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EXHIBIT 10.37
ULTRASWITCH USER AGREEMENT
This Agreement is entered into by and between THE HOTEL INDUSTRY
SWITCH COMPANY, a Delaware corporation (hereinafter "THISCO"), and HFS
INCORPORATED, formerly known as Hospitality Franchise Systems, Inc.
(hereinafter "HFS"), to be effective the 4th day of January, 1996 (the
"Agreement").
1.0 DEFINITIONS
1.1 For purposes of this Agreement, the following definitions
shall apply:
(i) UltraSwitch. The UltraSwitch is a service of THISCO to
provide an Interface (as hereinafter defined) between
Reservation Providers (as hereinafter defined) and hotel
reservation systems with the capability to provide immediate
room confirmation numbers for each hotel property partici
pating in UltraSwitch.
(ii) Interface. Interface is the hardware and software and
attendant technical support required to produce computer to
computer communications between a Reservation Provider (as
hereinafter defined) and an UltraSwitch User (as hereinafter
defined).
(iii) UltraSwitch User. An UltraSwitch User is an operator of
a hotel reservation system that has executed an UltraSwitch
User agreement.
(iv) Reservation Provider. A Reservation Provider is any
person or entity with the present or future capability to
connect with the UltraSwitch for the purpose of making
reservations with an UltraSwitch User.
INFORMATION CONTAINED IN THIS AGREEMENT HAS BEEN OMITTED SUBJECT TO A
CONFIDENTIAL TREATMENT REQUEST AND HAS BEEN FILED SEPARATELY WITH THE S.E.C.
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(v) Net Reservations. Net Reservations within a particular
time period equals the number of reservations processed
through the UltraSwitch system within such time period, less
the number of reservations as to which notice of cancellation
in the UltraSwitch system is received by the UltraSwitch
system within such time period.
(vi) Status Change. A Status Change is a message indicating
that either the availability or the rate of a room type
has changed for a single date in a single property.
2.0 THE ULTRASWITCH SYSTEM
2.1 Duties of THISCO. THISCO shall operate and maintain the
UltraSwitch Interface for the use and benefit of HFS and other UltraSwitch
Users meeting or exceeding the UltraSwitch Specifications. Subject to the
duties of HFS set forth in Section 2.2 below, THISCO will provide all
reasonable and necessary technical support, hardware and software, and
modifications to the UltraSwitch system to maintain an Interface between
Reservation Providers and HFS. Subject to Section 6.2 hereof, delays caused by
Reservation Providers, UltraSwitch Users or other third parties, the
UltraSwitch Interface will provide room confirmation numbers for each booking
at an UltraSwitch User's property made through a Reservation Provider within an
average determined over each calendar month of:
a. [*] seconds for UltraSwitch Users located within the
contiguous 00 Xxxxxx Xxxxxx xxx Xxxxxxxx xx Xxxxxxxx; and
b. [*] seconds for UltraSwitch Users located elsewhere.
THISCO shall not be responsible for but will use its best efforts to require
UltraSwitch Users to return response messages within the Response Time
Requirements set forth in subpart (a) and (b) above.
Subject to Section 6.2 hereof, the UltraSwitch will be available,
operational and fully functional to process HFS's customer reservations 99% of
the time each calendar month. Subject to Section 6.2 hereof, THISCO agrees to
correct all failures or interruptions of the
*Confidential Treatment Requested
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UltraSwitch and repair or replace all UltraSwitch parts causing or contributing
to failure or interruption within 72 hours of the failure or interruption at
THISCO's sole cost and expense.
THISCO will not discriminate among UltraSwitch Users in processing
reservations through the UltraSwitch.
2.2. Duties of HFS. Through the UltraSwitch Interface, HFS will permit
access to all Reservation Providers utilizing the UltraSwitch and will permit
all such Reservation Providers the full and complete right, subject to any
agreement between HFS and the Reservation Providers, to reserve and cancel
rooms authorized for sale by HFS and receive a confirmation acknowledgment of
any such transaction. All information provided by HFS with respect to rooms and
facilities shall be complete and accurate and shall be consistent with and
inclusive of all the information provided and rates available to a direct
caller of HFS reservation system to the fullest extent each Reservation
Provider data base will permit.
