Exhibit 10.10
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
CERTAIN PORTIONS OF THIS DOCUMENT. CONFIDENTIAL
PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
AIRLINE PARTICIPATION AGREEMENT
BY AND AMONG
NORTHWEST AIRLINES, INC.,
xxxxxxxxx.xxx Incorporated
AND
PRICELINE TRAVEL, INC.
DATED:
October 2, 1998
[**] = Confidential treatment requested for redacted portion.
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
TABLE OF CONTENTS
ARTICLE 1. Terms and Conditions Relating to Airline Tickets..................1
ARTICLE 2. Confidentiality and Related Matters...............................4
ARTICLE 3. Reporting.........................................................5
ARTICLE 4. Proprietary Marks.................................................6
ARTICLE 5. PriceLine Ticket Reservations, Bookings,
Payment and Fulfillment...........................................6
ARTICLE 6. PriceLine Ticket Allocation Methodology...........................8
ARTICLE 7. PriceLine Customer Service; Joint Marketing.......................8
ARTICLE 8. Term of Agreement.................................................9
ARTICLE 9. Indemnification...................................................9
ARTICLE 10. No Exclusivity...................................................10
ARTICLE 11. Taxes and the Payment Thereof....................................10
ARTICLE 12. General Provisions...............................................11
ATTACHMENT A..................................................................16
ATTACHMENT B..................................................................17
[**] = Confidential treatment requested for redacted portion.
i
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
THIS AIRLINE PARTICIPATION AGREEMENT ("Agreement'), dated October
2,1998, is by and among NORTHWEST AIRLINES, INC., a Minnesota corporation, with
its principal place of business at 0000 Xxxxxxxxx Xxxxx, Xx. Xxxx, XX 0000-0000
(the "Airline"), and xxxxxxxxx.xxx Incorporated, a Delaware limited liability
company with an address at 0 Xxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000
("xxxxxxxxx.xxx"), and PriceLine Travel, Inc., a Delaware corporation with an
address at 0 Xxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 ("PriceLine Travel
and, together with xxxxxxxxx.xxx, being collectively referred to herein as
"PriceLine")
WITNESSETH
WHEREAS, PriceLine provides an electronic service via the Internet
that allows consumers to purchase airline tickets at an offer price determined
by the consumer (the "PriceLine Service"). The consumer identifies the origin
and destination and departure and return dates for travel and the price the
consumer is willing to pay for the travel. PriceLine then determines if seats
are available at an appropriate price. If such seats are available, PriceLine
Travel will issue a ticket on the applicable carrier.
WHEREAS, The Airline desires to participate in the PriceLine Service
and, in connection therewith, will provide access to the Airline's inventory at
pricing for the origin and destination pairs (each, an "O&D") as determined by
the Airline in accordance with the terms and conditions set forth in this
Agreement.
WHEREAS, PriceLine desires to include the Airline as a participating
carrier in the PriceLine Service and to have access to such inventory in
accordance with the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements set
forth in this Agreement, the parties agree as follows:
ARTICLE 1 TERMS AND CONDITIONS RELATING TO AIRLINE TICKETS
[**] = Confidential treatment requested for redacted portion.
1
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
1.1 The Airline shall make available to PriceLine inventory and
pricing of O&Ds as determined by the Airline in accordance with the terms and
conditions set forth in this Agreement. As such, for each O&D that the Airline
chooses to make available, the Airline shall provide PriceLine with an
Unpublished Fare consisting of the base fare and the federal excise tax
applicable thereto pursuant to sections 4261(a) and 4261(e)(5) of the Internal
Revenue Code of 1986, as amended (the "Code"), or any successor provisions (the
"Unpublished Fare"). It is expressly understood and agreed that the Airline
makes no commitment whatsoever, regarding the level of inventory, the number of
such O&Ds or the level of specific pricing of Unpublished Fares, except that,
when any Unpublished Fares are made available, such will be communicated by the
Airline to PriceLine under the procedures identified in Attachment A, annexed
hereto and made a part hereof. Availability of seats is at the sole discretion
of the Airline, and any inventory communicated to PriceLine may be decreased or
withdrawn by Airline at any time before a sale thereof by PriceLine
1.2 All tickets issued by PriceLine for carriage on Airline (each, a
"PriceLine Ticket") shall be subject to the following restrictions (the
"Restrictions"):
1.2.1 All PriceLine Tickets will be non-refundable,
non-endorsable and nonchangeable;
1.2.2 All travel will be round-trip with no stopovers or open-jaw
travel permitted;
1.2.3 Frequent Flyer mileage and upgrades will not be permitted;
provided Airline may offer such benefits to the extent that it is
impractical, as determined by it, to impose frequent flyer restrictions on
PriceLine Tickets;
1.2.4 PriceLine customers must agree to (i) make at least one
stop or connection on both their departing and return flights, (ii) accept
a ticket on any Participating Carrier, and (iii) travel on any flight on
the specified date of travel (x) for domestic U.S. flights, during the 6
a.m. - 10 p.m. time period as determined by PriceLine (unless the customer
has specified a request to
[**] = Confidential treatment requested for redacted portion.
