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EXHIBIT 10.31
FIRST AMENDMENT TO HCC PARTICIPANT AGREEMENT
This First Amendment to HCC Participant Agreement is entered into by and
between The Hotel Clearing Corporation, hereinafter called "HCC", and CHOICE
HOTELS INTERNATIONAL, INC., hereinafter called "Participant", to be effective
the 11th day August, 1995 (the "First Amendment").
AGREED FACTS
1. HCC and Participant have heretofore entered into an HCC
Participant Agreement dated effective March 31, 1995 (hereinafter
called the "Participant Agreement").
2. HCC and Participant have mutually agreed to amend certain
provisions of the Participant Agreement as more specifically set
forth herein.
3. HCC and Participant intend for this First Amendment to set forth
in its entirety their agreement made this date with respect to
the amendments to the Participant Agreement as set forth herein.
AGREEMENT
FOR AND IN CONSIDERATION of the above stated facts, which are hereby
acknowledged as true and correct, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, HCC and
Participant hereby agree as follows:
1. Section 3.1 of the Participant Agreement is hereby deleted in its
entirety and is hereby replaced with the following:
"3.1 Fees for Processing HCC Travel Agent Commissions.
(a) For each of the [*] Commissionable Reservations
processed each calendar year pursuant to this
Agreement, Participant shall pay to HCC each month
a transaction fee of [*] per Commissionable
Reservation ("HCC Travel Agent Transaction Fees").
Participant shall pay no HCC Travel Agent
Transaction Fees for any Commissionable Reservation
transactions in excess of [*] in each calendar year.
*Confidential Treatment Requested
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(b) For Commissionable Reservations between [*] and
[*] processed each calendar year pursuant to this
Agreement, neither HCC nor Participant shall pay
any fee.
(c) For each Commissionable Reservation in excess of
[*] but less than [*] processed in each calendar
year pursuant to this Agreement, HCC shall pay to
Participant each month a fee (a "Participant Fee")
as follows:
(i) For the first [*] Commissionable
Reservations in excess of [*] Commissionable
Reservations [*] per Commissionable
Reservation.
(ii) For each Commissionable Reservation in
excess of [*] Commissionable Reservations -
[*] per Commissionable Reservation."
[*]
The fees set forth in Section 3.1(a)-(c) shall apply until such
time as the fees per Commissionable Reservation are either (i)
determined as standard fees for Pegasus stockholders or (ii) such
fees are generally applicable to Pegasus stockholders. At such
time, HCC shall make such pricing available to Participant and
Participant shall have the right to amend this Agreement
accordingly. In the event such standard or generally applicable
fees are not established by August 15, 1996, HCC shall promptly
provide notice to Participant of any more favorable fees or
pricing offered to any other Pegasus stockholders for HCC
Participant Agreements beginning after August 15, 1995 and
Participant shall have the right to amend this Agreement
accordingly.
2. Section 3.4 of the Participant Agreement is hereby deleted in its
entirety and is hereby replaced with the following:
"3.4 Billing Statements. Based upon the information provided
HCC by or with respect to Participant pursuant to Section
2.2 above, HCC will provide monthly billing statements
detailing (i) HCC Travel Agent Commissions to be paid by
Participant for the period covered by such billing
statement; (ii) HCC Travel Agent Transaction Fees to be
paid by Participant and (iii) [*] , based on [*]
*Confidential Treatment Requested
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[*] processed during the period covered by such
billing statement. All fees and costs shall be paid in
U.S. dollars."
3. Section 3.5 of the Participant Agreement is hereby deleted in its
entirety.
4. Section 4.1 of the Participant Agreement is hereby deleted in its
entirety and is replaced with the following:
"4.1 Term of Agreement. The initial term of this Agreement,
unless earlier terminated pursuant to the provisions of
this Agreement, shall expire [*]. This Agreement will be
automatically renewed and extended for additional twelve
(12) month periods unless, at least thirty (30) days prior
to the expiration of the initial term or any additional
twelve (12) month period, either party provides written
notice to the other of its decision not to renew and
extend."
5. Section 5.2 of the Participant Agreement is hereby deleted in its
entirety.
6. This First Amendment shall be and hereby is incorporated into the
Participant Agreement for all intents and purposes and all terms,
provisions and definitions of the Participant Agreement shall
apply.
7. Except for the provisions inconsistent with the terms of this
First Amendment, the Participant Agreement is hereby ratified and
affirmed in all respects.