2.3 Enhancement or Modification of the UltraSwitch System. THISCO may
undertake to modify the operation or enhance the capability of the UltraSwitch.
In such event, THISCO will provide notice to HFS of such enhancement at least
60 days prior to such modification or enhancement and will make such
adjustments and modifications to THISCO's system, at THISCO's sole expense, as
are reasonable and necessary to maintain the Interface with HFS. HFS agrees to
cooperate with THISCO in modifying and enhancing the UltraSwitch.
2.4 Modification of UltraSwitch User System. In the event HFS modifies
its central reservation system, or modification of its central reservation
system is required for the implementation, operation, modification or
enhancement of the UltraSwitch, HFS shall pay all necessary costs associated
with such modification to its system. In the event HFS modifies its central
reservation system and such modification requires THISCO to modify the
Interface, HFS shall pay THISCO its standard consulting rate and all expenses
incurred as a result of the modification. In the event THISCO modifies or
enhances the UltraSwitch and, as a result, it becomes necessary for HFS to
modify its reservation system, HFS shall have the option to terminate this
Agreement by notice to THISCO within thirty (30) days after receipt of the
notice provided in Section 2.3 if the resulting cost to HFS for the particular
modification exceeds $10,000.00.
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3.0 FEES AND COSTS
3.1 Reservation and Status Change Fees. For the use of the UltraSwitch
Interface, HFS shall pay THISCO as follows:
For the first [*] Net Reservations during each calendar
year [*] per Net Reservation;
For the next [*] Net Reservations during each calendar
year, [*] per Net Reservation;
For the next [*] Net Reservations during each calendar
year, [*] per Net Reservation;
For all Net Reservations in excess of [*] Net
Reservations during each calendar year, [*] per Net
Reservation;
For the first [*] Status Changes during each calendar
year, [*] for each Status Change;
For the next [*] Status Changes during each calendar
year, [*] for each Status Change;
For all Status Changes in excess of [*] during each
calendar year, [*] for each Status Change.
Notwithstanding the above-stated provisions, in the event the ratio of Status
Changes to Net Reservations exceeds [*] during a billing period, there shall
be no charge for Status Changes provided, however, in the event the ratio of
Status Changes to Net Reservations exceeds [*] during a billing period, all
Status Changes in excess of the [*] ratio shall be [*]
THISCO may increase the Reservation and Status Change Fees by an amount equal
to the annual increase in the U.S. Consumer Price Index to offset cost
increases of THISCO's operations provided that such increase shall not take
effect until the expiration of 60 days after notice of the increase.
*Confidential Treatment Requested
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3.2 Guaranteed Annual Minimum Reservation Fee. During each calendar
year of this Agreement, HFS shall pay THISCO a reservation fee for at least
[*] Net Reservations, whether or not such Net Reservations actually occur.
3.3 Payment of Fees and Costs. THISCO will invoice HFS monthly for all
fees, costs, and additional costs incurred by THISCO that are to be paid by HFS
pursuant to this Agreement. HFS shall pay each invoice upon receipt and, in any
event, within 30 days of each invoice date. In the event an invoice (all or a
portion of which has not been materially disputed) is not paid within 30 days
of mailing, HFS agrees to pay interest on all undisputed amounts over 30 days
old at an annual rate of 15% or 1 1/4% per month.
3.4 Additional Costs. HFS shall pay its pro rata share of
communication costs (based upon the number of UltraSwitch Users for that month
for all lease lines, back up and dial up lines between the UltraSwitch User and
the UltraSwitch) for all UltraSwitch Users who are operational and, with
respect to those UltraSwitch Users who are not yet operational, for a 60 day
period prior to becoming operational. HFS shall provide all necessary modems to
specifications established by THISCO for connection with the UltraSwitch.
4.0 TERM
4.1 Term of Agreement. The initial term of this Agreement, unless earlier
terminated pursuant to the provisions of this Agreement, shall be effective on
the date first stated above and shall expire on the last day of the seventy
second (72nd) month after the effective date. This Agreement shall be
automatically renewed and extended for additional 12 month periods unless, at
least 30 days prior to the expiration of the initial term or at least 30 days
prior to the expiration of any additional 12 month period, either party
provides written notice to the other of its decision not to renew and extend.
