shall be deemed a
"default"), and such default is not cured within 30 days after written notice,
specifying the nature of the default, or, at the option of HII, in the event of
a breach or default (however defined) under any agreement between HII or its
Affiliate and Vendor regarding the use, licensing or distribution of the System
Software in countries not covered under this Agreement, the non-defaulting party
may terminate this Agreement upon written notice giving the date of termination
and may exercise any other rights it may have at law or equity (including, but
not limited to, the rights under the Escrow Agreement).
5.6 INSOLVENCY. Except for the provisions dealing with the Escrow
Agreement, this Agreement shall automatically terminate should either party
become bankrupt or insolvent, however evidenced.
5.7 LICENSE TERMINATION. Except as expressly provided in this Section 5.7,
in the event of termination of this Agreement, any license granted by HII to
Vendor hereunder shall automatically terminate. Vendor shall, within 30 days of
such termination, return all specifications and other materials and information
supplied to it by HII in whatever form. Such termination shall not affect the
rights of HII, the Hotels or Affiliates under the Site Licenses, Support
Agreements, the Escrow Agreement or other license/equipment sales agreements
between such parties and Vendor. Vendor agrees that following the termination or
expiration of this Agreement for any reason, it will not, directly or
indirectly, license, sell, or otherwise distribute the One-Way Interface, the
Two-Way Interface, the Seamless Interface or any other software that interfaces
with, connects to or communicates with Holidex (or any successor thereto),
without the prior written permission of HII. The license rights granted by HII
to Vendor hereunder shall survive any termination of this Agreement to the
limited extent any such license is required for Vendor to fulfill its warranty
or support obligations to the Hotels and Affiliates. Any continuation of such
license rights shall not apply to Hotels or Affiliates which cease to be Hotels
or Affiliates.
5.8 CONFIDENTIALITY. Vendor agrees to keep all information received from
HII or developed for use with Holidex or the interfaces described herein in
strictest confidence. Such information shall not be disclosed to third parties
except under an appropriate burden of confidentiality or used for any purpose
other than as allowed by this Agreement unless specifically authorized by HII in
writing. The Confidentiality Agreement
32
between HII and Vendor, dated January 18, 1991, is incorporated herein by
reference and remains in full force and effect. Except as authorized in writing
by the other party, neither party shall use or disclose to third parties any
confidential information (or the existence thereof) concerning the business of
the other, including but not limited to information technology and new
developments, that either may acquire in the course of its activities under this
Agreement, and each shall take reasonable precautions to prevent any such
disclosure by any employees.
5.9 CERTIFICATION. The parties understand and agree that by certifying
Vendor's interface software as having passed HII's test procedures in a test
environment in no way limits or negates Vendor's obligations and
responsibilities hereunder when Vendor's software is actually connected to
Holidex and is used operationally by Vendor and/or Hotels. Further, the parties
agree that preliminary testing and certification of Vendor's system does not
imply or guarantee that Vendor's system will operate on-line at Hotels.
Certification shall only apply to the interface software version and its
effective date all as identified in HII's certification letter.
5.10 TRADEMARKS AND SERVICE MARKS. The parties agree that nothing herein
shall give either party the right to use the trade names, company names,
trademarks or service marks of the other party in any way without the prior
written consent of the other party.