This First Amendment is effective as of the date stated above and
executed on the dates indicated below.
THE HOTEL CLEARING CORPORATION
By:
-------------------------
Xxxx X. Xxxxx, III
President
Date:
-------------------------
CHOICE HOTELS INTERNATIONAL, INC.
By:
-------------------------
Its:
-------------------------
Date:
-------------------------
*Confidential Treatment Requested
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HCC PARTICIPANT AGREEMENT
This Agreement (the "Agreement") is entered into by and between THE
HOTEL CLEARING CORPORATION, a Delaware corporation ("HCC"), and CHOICE HOTELS
INTERNATIONAL, INC. ("Participant"), to be effective the 31st day of March,
1995.
SECTION 1. DEFINITIONS
1.1 For purposes of this Agreement, the following definitions
shall apply:
(i) Commissionable Reservations. Commissionable
Reservations within a particular time period equals the number of reservations
(both voice and electronic) processed through the HCC System within such time
period that are identified as "commissionable" or "partially commissionable" on
the transaction records provided by Participant to HCC and for which a travel
agent commission is paid pursuant to this Agreement.
(ii) HCC System. The HCC System is an automated
clearinghouse system to provide for the coordination of reservation
information, transfer of hotel reservation commissions and ancillary services
to Travel Agents and Participating Entities.
(iii) Participating Entity. A Participating Entity is an
operator of a hotel reservation system that has executed a HCC Participant
Agreement.
(iv) HCC Travel Agents. An HCC Travel Agent is a travel
agency who has executed an HCC Subscriber Agreement. A list of current HCC
Travel Agents will be periodically provided by HCC to Participant.
(v) HCC Travel Agent Commissions. HCC Travel Agent
Commissions are the commissions paid by Participant to HCC Travel Agents
pursuant to this Agreement. HCC Travel Agent Commissions will be based on
commission rates provided by Participant to HCC.
SECTION 2. THE HCC SYSTEM
2.1 Duties of HCC. HCC will provide and operate the HCC System
for the use and benefit of Participant, its franchisees and affiliates, and
other Participating Entities. HCC will provide all reasonable and necessary
technical support, hardware and software, except as otherwise provided herein,
and modifications to the HCC System to provide clearinghouse services to
Participant and its franchisees and affiliates as described below. Upon
compliance with the terms of this Agreement by Participant, its franchisees and
affiliates, and subject to Section 5 hereof, HCC will provide the following
clearinghouse services to Participant and its franchisees and affiliates:
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(i) unless earlier authorized by Participant, no earlier
than January 1, 1996, identify Participant to travel agents as being a HCC
System Participating Entity;
(ii) provide billing statements for HCC Travel Agent
Commissions, Transaction Fees (as defined below) and other fees, costs and
expenses to Participant no later than the fifteenth (15th) business day after
the end of each month as provided in Section 3 below;
(iii) distribute collected HCC Travel Agent Commissions
received from Participant and its affiliates and franchisees to the appropriate
HCC Travel Agents as set forth in the HCC Travel Agent Commission information
provided by Participant;
(iv) provide no later than the fifteenth (15th) business
day of each month reports to Participant and HCC Travel Agents reflecting HCC
Travel Agents' reservation transactions with Participant and HCC Travel Agent
Commissions owed based upon the data provided to HCC by Participant and its
affiliates and franchisees who are participating in the HCC System; and
(v) provide telephone customer support services from 8:00
a.m. to 6:00 p.m., U.S. Central time, Monday through Friday, exclusive of legal
holidays.
The procedures of the HCC System are subject to changes for enhancements from
time to time as determined by HCC.
2.2 Duties of Participant. Participant shall diligently and in
good faith do the following:
(i) Cooperate fully with HCC personnel with respect to
the implementation of the HCC System between HCC Travel Agents and Participant
and its affiliates and franchisees;
(ii) Provide HCC with all that is required by HCC to
process all reservations (including all reservations made electronically or by
voice, through the use of a central reservation "800" phone number, inclusive
of no-shows, cancellations and non-commissionable transactions) made by HCC
Travel Agents with Participant and its affiliates and franchisees no less often
than on a semi-monthly basis such data being complete and accurate to the best
of Participant's knowledge and ability and inclusive of all of the information
to permit HCC to provide the clearinghouse services described in Section 2.1
hereof and, without limitation, being such information as set forth on Exhibit
A hereof; and permit and authorize HCC to obtain and use such data concerning
such reservations made with Participant and its affiliates and franchisees
except such data designated as confidential pursuant to Section 7 hereof;
(iii) Pay, pursuant to this Agreement, all Travel Agent
Commissions reported to HCC for processing pursuant to this Agreement;
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(iv) Continually use its best efforts to cause each of its
franchisees and affiliates to fully and timely participate in the HCC System
pursuant to this Agreement;
(vi) Permit HCC to use its name as an entity participating
in the HCC System.