5.0 TERMINATION
5.1 Termination by HFS. Upon the occurrence of an Event of Default (as
hereinafter defined) by THISCO and the failure of THISCO to cure such default
after notice and opportunity to cure as provided by Section 6.3 hereof, HFS may
terminate this Agreement at any time within 30 days after the expiration of the
cure period provided in Section 6.3.
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5.2 Termination by THISCO. Upon the occurrence of an Event of Default
(as hereinafter defined) by HFS and the failure of HFS to cure such default
after notice and opportunity to cure as provided by Section 6.3 hereof, THISCO
may terminate this Agreement at any time within 30 days after the expiration of
the cure period provided in Section 6.3.
6.0 DEFAULT
6.1 Events of Default. Subject to Section 6.2 hereof, any one of the
following listed occurrences shall be considered an Event of Default:
(i) The failure to pay any amount due hereunder within the
time required;
(ii) The refusal or failure to diligently and in good faith
perform each and every material provision of this Agreement;
(iii) The failure of the UltraSwitch to perform materially in
accordance with its technical requirements;
(iv) If either THISCO or HFS (the "Defaulting Party")
becomes insolvent, takes any step leading to its cessation
as a going concern, or ceases business operations for
reasons other than a strike and other than assignment as
allowed by this Agreement, then the other party (the
"Insecure Party") may immediately terminate this Agreement
upon written notice to the other party unless the
Defaulting Party immediately gives the Insecure Party
adequate assurance of the future performance of this
Agreement. If bankruptcy proceedings are commenced with
respect to the Defaulting Party, and if this Agreement has
not otherwise terminated, then the Insecure Party may
suspend all further performance of this Agreement until the
Defaulting Party assumes or rejects this Agreement pursuant
to Section 365 of the Bankruptcy Code or any similar or
successor provision. Any such suspension of further
performance by the Insecure Party pending the Defaulting
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Party's assumption or rejection will not be a breach of
this Agreement.
6.2 Force Majeure. It shall not constitute a default if an Event of
Default is caused by or results from acts of God, fire, war, civil unrest,
accident, power fluctuations or outages, telecommunication fluctuations,
outages or delays, utility failures, mechanical defects, or other events beyond
the control of the defaulting party. However, if an Event of Default results
from any such occurrence and continues for more than 30 consecutive days,
either party may terminate this Agreement by providing notice as required
herein.
6.3 Occurrence of Default. Upon the occurrence of an Event of Default,
the non-defaulting party shall give written notice to the defaulting party
specifying the alleged default. The defaulting party shall then be entitled to
10 days after receipt of such notice within which to cure any monetary default
and 30 days within which to cure any non-monetary default. If the party
entitled to cure the Event of Default does not cure the Event of Default within
the cure period specified above, then such party shall be deemed to be in
default of this Agreement. Any such default shall not relieve the defaulting
party from any of its obligations hereunder, and in the event of a default, the
non-defaulting party hereunder shall, except as provided in this Agreement, be
entitled to whatever remedies at law or in equity are available to it.
7.0 CONFIDENTIALITY
7.1 Proprietary Information. During the term of this Agreement, it is
acknowledged by HFS and THISCO that each will receive confidential and
proprietary information which is the sole and exclusive property of the other
party. All such confiden tial and proprietary information shall be marked or
otherwise identified as such and shall be treated as confidential and
proprietary subject only to disclosure where required by law. Such designation
may be removed by each party making the designation. HFS acknowledges that it
shall have no access to and shall not use the UltraSwitch software or related
property, other than as specifically provided for in this Agreement, and that
such information is confidential and proprietary property of THISCO. Any use of
the UltraSwitch name by HFS is subject to prior written approval of THISCO
provided HFS may describe the Interface contemplated by this Agreement in its
franchise offering circular and other materials as required by state or federal
law. The provisions hereof shall remain binding
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and in force and effect forever, notwithstanding the expiration or termination
of this Agreement at any time.