5.11 RIGHT OF FIRST REFUSAL. In the event that Vendor, during the term of
this Agreement, desires to enter into any transaction, or a series of related
transactions, involving either (i) the sale or assignment of it rights and
interests in the System Software, or (ii) a change in control over the
properties and assets of Vendor, whether by sale of assets, sale and issuance
(to persons other than the current shareholders of Vendor) of common or other
voting stock which would constitute more than 50% of its outstanding shares of
such stock after such sale and issuance, or pursuant to a merger or other
business combination in which Vendor is not the surviving entity (each a
"Transaction"), Vendor will not engage in such Transaction, or make or accept
any offer to engage in such Transaction, unless it has first offered HII the
opportunity to assume and perform the terms of the Transaction and HII shall
have failed to accept such offer within the time required. Any offer by Vendor
pursuant to this Section 5.11 shall be in writing, shall describe the nature of
the Transaction in which Vendor proposes to engage, and shall be accompanied by
a copy of the written offer from the party or parties to such proposed
Transaction other than Vendor (the "Proposed Purchaser"), setting forth the
complete terms and conditions applicable to such proposed Transaction,
including, without limitation, the purchase price and payment terms, and shall
be accompanied by a copy of all information regarding
33
Vendor and the proposed Transaction as has been furnished to the Proposed
Purchaser, including, without limitation, financial information, lists of
customers and suppliers, descriptions of properties and assets (whether tangible
or intangible), appraisals, stockholder lists, environmental audits and the
like. HII shall have a period of two weeks following receipt of the offer (and
all information required to be delivered therewith) to determine whether or not
it will accept such offer. During such two-week period, Vendor will provide HII
and its agents and representatives such reasonably available additional
information as HII may require in order to evaluate the offer, all at HII's
expense, but this provision shall not extend the two-week period. If HII fails
to accept the offer within the time required, Vendor shall be free to
consummate the Transaction with the Proposed Purchaser, on terms which are no
more favorable to the Proposed Purchaser than as set forth in the offer to HII.
In the event the Transaction is not completed within 120 days following HII's
receipt of the offer, Vendor shall not consummate the Transaction without once
again making the offer to HII described herein.
5.12 NOTICES. All notices provided for in this Agreement shall be in
writing, addressed to the appropriate party specified below:
HII: Holiday Inns, Inc.
Xxxxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Vice President Information Technology
VENDOR: Encore Systems, Inc.
000 Xxxxxx 00 Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxx, President
Notices of default or termination must be sent United States Mail, return
receipt requested.
5.13 GOVERNING LAW AND JURISDICTION. This Agreement shall be construed and
enforced in accordance with the laws of the State of Georgia and venue shall lie
in Atlanta.
5.14 INDEMNITY. Vendor agrees to indemnify and hold harmless HII, Holiday
Inns Franchising, Inc. and their divisions, subsidiaries, affiliates, officers
and employees (each a "Vendor Indemnified Party") against any and all claims
(including but not limited to claims by Hotels), actions, liabilities, losses,
costs, and expenses (including attorney's fees and court costs) of whatever kind
or nature (even when the negligence of a Vendor Indemnified Party is alleged)
arising or alleged to have arisen in whole or part out of (a) any alleged acts
or omissions of Vendor, its employees, agents or subcontractors; (b) any alleged
34
breach of this Agreement by Vendor; (c) the alleged failure of the System
Software to conform to applicable specifications or warranties including implied
warranties of merchantability and fitness for a particular purpose, (d) an
alleged defect or deficiency in the System Software, the interfaces, or any
components thereof, the System Software's or interfaces' design, manufacture or
installation (other than for software elements provided by a Vendor Indemnified
Party), and/or (e) any allegation that the software provided by Vendor to HII,
Affiliates or Hotels (other than for software elements licensed directly by a
Vendor Indemnified Party) violates another's proprietary rights. Notwithstanding
the foregoing, Vendor shall not be responsible for damages caused by the gross
negligence of a Vendor Indemnified Party or due to causes beyond the control of
Vendor. The foregoing indemnities are subject to HII providing Vendor with
reasonably prompt notice of any Vendor Indemnified Party having received notice
of an indemnifiable occurrence. Vendor shall have control of the defense or
settlement of any indemnifiable claim, action or proceeding brought by a third
party provided, however, Vendor shall not make any admission or settlement that
would be against any Vendor Indemnified Party's interests and Vendor shall keep
HII informed of the status of such claim, action or proceeding. This indemnity
shall survive the termination of this Agreement.
5.15 NO GUARANTEE. HII does not guarantee or give any assurances that
Vendor will obtain any particular amount of business by reason of this
Agreement.
5.16 INSURANCE. Vendor shall carry Broad Form Vendor's Liability Insurance
coverage in an amount of not less than $1,000,000 (combined single limit per
occurrence), such other insurance as is necessary to cover potential liabilities
assumed by Vendor under this Agreement, and workers compensation insurance and
employers liability insurance as required by law, with a reputable insurance
company satisfactory to HII. Vendor shall provide HII with a certificate of
insurance evidencing such coverage within 30 days of the execution of this
Agreement showing HII as an additional insured and certificate holder and
providing that such insurance shall not lapse or be cancelled or modified unless
HII has been given 30 days prior written notice of the intended cancellation,
termination or modification.