2
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
include flights departing outside those periods), and (y) for international
flights, at any time (i.e., 12:01 a.m. to 11:59 P.M.);
1.2.5 All PriceLine travel reservations and bookings shall be
made without PriceLine customers specifying a preferred (or requested)
carrier, flight or time of day travel preference(s) on the specified
date(s) of travel;
1.2.6 All PriceLine Tickets require instant ticketing guaranteed
with a major credit card if PriceLine is, at such time, able to provide an
airline ticket within the customer's requested price, departure and return
date parameters; and
1.2.7 PriceLine Ticket reservations are limited to no more than
eight persons traveling in the same itinerary.
1.2.8 In any 72-hour period, a PriceLine customer shall be
limited to making one offer price for airline ticket(s) for a Trip. A
"Trip" is defined as travel between the same airports on the same dates of
travel by the persons identified in the previous subparagraph hereof. A
PriceLine customer may, within said 72-hour period, make an offer for
travel in a different airport pair, in the same airport pair, or on a
different date of travel.
1.2.9 PriceLine Travel, and not the Airline, shall be solely
responsible for issuing tickets that comply with section 7275(a) of the
Code, or any successor provisions.
1.3 PriceLine may not change any of the Restrictions established by
Airline with respect to a particular fare.
1.4 The Restrictions will apply to all tickets issued through the
PriceLine Service on Airline. Airline may waive, at its own cost and expense,
one or more of the Restrictions pursuant to a direct arrangement made by Airline
with the applicable customer holding a PriceLine Ticket. On an exception basis
where necessary or appropriate to promote customer good will, PriceLine may
refund the
[**] = Confidential treatment requested for redacted portion.
3
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
price of a PriceLine Ticket pursuant to a direct arrangement made by PriceLine
with the applicable customer. PriceLine Shall provide Airline with a monthly
report detailing the number and amount of refunded PriceLine Tickets involving
air transportation services on Airline. PriceLine shall nonetheless pay Airline
for such refunded ticket.
1.5 The Restrictions will be communicated by PriceLine to the
customer via the Internet (or through PriceLine's customer service
representatives if the customer contacts PriceLine through its toll free
customer service number), and will be set forth on ticketing and/or itinerary
documentation issued by PriceLine Travel.
1.6 All PriceLine Tickets issued for carriage on Airline shall be
subject to the published conditions of carriage and the fare rules of Airline.
Airline will honor all PriceLine Tickets issued for travel on Airline in
accordance with the Restrictions and other rules and conditions established by
Airline for PriceLine Tickets, which are set forth in Attachment A hereto, as
the same may be supplemented by Airline in its discretion from time to time.
1.7 The Airline will provide transportation for PriceLine customers in
accordance with its general conditions for carriage except as noted in Section
1.2 above. Any special handling procedures will be drafted by the parties and
made a supplement hereto.
PriceLine will provide customers with access to a fully-staffed
telephone service center that will respond to any consumer questions and issues
pertaining to special handling requirements for PriceLine Tickets, including
processing any customer handling requirements as identified and authorized by
the Airline.
1.8 At the request of Airline, PriceLine will, at its own cost and
expense, incorporate into the PriceLine Service a "hot link" to the designated
Internet site of Airline: provided however, that PriceLine will have a
reasonable period of time following any such request to accomplish any system
changes, additions or enhancements necessary or appropriate for the inclusion of
any such "hot link".
[**] = Confidential treatment requested for redacted portion.