8.0 INDEMNIFICATION
8.1 Indemnification in the Event of Certain Losses. HFS agrees to
indemnify and hold harmless THISCO and THISCO's affiliates and their directors,
officers, employees and other stockholders, from and against any losses,
claims, liabilities, damages or expenses (including reasonable attorney's fees)
occurring on account of HFS's fault and through no fault of THISCO ("THISCO's
Losses"). THISCO agrees to indemnify and hold harmless HFS, and HFS's
affiliates and their directors, officers, employees and stockholders, from and
against any losses, claims, liabilities, damages or expenses (including
reasonable attorney's fees) ("HFS's Losses") occurring on account of THISCO's
fault and through no fault of HFS. Promptly after receipt by an indemnified
party of notice of the commencement of any action or the presentation or other
assertion of any claim which could result in any indemnification claim pursuant
to this Section 8.1, such indem nified party shall give prompt notice thereof
to the indemnifying party and the indemnifying party shall be entitled to
participate therein or, to the extent that it shall wish, assume the defense
thereof with its own counsel. If the indemnifying party elects to assume the
defense of any such action or claim, the indemnifying party shall not be liable
to the indemnified party for any fees of other counsel or other expenses, in
each case sub sequently incurred by such indemnified party in connection with
the defense thereof, other than reasonable costs of investigation and
preparation, unless representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. The
parties agree to cooperate to the fullest extent possible in connection with
any claim for which indemnification is or may be sought under this Agreement.
9.0 DISCLAIMER OF WARRANTIES
9.1 Waiver of Warranties. THISCO shall not be responsible or liable
for any inaccuracies in the data base or the information processed by or
through the UltraSwitch nor shall it have any liability for any act or failure
to act except as expressly set forth herein, except gross negligence or willful
misconduct. All warranties express or implied, including without limitation,
any warranty of fitness for a particular purpose, merchantability, good and
workmanlike product or service or otherwise, are disclaimed and waived.
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9.2 No Consequential Damages. Neither party shall be liable to the
other for any consequential damages proximately caused or resulting from any
breach of this Agreement or arising out of the performance of this Agreement,
and each party hereby expressly waives such damages.
9.3 Right to Repair. Notwithstanding any other provision of this
Agreement, the only obligation of THISCO in the event of a material failure in
the operation or performance of the UltraSwitch shall be to repair the system
within 24 hours of notice from HFS requesting such repair.
10. MISCELLANEOUS
10.01 Other UltraSwitch User Agreements. In the event any other
UltraSwitch User Agreement shall contain provisions regarding Fees and Costs
(Article 3 hereof), Term (Article 4 hereof), Termination (Article 5 hereof),
Indemnification (Article 8 hereof), or Disclaimer of Warranties (Article 9
hereof) more favorable than those referenced provisions contained herein,
THISCO shall promptly provide notice to HFS of such provision(s) and HFS shall
have the right to amend this Agreement to include the effected provisions.
10.02 Arbitration of Disputes. Any controversy or claim arising out of
or relating to this contract, or the breach thereof, shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. There
shall be a panel of three arbitrators. Each party shall select one arbitrator
and the two arbitrators selected shall select a third neutral arbitrator. All
reasonable and necessary costs and fees (including attorney's fees) incurred in
connection with the arbitration shall be borne by the losing party or assessed
in the award as otherwise deemed appropriate except travel, food and lodging
expenses shall be borne by the party incurring the same. If the demand for
arbitration is initiated by HFS, venue of the arbitration proceedings shall be
determined by THISCO. If the demand for arbitration is initiated by THISCO,
venue of the arbitration proceedings shall be determined by HFS.
10.03 Non-Exclusive Agreement. Each party acknowledges that this is
not an exclusive agreement with respect to a direct link interface and that
each party may contract with other parties providing same or similar services.
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10.04 Status of Parties. This Agreement shall not constitute a
partnership, joint venture or similar arrangement. The parties hereto are
separate and distinct entities independently contracting with each other at
arms length. THISCO shall not be deemed by this Agreement to be granting a
license to HFS, with respect to UltraSwitch or any software or service xxxx
related thereto, or otherwise, this being a contract for the use and rendering
of services only.
10.05 Assignment. This Agreement is not assignable by THISCO or HFS
without the prior written consent of the non-assigning party, and such consent
shall not be unreasonably withheld or delayed provided that HFS may assign this
Agreement in connection with the sale of its reservation system or franchise
system and either party may assign this Agreement without consent in the event
of a merger, consolidation, or sale of substantially all of its assets.