5.17 ENTIRE AGREEMENT. This document, the exhibits, the letter dated May
17, 1991, regarding bailment of Holidex and HMS hardware and software, and the
January 18, 1991 letter (copies of such letters being attached as Exhibit 5.17
hereto), all of which are incorporated herein by reference, set forth the entire
Agreement between the parties hereto relating to the subject matter herein and
cancels and supersedes any and all prior representations and agreements, whether
oral or written, relating to the promotion of Vendor's system by HII including,
without
35
limitation, the Original Agreement. This Agreement may be modified or amended or
any term waived only by a writing signed by a duly authorized representative of
each party. Any attempted or purported amendment, modification or waiver that
does not comply with this requirement shall be null and void. Vendor and HII or
its Affiliates contemplate entering into similar agreements with respect to the
use, licensing and distribution of the System Software in countries other than
those covered by this Agreement. To the extent any such subsequent agreement
contains terms, conditions or limitations which either desires to be made a part
of this Agreement, HII and Vendor will negotiate in good faith to incorporate
such terms, conditions or limitations into this Agreement by an appropriate
amendment.
VENDOR: ENCORE SYSTEMS, INC. HII: HOLIDAY INNS, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx By: /s/ Illegible
------------------------------- --------------------------------
Title: President Title: Vice President
------------------------------ -------------------------------
36
AMENDMENT TO AGREEMENT
AMENDMENT #1
Whereas, the undersigned parties have entered into a certain Amended and
Restated Preferred Vendor Agreement (the Agreement) dated May 15, 1992 and:
Whereas, the undersigned parties are desirous of amending the aforementioned
Agreement, it being to the mutual benefit of all parties to do so:
Now therefore, for and in consideration of mutual promises and other valuable
considerations paid by each to the other, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree to modify and amend
the aforementioned Agreement as follows:
Folio Retention which was originally listed on Exhibit 3.2.1 of the
Agreement as an optional software application will now be listed in
Exhibit 1.3 and will be included in the Basic PMS System.
It is agreed by the parties hereto that all of the other terms and conditions
of the original Agreement shall remain in full force and effect other than as
modified herein. Upon execution by all parties, this Amendment shall be
attached to and form a part of the Agreement.
HOLIDAY INNS, INC.
BY: [Illegible Signature]
------------------------------------
ENCORE SYSTEMS, INC.
BY: /s/Xxxxxxxx X. Xxxxxxx
------------------------------------
11/8/92 President
37
SECOND AMENDMENT TO
AMENDED AND RESTATED PREFERRED VENDOR AGREEMENT
This SECOND AMENDMENT TO AMENDED AND RESTATED PREFERRED VENDOR AGREEMENT is
entered into this 30 day of December, 1995, by and among ENCORE SYSTEMS, INC.
("Encore"), GLOBAL SYSTEMS AND SUPPORT, INC. ("Global") and HOLIDAY INNS, INC.
("HII").
Pursuant to the terms of that certain Amended and Restated Preferred Vendor
Agreement dated May 15, 1992, and as amended November 11, 1992 (the "Vendor
Agreement"), by and between Encore and HII, Encore provides software support and
other services to certain Hotels and Affiliates (as those terms are defined in
the Vendor Agreement). Encore wishes to amend certain provisions of the Vendor
Agreement so that Global may perform certain of those software support and other
services. HII agrees to amend the Vendor Agreement pursuant to the terms and
provisions provided herein.
NOW THEREFORE, in consideration of the foregoing premises, the covenants
and commitments set forth below and for other good and sufficient consideration,
the parties agree as follows:
1. AMENDMENTS.
(a) Section 3.5 (Software Support) of the Vendor Agreement is amended by
adding the following paragraph at the end of Section 3.5:
"Vendor may in its discretion assign any of the Support Agreements to
Global Systems and Support, Inc. ("Global") (an "Assignment") at any
time provided that such Assignment shall not create or be deemed to
impose any new or additional obligations on the part of HII and
further provided that Encore provides written notice to HII of the
Assignment setting forth the Assignment's effective date and the name
of the Hotel or Affiliate party to the assigned Support Agreement.