4
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
ARTICLE 2 CONFIDENTIALITY AND RELATED MATTERS
2.1 PriceLine and the Airline will each hold in confidence and,
without the prior written consent of the other, will not reproduce, distribute,
transmit, transfer or disclose, directly or indirectly, in any form, by any
means or for any purpose, any Confidential Information of the other. As used
herein, the term "Confidential Information" shall mean this Agreement and its
subject matter, and information that is provided to or obtained from one party
to the other party and that is valuable to the disclosing party, and
particularly any information which derives economic value, actual or potential,
from not being generally known to, and not generally ascertainable by proper
means by, other persons who can obtain economic value from its disclosure or
use. The recipient of Confidential Information may only disclose such
information to its employees on a need-to-know basis. The obligations of a
recipient party with respect to Confidential Information shall remain in effect
during and after the term of this Agreement (including any renewals or
extensions hereof, and as otherwise further clarified in Section 2.3 hereof)
except to the extent necessary to comply with applicable law or the order or
other legal process of any court, governmental or similar authority having
jurisdiction over the recipient.
2.2 The recipient of Confidential Information will exercise reasonable
commercial care in protecting the confidentiality of the other party's
Confidential Information.
2.3 The obligations of a recipient party with respect to Confidential
Information shall remain in effect during and after the term of this Agreement
(including any renewals or extensions hereof) and for a period of three (3)
years thereafter, except to the extent such data:
2.3.1 is or becomes generally available to the public other than
as a result of a disclosure by the recipient, or its directors, officers,
employees, agents or advisors;
2.3.2 becomes available to the recipient on a non-confidential
basis from a source other than the disclosing party or its affiliated
companies,
[**] = Confidential treatment requested for redacted portion.
5
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
provided that such source is not bound by any confidentiality obligations
to the disclosing party or its affiliated companies (as applicable); or
2.3.3 is necessary to comply with applicable law or the order or
other legal process of any court, governmental or similar authority having
jurisdiction over the recipient.
2.4 In the event that the recipient becomes legally compelled to
disclose any of such Confidential Information by any governmental body or court,
recipient will provide the disclosing party with prompt notice so that the
disclosing party may seek a protective order or other appropriate remedy and/or
waive compliance (in writing) with provisions hereof. In the event that such
protective order or other remedy is not obtained, or the disclosing party waives
(in writing) compliance with the provisions hereof, recipient will furnish only
that portion of such Confidential Material which is legally required and will
exercise its reasonable business efforts to obtain appropriate assurance that
confidential treatment will be accorded such Confidential Information.
2.5 PriceLine will not disclose (including, without limitation, by
sale) to any third party information obtained through the PriceLine Service
concerning a customer who has acquired a ticket on Airline using the PriceLine
Service.
2.6 PriceLine will not identify the Airline's participation to the
bidder in any specific O&D until a customer is booked and confirmed for
ticketing. Further, PriceLine will not, in any media, indicate that the Airline
is participating or has participated in any specific O&D except to indicate
that, as a consumer proposition, a PriceLine customer must accept a routing on
one of the major U.S. full service airlines or, in the case of international
travel, other airline carriers available through the PriceLine Service. The
Airline may be identified, in such case and for definitional purposes, as one
of the major U.S. full service airlines. Beyond such identification, PriceLine
will not otherwise advertise or promote that Airline is a participant in the
PriceLine Program.
[**] = Confidential treatment requested for redacted portion.
6
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
ARTICLE 3 REPORTING
3.1 PriceLine will provide the Airline with (i) access to information
concerning each ticket issued by PriceLine Travel on the Airline: (ii) aggregate
information (i.e. non airline specific) for all tickets Issued by PriceLine
Travel in each O&D that the Airline participates with reasonable availability;
(iii) aggregate information for all PriceLine offers not ticketed in each O&D
that the Airline participates with reasonable availability; and (iv) information
about the Airlines' PriceLine market share in each O & D in which the Airline
participates.
3.2 PriceLine will provide to the Airline the methodology for
processing customer offers and selecting a participating carrier to ticket
each such offer. These processing procedures may be modified or adjusted from
time to time by PriceLine. PriceLine will use its best efforts to provide, in
writing, any modifications or adjustments to the processing procedures then
in effect within five (5) business days of any such modification or
adjustment.
3.3 PriceLine will provide to the Airline an annual statement by
PriceLine's independent accounting firm or other qualified third-party
concerning PriceLine's compliance with all reporting and processing procedures
in effect from time to time. In addition, commencing six months after the
effective date of the Agreement, PriceLine's independent accounting firm will
provide to the Airline on a quarterly basis for each quarter ending March 30,
June 30, September 30 and December 31, a statement certifying (1) that PriceLine
has collected from its customer the correct amount of Section 4261 Taxes and
Other Collected Taxes, as defined in Section 11.1, in compliance with all laws,
regulation and rules applicable thereto; (2) that PriceLine has properly
remitted the correct amount of such collected Section 4261 Taxes to the
appropriate government entity or entities and (3) that PriceLine has remitted
the correct amount of such Other Collected Taxes to the Airline.