2.3 Implementation of The HCC System. HCC will proceed with the
implementation of the HCC System between HCC Travel Agents and Participant
pursuant to a mutually agreed upon schedule. However, Participant shall not
be obligated to process transactions pursuant to this Agreement until January
1, 1996.
2.4 Modification or Enhancement of the HCC System or Participant
System. HCC may in its sole discretion modify the operation or enhance the
capability of the HCC System, and Participant agrees to cooperate with HCC in
all modifications and enhancements of the HCC System. If Participant
determines that such modification or enhancement is likely to require
Participant to make significant modifications to its central reservation system
(any such modifications to be at Participant's sole expense), HCC will provide
at least ninety (90) days' prior notice to Participant of such modification or
enhancement and Participant may, at its option, terminate this Agreement upon
sixty (60) days notice to HCC.
SECTION 3. FEES, COSTS, AND PAYMENTS
3.1 Fees for Processing HCC Travel Agent Commissions. Participant
shall pay HCC monthly transaction fees for processing HCC Travel Agent
Commissions ("HCC Travel Agent Transaction Fees") of U.S. Ten Cents ($.10) per
HCC Travel Agent Commissionable Reservation.
3.2 Commission Payments. HCC shall pay HCC Travel Agent
Commissions in the travel agent's local currency.
3.3 Disputed Commissions. HCC will provide Participant and HCC
Travel Agents with periodic reports indicated under Section 2.1(iv) that will
indicate any exceptions to HCC Travel Agent Commissions, based on discrepancies
between information given HCC by Participant compared to other information
available to HCC. With respect to all exceptions as to which Participant
provides supporting documentation, HCC will forward such documentation to the
appropriate HCC Travel Agent(s), and the HCC Travel Agents involved may pursue
such dispute directly with Participant('s) franchisees, but HCC will not have
any liability to either Participant or any travel agent (HCC or non- HCC) with
respect to the resolution of any disputed commission. No dispute concerning
any travel agent commissions will in any way affect or reduce the obligations
of Participant to (i) timely pay all other HCC Travel Agent Commissions
reported to HCC for processing and (ii) timely pay to HCC all Transaction Fees
and other fees, costs and additional expenses owed by Participant under this
Agreement.
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3.4 [deleted by amendment]
3.5 [deleted by amendment]
SECTION 4. TERM
4.1 Term of Agreement. The initial term of this Agreement, unless
earlier terminated pursuant to the provisions of this Agreement, shall expire
[*] after the date of this Agreement. However, this Agreement will
be automatically renewed and extended for additional twelve (12) month periods
unless, at least thirty (30) days prior to the expiration of the initial term
of this Agreement or any additional twelve (12) month period, either party
provides written notice to the other of its decision not to renew and extend.
SECTION 5. TERMINATION
5.1 Termination Upon Default. Upon the occurrence of an Event of
Default (as defined below) by either party and the failure of such party to
cure such default after notice and opportunity to cure as provided by Section
6.3 below, the nondefaulting party may terminate this Agreement at any time.
5.2 Termination Upon Participant Ceasing to be a Shareholder of
HCC. In the event Participant shall cease to be a shareholder of HCC, this
Agreement shall terminate effective that date.
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5.3 Suspension of Status. Upon the occurrence of an Event of
Default by Participant and the failure of Participant to cure such default
after notice and opportunity to cure as provided by Section 6.3 below, then, if
HCC does not terminate this Agreement under Section 5.1, until such time as
such Event of Default is cured HCC shall have the right to suspend the status
of Participant as a Participating Entity and to notify all HCC Travel Agents of
such default and suspension through central reservation systems or otherwise.