Following any such Assignment of a Support Agreement, Global shall
perform the duties and obligations under the Support Agreement in
compliance with the terms of the Support Agreement, this Agreement and
in a manner substantially the same as historically performed by
Vendor. Global hereby makes and gives each of the representations and
warranties of Vendor and agrees to perform each of the covenants and
obligations of Vendor set forth in this Section 3.5. With respect to
any assigned Support Agreement, HII agrees to treat Global as the
"Vendor" for invoicing and billing purposes."
(b) Section 3.6 (Billing Services) of the Vendor Agreement is amended by
adding new section 3.6.8 as follows:
" 3.6.8 ASSIGNMENTS TO GLOBAL. With respect to any Support
Agreement assigned by Vendor to Global pursuant to the second
paragraph of Section 3.5, Global shall be deemed to be the "Vendor"
for all purposes under this Section 3.6 and shall perform the duties
and obligations of Vendor as set forth in this Section 3.6."
38
(c) Section 3.8 (Termination of Site License and Support Agreements) of
the Vendor Agreement is amended as follows:
(i) The first sentence is amended by replacing the word "Vendor" with
the phrase "Each of Vendor and Global"; and
(ii) The second sentence is amended by replacing the word "Vendor"
with the phrase "Each of Vendor and Global".
(d) Section 3.9 of the Vendor Agreement is amended by inserting the phrase
"and Global" after the word "Vendor".
(e) Article V (General Provisions) of the Vendor Agreement is amended as
follows:
(i) Section 5.1 (Assignment). The phrase "or Global" is added after
the word "Vendor" in the first and third sentences and the phrase "or
Global's" is added after the word "Vendor's" in the fourth sentence.
(ii) Section 5.2 (Relationship of Parties). The phrase "and/or Global"
is added immediately prior to the end of the first sentence.
(iii) Section 5.4.1 (Rights Upon Expiration or Termination by HII). In
the first sentence, the phrase "Vendor or Global" shall replace the
word "Vendor". In the third sentence, the phrase "and Global" shall be
added immediately following every reference to "Vendor".
(iv) Section 5.8 (Confidentiality). The phrase "Vendor and Global
agree" shall replace the word "Vendor". Further, Global agrees to be
bound by the terms of Confidentiality Agreement referenced and
incorporated by Section 5.8 as if Global were an original party
thereto.
(v) Sections 5.4 (Term), sub-section (ii), 5.5 (Default) and 5.10
(Trademarks). Global, Encore and HII acknowledge that the reference to
"parties" or "party" shall be deemed to include Global.
(vi) Section 5.11 (Right of First Refusal). The following sentence is
added at the end of the text of Section 5.11:
"For purposes of this Section 5.11, the term "Vendor" shall be
deemed to include Global as well as Encore Systems, Inc. and the
provisions of this Section shall apply to Global in all
respects."
(vii) Section 5.12 (Notices). The following text shall be added prior
to the last sentence of Section 5.12:
39
"GLOBAL: Global Systems and Support, Inc.
000 Xxxxxx 00 Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxx, President"
(ix) Section 5.14 (Indemnity).
(A) The following sentence shall be added immediately after the
first sentence:
"Global agrees to indemnify and hold harmless the Vendor
Indemnified Parties against any and all claims (including
but not limited to claims by Hotels), actions, liabilities,
losses, costs, and expenses (including attorney's fees and
court costs) of whatever kind and nature (even when the
negligence of a Vendor Indemnified Party is alleged) arising
or alleged to have arisen in whole or part out of (a) any
alleged acts or omissions of Global, its employees, agents
or subcontractors; (b) any alleged breach of this Agreement
by Global; (c) the alleged failure of the System Software to
conform to applicable specifications or warranties including
implied warranties of merchantability and fitness for a
particular purpose to the extent such conformity failure is
a result of any action by Global; (d) an alleged defect or
deficiency in the System Software, the interfaces, or any
components thereof, the System Software's or interfaces'
design, manufacture or installation (other than for software
elements provided by a Vendor Indemnified Party), to the
extent such defect or deficiency is a result of any action
by Global, and/or (e) any allegation that the software
provided by Vendor to HII, Affiliates or Hotels (other than
for software elements licensed directly by a Vendor
Indemnified Party) violates another's proprietary rights to
the extent that such violation is a result of any action by
Global."