3.4 Airline may, upon reasonable notice to PriceLine and during normal
business hours, audit the financial books and records of PriceLine and the
information specified in Sections 3.1 and 3.3 above. Any such audit shall be at
the sole cost
[**] = Confidential treatment requested for redacted portion.
7
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
and expense of Airline and shall be conducted in a manner that
does not unduly disrupt or interfere with the normal business operations of
PriceLine.
ARTICLE 4 PROPRIETARY MARKS
4.1 During the term of this Agreement and thereafter, neither
PriceLine nor Airline shall use the other party's trademarks, trade names,
service marks, logos, emblems, symbols or other brand identifiers in advertising
or marketing materials, unless it has obtained the prior written approval of the
other party. The consent required by this Section 4.1 shall extend to the
content of the specific advertising or marketing items as well as the placement
and prominence of the applicable trademark, trade name, service xxxx, logo,
emblem, symbol or other brand identifier of the other party. PriceLine or
Airline, as applicable, shall cause the withholding, discontinuance, recall or
cancellation, as appropriate, of any advertising or promotional material not
approved in writing by the other party, that differs significantly from that
approved by the other party, or that is put to a use or used in a media not
approved by the other party.
ARTICLE 5 PRICELINE TICKET RESERVATIONS, BOOKINGS, PAYMENT AND FULFILLMENT
5.1 Airline will file Unpublished Fares and rules for PriceLine
Tickets with the computer reservation system ("CRS") used by PriceLine Travel.
5.2 PriceLine will determine the price at which tickets are sold based
on customer offers received through the PriceLine Service.
5.3 All Unpublished Fares, as defined in Section 11.1, made available
by Airline for sale through the PriceLine Service shall not be commissionable.
All such Unpublished Fares shall be exclusive of any domestic federal segment
taxes, and any domestic or international government-imposed fuel, departure,
arrival, passenger facility, airport, terminal and/or security taxes or
surcharges. All such
[**] = Confidential treatment requested for redacted portion.
8
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
excluded items, however, must be included in the fare displayed or, if not
included, displayed, pursuant to the rules established by the Department of
Transportation, on- screen in full, by dollar amount, prior to a customer
purchasing a ticket, and added to the fare amount collected from the passenger.
5.4 Upon locating an Unpublished Fare satisfying a PriceLine
customer's ticket request, PriceLine Travel shall immediately ticket the
customer's ticket price against a valid credit card provided by the PriceLine
customer.
5.5 In all PriceLine Ticket transactions, PriceLine Travel will be the
merchant of record and will pay all associated merchant credit card fees. All
PriceLine tickets sold on Airline will be settled through the Airline Reporting
Corporation ("ARC").
5.6 All tickets of Airline issued through the PriceLine Service will
be issued by PriceLine Travel using Agency ARC: 00-00000-0.
5.7 From the effective date of this Agreement through the date six
months thereafter (the "Six Month Period"), PriceLine shall pay to the Airline
the base fare, as defined in Attachment A, and all Section 4261 and Other
Collected Taxes, associated with such base fare. In the event of any dispute as
to the amount of the Section 4261 and Other Collected Taxes associated with any
base fare offered by Airline to PriceLine, the Airline alone shall have the
authority to determine the proper amount of such Collected Taxes.
5.8 After the Six Month Period, PriceLine, through its agent, ARC,
shall pay to the Airline the base fare, as defined in Attachment A. and all
Other Collected Taxes.
5.9 Unless otherwise directed by a PriceLine customer, all PriceLine
Tickets issued on Airline will be issued electronically. After issuance,
PriceLine will promptly forward to the customer a receipt of proof of purchase,
contract of carriage on Airline and a copy of the Restrictions (including any
additional restrictions imposed by Airline).
[**] = Confidential treatment requested for redacted portion.
9
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
5.10 PriceLine will encourage its customers to accept electronic
ticketing for all PriceLine Ticket requests by imposing an additional charge for
the issuance of paper tickets and maintaining the issuance of electronic tickets
as the default option on the PriceLine Service.