10.06 Notices. All notices, requests, consents, payments and other
communications contemplated hereby shall be in writing and (a) personally
delivered, (b) deposited in the United States mail, first-class, registered or
certified mail, return receipt requested, with postage prepaid, (c) sent by
overnight courier service (for next business day delivery), shipping prepaid,
or (d) transmitted by facsimile/telecopy in combination with any other
permitted form of notice as follows:
If to If to
THISCO:
The Hotel Industry Switch Company HFS Incorporated
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 0000 0000 X. Xxx Xxxxx
Xxxxxx, Xxxxx 00000 Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxx, III Attention: Xxxx Xxxxxxxxx
If by facsimile/telecopy to: If by facsimile/telecopy to:
(000) 000-0000) (000) 000-0000
or such persons or addresses as any party may request by notice duly given
hereunder. Except as otherwise specified herein, notices shall be deemed given
and received at the time of personal delivery or, if sent by U.S. mail, three
(3) business days after mailing, or, if sent by overnight courier, one (1)
business day after such sending or, if sent by facsimile or telecopy, upon
verified receipt of same.
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10.07 Controlling Law. This Agreement shall be interpreted pursuant to
the laws of the State of Texas without reference to its conflict of laws
principles.
10.08 Entire Agreement. This Agreement and the exhibits attached
hereto constitute the entire agreement between THISCO and HFS with respect to
the implementation and operation of the UltraSwitch system and supersedes and
replaces any and all other agreements and representations, verbal or written,
with respect to the subject matter of this Agreement. There are no
representations, warranties or agreements made or relied upon by either party
with respect to the subject matter of this Agreement which are not contained in
this Agreement.
10.09 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the legal representatives, successors and duly
authorized assigns of each party whether resulting from merger, acquisition,
reorganization or assignment pursuant to the terms hereof.
10.10 Confidentiality of the Agreement. The parties agree that the
terms and provisions of this Agreement shall be kept confidential and shall be
disclosed only to those persons and entities as required by law or as permitted
by the other party hereto. The parties may, however, disclose the existence of
this Agreement to any person or entity.
10.11 Software and Intellectual Property. Each of the parties hereto
represents and warrants to the other that, with respect to all software and
other intellectual property in connection with the operation of the Interface
furnished or required to be furnished pursuant to this Agreement (collectively,
the "Intellectual Property"), each either owns the Intellectual Property
furnished by it or is fully authorized to deliver the Intellectual Property and
to allow the Intellectual Property to be used in connection with the Interface,
as con templated by this Agreement. Should any claim be raised by any third
party that the use of any of the Intellectual Property or the delivery of any
of the Intellectual Property in connection with this agreement constitutes
infringement of any patent, copyright, license or other property right (a
"Claim"), the party furnishing such Intellectual Property shall, at its
expense, defend any such Claim in accordance with the provisions of Section 8.1
of this Agreement. Should either party be temporarily or permanently enjoined
from using any of the Intellectual Property as a result of any Claim, the other
party, at its option and own expense, shall either procure the right to
continue to use the Intellectual Property free from any Claim or replace or
modify the offending Intellectual Property so that its use becomes
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non-infringing, within 15 days of the date on which it receives notice of the
claim (either such corrective action being referred to herein as a
"Correction"). If a Correction is not accomplished, the party who furnished the
Intellectual Property resulting in the Claim shall be deemed to be in default
of this Agreement, and in such event, Sections 5.2 and 6.3 of this Agreement
shall control; provided, however, that the 15 day period specified above shall
be deemed to be the applicable cure period under Section 6.3, and once that 15
day period has expired without a Correction having occurred, the applicable
cure period under Section 6.3 shall be deemed to have expired. Without limiting
Article 8 of this Agreement, the party who furnished the Intellectual Property
resulting in the Claim shall also be obligated to indemnify the other party for
any of its losses (such losses being THISCO's Losses or HFS's Losses, as the
case may be, as defined in section 8.1 hereof) in connection with any Claim for
which a Correction is not made within such 15 day period, in accordance with
Article 8.
AGREED to this 4th day of January, 1996.
THE HOTEL INDUSTRY SWITCH HFS INCORPORATED
COMPANY
By: /s/ XXXX X. XXXXX, III By: /s/ XXXXXXX X. XXXXXXX
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Xxxx X. Xxxxx, III (name) Xxxxxxx X. Xxxxxxx
President -------------------------------
(title) Vice President MIS
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