(B) The phrase "neither Vendor nor Global shall be" shall
replace the phrase "Vendor shall not be" in the existing second
sentence.
(x) Section 5.16 (Insurance). The phrase "Vendor and/or Global" shall
replace the second occurrence of the word "Vendor" in the first
sentence.
2. CROSS GUARANTEES.
(a) Subject to Section 2(c) below, Encore hereby fully and unconditionally
guarantees the full and timely performance by Global of Global's
obligations under any and all assigned Support Agreements and under the
Vendor Agreement as amended.
40
(b) Subject to Section 2(c) below, Global hereby fully and unconditionally
guarantees the full and timely performance by Encore of the obligations
under Sections 3.5 and 3.6 of the Vendor Agreement as amended.
(c) HII agrees that with respect to any disputes arising among HII and
Global and Encore which give rise to Encore's and/or Global's guarantee
obligations provided in this Section 2, each of Encore and Global may avail
itself of the legal and equitable defenses available to the other with
respect to its performance of the guaranteed obligations.
(d) With respect to any default or failure by either Encore or Global to
perform its obligations under Section 3.5 of the Vendor Agreement as
amended or this Amendment, HII agrees to provide notice to both Encore and
Global and permit Encore and Global to cure such default or failure to
perform, in accordance with Section 5.5 of the Vendor Agreement as amended.
(e) Notwithstanding the foregoing, nothing herein shall be deemed to create
or impose any new or additional obligations on the part of Encore, except
as solely set forth in Section 2(a) above, or to establish or grant any new
or additional rights to HII except as specifically set forth in this
Amendment.
3. REPRESENTATIONS.
(a) Each of Encore and Global represents and warrants to HII that as of the
date of execution of this Amendment, neither Encore nor Global has a
present intention of transferring control of its business to any third
party or of selling all or substantially all of its assets to any third
party.
(b) Each of Encore and Global represents and warrants to HII that Global
has the corporate capacity and authority and the financial, operational,
logistical, personnel and administrative resources and wherewithal to fully
perform each and every obligation and duty assigned to Global pursuant to
this Amendment.
4. NO OTHER AMENDMENTS. Except as specifically set forth above, the terms
and conditions of the Vendor Agreement shall remain and continue in full force
and effect. Upon execution by all parties hereto, this Amendment shall be
attached to and form a part of the Vendor Agreement.
5. DUPLICATE EXECUTION. This Amendment may be executed in duplicates which,
when taken together, shall constitute the full and binding agreement of the
parties.
[Signatures On Following Page]
41
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first set forth above.
ENCORE SYSTEMS, INC. GLOBAL SYSTEMS AND SUPPORT, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx By: /s/ Xxxxxxxx X. Xxxxxxx
-------------------------------- -------------------------------
Xxxxxxxx X. Xxxxxxx Xxxxxxxx X. Xxxxxxx
President President
HOLIDAY INNS, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Xxxxxxx X. Xxxxx
Senior Vice President - Information
Technology
42
AMENDMENT TO AGREEMENT
AMENDMENT NO. 2
WHEREAS, the undersigned parties have entered into a certain Amended and
Restated Preferred Vendor Agreement (the "Agreement") originally dated May 15,
1992 and amended by that certain Amendment to Agreement Amendment No. 1, dated
November 8, 1992; and
WHEREAS, the undersigned parties are desirous of amending the
aforementioned Agreement, it being to the mutual benefit of all parties to do
so;
NOW THEREFORE, for and in consideration of the mutual promises and other
valuable consideration paid by each to the other, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree to modify Exhibit 3.2.1
to the Agreement by adding the following language thereto at the current end
thereof:
The foregoing notwithstanding, if more than fourteen hundred (1,400)
licenses but fewer than sixteen hundred one (1,601) are purchased under
this Agreement, such additional licenses will be acquired at Seven Hundred
Fifty Dollars ($750.00) per copy of Software (as defined in the Agreement),
in an increment of two hundred (200), payable as a one time license fee of
One Hundred Fifty Thousand Dollars ($150,000) upon purchase of such
incremental amount.
It is agreed by the parties hereto that all of the other terms and
conditions of the original Agreement shall remain in full force and effect other
than as modified herein. Upon execution by all parties, this amendment shall be
attached to and form a part of the Agreement.