5.11 Subject to the provisions of Section 6.5 above, all PriceLine
paper tickets for carriage on Airline will be issued by PriceLine Travel on
standard ARC traffic documents and will be validated with Airline's validation
in accordance with ARC requirements. The auditor's coupon will show the
Airline's base fare and all Section 4261 Taxes and all Other Collected Taxes
that are remitted by PriceLine to Airline pursuant to Section 11.2.
5.12 In the event that PriceLine is unable to fulfill a PriceLine
ticket request from Unpublished Fares and seat inventory provided from airlines
participating in the PriceLine Service, PriceLine reserves the right to sell
tickets on Airline using published fares used by travel agents generally as
reflected in CRSs, in accordance with the rules and conditions associated with
such fares.
ARTICLE 6 PRICELINE TICKET ALLOCATION METHODOLOGY
6.1 All airlines participating in the PriceLine Service will be given
the first opportunity to fill a customer ticket request based on a formula[**].
If a participating airline fails to respond to ticket request on its designated
first look, then PriceLine will allocate the request through a second round of
preferred looks[**] for each O&D requested (but excluding the participating
airline that failed to fulfill the ticket request on the first look).
ARTICLE 7 PRICELINE CUSTOMER SERVICE; JOINT MARKETING
7.1 PriceLine will provide 24-hour customer support services to all
PriceLine customers through a toll-free number at the customer support center
[**] = Confidential treatment requested for redacted portion.
10
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
designated by PriceLine from time to time. The customer support center will be
adequately staffed with personnel trained to take PriceLine Ticket requests by
phone and respond to all customer inquiries for related service and support.
7.2 PriceLine will use commercially reasonable efforts to ensure that
its customer service representatives provide quality customer service and
support to PriceLine customers in a prompt, reliable and courteous manner.
7.3 PriceLine will promptly respond to PriceLine customer questions
and issues pertaining to special handling requirements for PriceLine Tickets,
including processing any special customer handling requirements in respect of
PriceLine Tickets issued on Airline.
ARTICLE 8 TERM OF AGREEMENT
8.1 This Agreement will commence on the date set forth on the first
page of this Agreement and may be terminated by the Airline or PriceLine upon
thirty (30) days prior written notice to the other party except that, in the
event PriceLine fails to pay any sum due hereunder on the due date, Airline may
terminate this Agreement immediately. The obligations of the parties under
Articles 2, 3 and 9 of this Agreement shall indefinitely survive the expiration
or termination of this Agreement.
8.2 If any sum due to be paid hereunder is not paid on the due date,
or if, after the Six Month Period referenced in Section 5.7, Airline reasonably
believes that PriceLine has not put into place appropriate tax and other
procedures to enable PriceLine to remit the Collected Taxes, as defined in
Section 11.1, to the Internal Revenue Service, or other appropriate governmental
entity, or if Airline has not received, in a timely manner, any of the
certifications from PriceLine's independent accounting firm as required by
Section 3.3. Airline may, upon notice to PriceLine, terminate this Agreement
immediately.
[**] = Confidential treatment requested for redacted portion.
11
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
8.3 In the event of written notice of termination of this Agreement in
accordance with the terms of this Article, all PriceLine tickets issued and paid
for prior to the effective date of termination specified in such notice will be
accepted by the Airline under the terms of this Agreement.
ARTICLE 9 INDEMNIFICATION
9.1 PriceLine Travel and PriceLine Inc. will jointly and severally
indemnify, defend and hold harmless Airline, its officers, directors, employees
and agents, from and against all damages, losses and causes of action including,
without limitation, failure to properly promote or advertise any fare, damage to
property or bodily injury, to the extent caused by PriceLine Inc.'s or PriceLine
Travel's breach of this Agreement or the ARC Agent Reporting Agreement, or any
failure to assess, collect or, as provided herein, pay over to Airline or an
appropriate government entity or entities any sums due to be paid hereunder, or
by the negligence or willful acts of any of the parties named above or any of
their respective employees or agents.
9.2 Airline will indemnify, defend and hold harmless PriceLine, Inc.
and PriceLine Travel, and their respective officers, directors, employees and
agents from and against all damages, losses and causes of action including,
without limitation, damage to property or bodily injury, to the extent caused
by the Airline's breach of this Agreement or by the negligence or willful acts
of the Airline or any of its employees or agents.
ARTICLE 10 NO EXCLUSIVITY
10.1 The relationship by and among Airline, PriceLine Inc. and
PriceLine Travel as set forth in this Agreement shall be non-exclusive. As such,
Airline may participate in other programs similar to the PriceLine Service.
ARTICLE 11 TAXES AND THE PAYMENT THEREOF
[**] = Confidential treatment requested for redacted portion.
12
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
11.1 PriceLine shall be responsible for collecting (1) any taxes
pursuant to Section 4261 of the Code ("Section 4261 Taxes") on any amounts paid
by the customers of PriceLine to PriceLine and (2) any passenger facility
charges, stamp taxes, excise taxes (including segment fees), value added taxes
(in the nature of a sales or use tax), gross receipts taxes (in the nature of a
sales or use tax), APHIS user fees, U.S. Custom user fees, U S. Immigration user
fees, security charges, and any other taxes and/or user fees imposed by any
domestic or foreign governmental entity on a per passenger basis ("Other
Collected Taxes") on any amounts paid by the customers of PriceLine to
PriceLine.
11.2 During the Six Month Period, PriceLine shall remit and be
responsible for remitting to the Airline, any Section 4261 Taxes and any Other
Collected Taxes on any amounts paid by the customers of PriceLine to PriceLine
with one exception as follows: PriceLine shall not remit to the Airline any
Section 4261 Taxes or any Other Collected Taxes on any amount charged to and
paid by the customers of PriceLine in excess of the base fare (and Airline shall
not, accordingly, have any obligation to pay such portion of the Section 4261
Taxes or any Other Collected Taxes to the appropriate government agency). During
such Six Month Period, the Airline shall remit, and be responsible for
remitting, to the appropriate governmental agencies all Section 4261 Taxes and
any Other Collected Taxes received by the Airline from PriceLine pursuant to
this paragraph. During such Six Month Period, PriceLine shall remit, and be
responsible for remitting, to the appropriate governmental agencies, all
Section 4261 Taxes and all Other Collected Taxes on any amounts paid by the
customers of PriceLine in excess of the base fare.
11.3 After the Six Month Period, PriceLine shall remit, and be
responsible for remitting to the appropriate governmental agencies, all Section
4261 Taxes on any amounts paid by the customers of PriceLine to PriceLine. After
the Six Month Period, PriceLine shall remit, and be responsible for remitting,
to the Airline any Other Collected Taxes on any amounts paid by the customers of
PriceLine to PriceLine. The Airline, in turn, shall remit, and be responsible
for remitting to the appropriate governmental entity cr entities, all such Other
Collected Taxes received by the Airline from PriceLine.
[**] = Confidential treatment requested for redacted portion.
13
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
11.4 With the exception of the Airline's obligations set forth in
Sections 11.2 and 11.3, PriceLine shall pay and be responsible for all Section
4261 Taxes and any Other Collected Taxes on any amounts paid by the customers of
PriceLine to PriceLine, and related penalties and interest. PriceLine Travel and
PriceLine Inc. will jointly and severally indemnify, defend and hold harmless
Airline and Its affiliated airlines, and any of the airline's or its affiliated
airlines' officers, directors, employees, and agents, from and against any and
all assessments or payments of Section 4261 Taxes or Other Collected Taxes on
any amounts paid by, or payable by, the customers of PriceLine Travel or
PriceLine Inc. and any related penalties and interest. This indemnification
specifically includes, but is not limited to, any assessments or payments under
Sections 4263, 6651, 6652, 6856, 6662, 6672, or 7275 of the Code, and any
successor provisions, and any related interest. Any payment that PriceLine shall
be required to make to or with respect to Airline or its affiliated airlines, or
any of the Airline's or its affiliated airlines' officers, directors, employees,
and agents, shall be in an amount which, after reduction by the amount of taxes
required to be paid in respect of the receipt, accrual or payment of such
amount, shall be equal to the payment otherwise required hereunder. The
obligations of this Section 11.4 are supplementary of those set forth in Section
9. 1 and shall survive the termination of this Agreement.
11.5 PriceLine's obligations to pay taxes hereunder shall be
collateralized by an Irrevocable Stand-by Letter of Credit ("Letter of Credit")
satisfactory in form to Airline and issued by a bank in the continental United
States satisfactory to Airline ("Issuing Bank"). Such Letter of Credit shall be
kept current and not be permitted to lapse and shall be in the amount of One
Million Dollars ($1,000,000), any part of which amount shall be supplemented and
replaced if it is drawn upon by Airline, so that the Letter of Credit continues
to have a face amount of One Million Dollars ($1,000,000). Such Letter of Credit
shall be delivered to Airline within fourteen (14) days from the date of this
Agreement.