HOLIDAY INNS, INC.
By: /s/ [Illegible]
----------------------------------
Name:
----------------------------------
Its:
----------------------------------
ENCORE SYSTEMS, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
----------------------------------
Name:
----------------------------------
Its:
----------------------------------
43
AMENDMENT TO AGREEMENT
AMENDMENT NO. 3
WHEREAS, the undersigned parties have entered into a certain Amended and
Restated Preferred Vendor Agreement (the "Agreement") originally dated May 15,
1992 and amended by that certain Amendment to Agreement Amendment No. 1, dated
November 8, 1992; and further amended by that certain Amendment to Agreement
Amendment No. 2, and,
WHEREAS, the undersigned parties are desirous of amending the
aforementioned Agreement, it being to the mutual benefit of all parties to do
so;
NOW THEREFORE, for and in consideration of the mutual promises and other
valuable consideration paid by each to the other, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree to modify Exhibit 3.2.1
to the Agreement by adding the following language thereto at the current end
thereof
The foregoing notwithstanding, if more than sixteen hundred (1,600)
licenses but fewer than eighteen hundred one (1,801) repurchased under
this Agreement, such additional licenses will be acquired at Seven Hundred
Fifty Dollars ($750.00) per copy of Software (as defined in the Agreement),
in an increment of two hundred (200), payable as a one-time license fee of
One Hundred Fifty Thousand Dollars ($150,000) upon purchase of such
incremental amount.
It is agreed by the parties hereto that all of the other terms and conditions of
the original Agreement shall remain in full force and effect other than as
modified herein. Upon execution by parties, this amendment shall be attached to
and form a part of the Agreement. This 7th day of September, 1995.
HOLIDAY INNS, INC.
By: /s/ Xxxxxxx Xxxxx
----------------------------------
Name: Xxxxxxx Xxxxx
----------------------------------
Its: SVP Information Technology
----------------------------------
ENCORE SYSTEMS, INC.
By: /s/ Xxxxxxxx Xxxxxxx
----------------------------------
Name: Xxxxxxxx Xxxxxxx
----------------------------------
Its: President
----------------------------------
44
AMENDMENT TO AGREEMENT
AMENDMENT NO. 4
WHEREAS, the undersigned parties have entered into a certain Amended and
Restated Preferred Vendor Agreement (the "Agreement") originally dated May 15,
1992 and amended by that certain Amendment to Agreement Amendment No. 1, dated
November 8, 1992; and further amended by that certain Amendment to Agreement
Amendment No. 2; and, further amended by that certain Amendment to Agreement
Amendment No. 3, dated _______ 1995; and
WHEREAS, the undersigned parties are desirous of amending the
aforementioned Agreement, it being to the mutual benefit of all parties to do
so;
NOW THEREFORE, for and in consideration of the mutual promises and other
valuable consideration paid by each to the other, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree to modify Exhibit 3.2.1
to the Agreement by adding the following language thereto at the current end
thereof:
The foregoing notwithstanding, if more than eighteen hundred (1,800)
licenses but fewer than eighteen hundred fifty-one (1,851) purchased under
this Agreement, such additional licenses will be acquired at Seven Hundred
Fifty Dollars ($750.00) per copy of Software (as defined in the Agreement),
in an increment of fifty (50), payable as a one-time license fee of
Thirty-Seven Thousand Five Hundred Dollars ($37,500) upon purchase of such
incremental amount.
It is agreed by the parties hereto that all of the other terms and
conditions of the original Agreement shall remain in full force and effect other
than as modified herein. Upon execution by all parties, this amendment shall be
attached to and form a part of the Agreement. This 25th day of November 1996.
HOLIDAY INNS, INC. ENCORE SYSTEMS, INC.