Airline may draw upon such Letter of Credit if, at any time, it
believes that any sums due to be paid by PriceLine hereunder have not been paid
on the due date, by, without more, presenting to the Issuing Bank a certificate
signed by
[**] = Confidential treatment requested for redacted portion.
14
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
an officer of Airline, stating the sum that is due and that such sum has not
been paid on the due date.
ARTICLE 12 GENERAL PROVISIONS
12.1 No waiver or breach of any of the provisions of this Agreement
shall be construed as a waiver of any succeeding breach of the same or any other
provision.
12.2 If any paragraph, sentence or clause of this Agreement shall be
adjudged illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall not affect the legality, validity or enforceability of
this Agreement as a whole or of any paragraph, sentence or clause hereof not so
adjudged.
12.3 Any notice required or permitted hereunder shall be deemed
sufficient if given in writing and delivered personally, by facsimile
transmission, by reputable overnight courier service or United States mail,
postage prepaid, to the addresses shown below or to such other addresses as are
specified by similar notice, and shall be deemed received upon personal
delivery, upon confirmed facsimile receipt, two (2) days following deposit with
such courier service, or three (3) days from deposit in the United States mails,
in each case as herein provided:
If to PriceLine Travel or to PriceLine Inc.:
Xxxxxxxxx.xxx Incorporated
Five Xxxx Xxxxx Xxxx
Xxxxxxxx XX 00000
Attention: Chief Financial Officer
Phone: 000-000-0000
Fax: 000-000-0000
WITH A COPY TO:
[**] = Confidential treatment requested for redacted portion.
15
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
xxxxxxxxx.xxx Incorporated
Five Xxxx Xxxxx Xxxx
Xxxxxxxx XX 00000
Attention: General Counsel
If to Airline:
Northwest Airlines, Inc.
0000 Xxxxxxxxx Xxxxx
XX. Xxxx, XX 00000-0000
Attention: Director Domestic Pricing
Phone: 000-000-0000
Fax: 000-000-0000
WITH A COPY TO:
Attention: General Counsel
Mail Stop: A l180
A Party may change its address and the name of its designated recipient of
copies of notices for purposes of this Agreement by giving the other parties
written notice of the new name and the address, phone and facsimile number of
its designated recipient in accordance with this Section 12.3.
12.4 This Agreement and the Attachments hereto supersede and replace
all previous understandings or agreements, whether oral or written, with respect
to the subject matter hereof. The captions in this Agreement are for convenience
only and do not alter any terms of this Agreement.
12.5 This Agreement may be amended or modified only by a written
amendment executed by the parties.
12.6 The formation, construction, performance and validity of this
Agreement shall be governed by the internal laws of the State of New York. .
[**] = Confidential treatment requested for redacted portion.
16
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
12.7 This Agreement may be executed in counterparts, each of which
shall be deemed an original, and together, shall constitute one and the same
instrument. Execution may be effected by delivery of facsimiles of signature
pages (and the parties shall follow such delivery by prompt delivery of
originals of such pages).
12.8 No party will in any manner or by any device, either directly or
indirectly, act in violation of any applicable law, governmental order or
regulation. PriceLine Travel shall comply at all times with the provisions of
the Airline's tariffs (except where such tariffs are specifically amended by
Airline under the terms of this Agreement) and the terms of the Airlines
Reporting Corporation (ARC) Agent Reporting Agreement and any addenda thereto.
12.9 PriceLine agrees to notify the Airline promptly, in writing, in
the event there is a change of control in the ownership of PriceLine Inc. For
purposes of this Agreement, a "change of control" with respect to a party means
(i) the acquisition by any other person or group (within the meaning of Section
13(d)(3) of the Securities Exchange Act (except an employee group of such party,
any of its subsidiaries or a holding company of such party)), of the beneficial
ownership of securities representing 20% or more of the combined voting power of
the securities entitled to vote generally in the election of the board of
directors of such party, or (ii) the sale, mortgage, lease or other transfer of
assets or earning power constituting more than 50% of the assets or earning
power of such party (other than ordinary course financing); provided that in no
event shall a "change of control" be defined to include (i) an initial public
offering of shares of a party's capital stock, (ii) the formation by a part of a
holding company, or (ii) an intra-corporate transaction with a company under
common control with a party. Upon the occurrence of a change of control, any
other party may terminate this Agreement on thirty (30) days prior written
notice.
12.10 No party hereto shall assign or transfer or permit the
assignment or transfer of this Agreement within the prior written consent of the
other parties hereto, which may be withheld in their respective sole discretion.
[**] = Confidential treatment requested for redacted portion.
17
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
12.11 This Agreement shall not- be deemed to create any partnership or
joint venture between Airline and PriceLine, nor to create any rights in favor
of any person or entity other than the parties hereto. This Agreement is for the
sole benefit of the parties and nothing herein expressed or implied shall give
or be construed to give any other person any legal or equitable rights
hereunder.
12.12 In the event that irreparable damage shall occur in the event
any provision of this Agreement is not performed in accordance with the terms
hereof, the aggrieved party shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement.
12.13 Each party has participated jointly in the negotiation and
drafting of this Agreement. In the event any ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.
12.14 In the event that either party hereto is prevented from
fulfilling any of its obligations under this Agreement for a period not
exceeding one hundred twenty (120) consecutive days for a reason beyond its
control, including, but not limited to, strikes, lockouts, work stoppages or
other labor disputes, riots, civil commotions, acts of God, fire, flood and
other weather-related reasons, governmental action or directive (a "Force
Majeure Event), such party shall not, by reason of being so prevented, be in
breach of this Agreement and such condition shall not be cause of termination by
any other party. If a Force Majeure Event continues for a period in excess of
one hundred twenty (120) consecutive days as to one party which prevents that
party from fulfilling in any material way its obligations under this Agreement
to the other party, the other party shall have the right to terminate this
Agreement upon thirty (30) days' advance written notice to the other party.
[**] = Confidential treatment requested for redacted portion.
18
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the date indicated above.
AGREED AND ACCEPTED:
NORTHWEST AIRLINES, INC.
By: /s/ J. Xxxxxxx Xxxxxxx
----------------------------
Name: J. Xxxxxxx Xxxxxxx
--------------------------
Title: Sr VP Mkt Plng
-------------------------
xxxxxxxxx.xxx Incorporated
By: /s/ Xxx X. Xxxxxx
-----------------------------
Name: Xxx Xxxxxx
--------------------------
Title: Vice Chairman
-------------------------
PRICELINE TRAVEL, INC.
By: /s/ Xxx X.Xxxxxx
----------------------------
Name: Xxx X.Xxxxxx
--------------------------
Title: Vice Chairman
-------------------------
[**] = Confidential treatment requested for redacted portion.
19
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
-------------------------------------------------------------------------------
ATTACHMENT A
The Airline shall maintain and communicate any changes in fares and/or rules to
be used by PriceLine. The Airline will file base fares (i.e. not fares) via
ATPCO (Airline Tariff Publishing Corporation). The base fare is the Unpublished
Fare net of any taxes required to be paid by a customer as part of the purchase
of a ticket from PriceLine under Section 4261(a) and 4261(e)(5) of the Code.
ATPCO will transmit the base fares to WorldSpan and WorldSpan will add in the
Section 4261 Taxes. These fares will be secured to the PriceLine IATA number.
The Airline may file fare and/or rule changes up to 3 times a day Mon-Fri and
once a day on weekends. The Airline will consider PriceLine notified of any
changes when WorldSpan has completed loading the ATPCO file. The following chart
illustrates the approximate filing times:
Day of week ATPCO sends file to Approximate update time in
WorldSpan WorldSpan
----------- ---------
Mon-Fri 10:00 am Noon - 1:00 PM
12.30 pm 2:00 pm - 4:00 pm
8:00 pm 12:30 am (next day)
Sat/Sun 4:00 pm 12:30 am (next day)
The most current fares and rules may be accessed by PriceLine as authorized by
the Airline, through the following CRS entries:
Fares & Rules Display: 4FMSPMIA SR - NW
Pricing Entry: 4P FSR
4P*FSR (to store fare)
Ticketing Entry: Tickets must be issued as Bulk.
[**] = Confidential treatment requested for redacted portion.
20
AIRLINE PARTICIPATION AGREEMENT
Northwest Airlines, Inc. and PRICELINE
--------------------------------------------------------------------------------
Information on how to issue bulk tickets can be found
in WorldSp2n under:
Help Bulk
Help Custtkt
Info Bulk
[**] = Confidential treatment requested for redacted portion.
21
ATTACHMENT B
PRICELINE ALLOCATION MODEL
Overview and Summary
[**]
[**] = Confidential treatment requested for redacted portion.