By: /s/ Xxx X. Xxxxxxx By: /s/ Xxxxxxxx Xxxxxxx
------------------------------ ----------------------------------
Name: Xxx X. Xxxxxxx Name: Xxxxxxxx Xxxxxxx
------------------------------ ----------------------------------
Its: Chief Information Officer Its: President
------------------------------ ----------------------------------
45
AMENDMENT TO AGREEMENT
AMENDMENT NO. 5
WHEREAS, Holiday Inns, Inc. and Encore Systems, Inc. entered into that
certain Amended and Restated Preferred Vendor Agreement (the "Agreement")
originally dated May 15, 1992 and amended by that certain Amendment to Agreement
Amendment No. 1, dated November 8, 1992; and further amended by that certain
Amendment to Agreement Amendment No.2, dated May 4, 1995; and further amended by
that certain Amendment to Agreement No. 3, dated September 7, 1995; and further
amended by that certain Amendment to Agreement Amendment No. 4, dated November
25, 1996; and
WHEREAS, Holiday Inns, Inc. assigned its right, title, and interest in and
to the Agreement (as amended) to Holiday Hospitality Corporation as of April 28,
1997, and
WHEREAS, the undersigned parties are desirous of amending the
aforementioned Agreement, it being to mutual benefit of all parties to do so;
NOW THEREFORE, for and in consideration of the mutual promises and other
valuable consideration paid by each to the other, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree to modify Exhibit 3.2.1
to the Agreement by adding the following language thereto at the current end
thereof:
The foregoing notwithstanding, if more than eighteen hundred fifty-one
(1,851) licenses but fewer than nineteen hundred (1,900) are purchased
under this Agreement, such additional licenses will be acquired at Seven
Hundred Fifty Dollars ($750.00) per copy of Software (as defined in the
Agreement), in an increment of fifty (50), payable as a one-time license
fee of Thirty-Seven Thousand Five Hundred Dollars ($37,500) upon purchase
of such incremental amount.
It is agreed by the parties hereto that all of the other terms and
conditions of the original Agreement shall remain in full force and effect other
than as modified herein. Upon execution by all parties, this amendment shall be
attached to and form a part of the Agreement. This 22 day of May, 1997.
HOLIDAY HOSPITALITY CORP. ENCORE SYSTEMS, INC.
By: /s/ Xxx X. Xxxxxxx By: /s/ Xxxxxxxx X. Xxxxxxx
------------------------------ ----------------------------------
Name: Name: Xxxxxxxx X. Xxxxxxx
------------------------------ ----------------------------------
Its: Its: President
------------------------------ ----------------------------------
46
AMENDMENT TO AGREEMENT
AMENDMENT NO.6
WHEREAS, the undersigned parties have entered into a certain Amended and
Restated Preferred Vendor Agreement (the "Agreement") originally dated May 15,
1992 and amended by that certain Amendment to Agreement Amendment No. 1, dated
November 8, 1992; and further amended by that certain Amendment to Agreement
Amendment No. 2, dated May 4, 1925; and further amended by that certain
Amendment to Agreement Amendment No. 3, dated September 7, 1995; and further
amended by that certain Amendment to Agreement Amendment No. 4, dated November
25, 1996; and further amended by that certain Amendment to Agreement Amendment
No. 5, dated May 22, 1997 ; and
WHEREAS, the undersigned parties are desirous of amending the
aforementioned Agreement, it being to mutual benefit of all parties to do so;
NOW THEREFORE, for and in consideration of the mutual promises and other
valuable consideration paid by each to the other, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree to modify Exhibit 3.2.1
to the Agreement by adding the following language thereto at the current end
thereof:
The foregoing notwithstanding, if more that nineteen hundred (1,900)
licenses but fewer than nineteen hundred and fifty (1,950) purchased under
this Agreement, such additional licenses will be acquired at Seven Hundred
Fifty Dollars ($750.00) per copy of Software (as defined in the Agreement),
in an increment of fifty (50), payable as a one-time license fee of
Thirty-Seven Thousand Five Hundred Dollars ($37,500) upon purchase of such
incremental amount.
It is agreed by the parties hereto that all of the other terms and
conditions of the original Agreement shall remain in full force and effect other
than as modified herein. Upon execution by all parties, this amendment shall be
attached to and form a part of the Agreement. This 2nd day of March, 1998.
HOLIDAY HOSPITALITY CORP. ENCORE SYSTEMS, INC.
By: /s/ Xxxx Xxxxxx By: /s/ Xxxxxxxx Xxxxxx
-------------------------------- ----------------------------------
Name: Xxxx Xxxxxx Name: Xxxxxxxx Xxxxxx
-------------------------------- ----------------------------------
Its: JPE Its: Director of Corp Accts
-------------------------------- ----------------------------------
47