SECTION 6. DEFAULT
6.1 Events of Default. Subject to Section 6.2 below, any one of
the following will be considered an Event of Default:
(i) The failure of either party to pay any amount due
hereunder within the time required;
(ii) The failure of Participant or HCC to satisfy the
obligations set forth in this Agreement;
(iii) The refusal or failure of either party to perform
diligently and in good faith each and every material provision of this
Agreement;
(iv) The commencement by either party of a voluntary case
under Chapter 11 or 7 of the United States Bankruptcy Code, as from time to
time in effect, the commencement against either party of an involuntary case
under said Chapter 11 or 7, either party seeking relief as a debtor under any
applicable law, other than said Chapter 11 or 7, of any jurisdiction relating
to the liquidation or reorganization of debtors or the modification of the
rights of creditors, the entry of a court order adjudging the party bankrupt or
insolvent, ordering its liquidation or reorganization or assuming custody or
appointing a receiver or other custodian of its property, or its making an
assignment for the benefit of, or entering into a composition with, its
creditors.
Any such Event of Default shall not relieve the defaulting party from
any of its obligations hereunder, and the non-defaulting party shall, except as
provided in this Agreement, be entitled to whatever remedies at law or in
equity are available to it.
6.2 Force Majeure. It will not constitute an Event of Default if
such event listed in Section 6.1 is caused by or results from acts of God,
fire, war, civil unrest, accident, power fluctuations or outages,
telecommunication fluctuations, outages or delays, utility failures, mechanical
defects, or other events beyond the control of the defaulting party. However,
if any such occurrence results in any of the events described in Section 6.1,
and the same continues for more than thirty (30) consecutive days, either party
may terminate this Agreement by providing notice as required herein.
6.3 Cure Period. Upon the occurrence of an Event of Default, the
non-defaulting
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party will give written notice to the defaulting party specifying the alleged
default. In the case of a monetary default by Participant, Participant will
only be allowed to cure such default within two (2) business days after receipt
of such notice, by delivering that amount owed to HCC in good funds into HCC's
bank account. In all other instances, the defaulting party will be entitled to
fifteen (15) days from receipt of notice within which to cure the default.
SECTION 7. CONFIDENTIALITY
7.1 Proprietary Information. During the term of this Agreement,
it is acknowledged by Participant and HCC that each may receive confidential
and proprietary information that is the property of the other party. All such
confidential and proprietary information will be marked or otherwise identified
as such and will be treated as confidential and proprietary subject only to
disclosure where required by law. Such designation may be removed by each
party making the designation. Participant acknowledges that it will have no
access to and will not use the HCC System or related property, other than as
specifically provided for in this Agreement, and that such system and related
property is confidential and proprietary property of HCC. Any use of HCC
service marks or trade names by Participant is subject to prior written
approval of HCC, provided, that Participant may describe the HCC System
contemplated by this Agreement in its franchise offering circular and other
materials as required by state or federal law. Unless otherwise provided
herein, any use of Participant's service marks or trade names by HCC is subject
to prior written approval of Participant. The provisions of this Section 7.1
will remain binding and in force and effect as long as such information remains
confidential (other than by breach of this Agreement), notwithstanding the
expiration or termination of this Agreement at any time.
SECTION 8. INDEMNIFICATION
8.1 Indemnification in the Event of Certain Losses. Participant
agrees to indemnify and hold harmless HCC and HCC's affiliates, directors,
officers, employees and stockholders, from and against any losses, claims,
liabilities, damages or expenses (including reasonable attorney's fees)
occurring as a result of or arising out of a material breach of this Agreement
on account of Participant's (or its affiliates or franchisees) fault, to the
extent not caused by the fault of HCC ("HCC's Losses"). HCC agrees to
indemnify and hold harmless Participant, and Participant's affiliates,
directors, officers, employees and stockholders, from and against any losses,
claims, liabilities, damages or expenses (including reasonable attorney's fees)
("Participant's Losses") occurring as a result of or arising out of a material
breach of this Agreement on account of HCC's fault to the extent not caused by
the fault of Participant. Promptly after receipt by an indemnified party of
notice of the commencement of any action or the presentation or other assertion
of any claim which could result in any indemnification claim pursuant to this
Section 8.1, such indemnified party will give prompt notice thereof to the
indemnifying party and the indemnifying party will be entitled to participate
therein or, to the extent that it wishes, assume the defense thereof with its
own counsel. If the indemnifying party elects to
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assume the defense of any such action or claim, the indemnifying party shall
not be liable to the indemnified party for any fees of other counsel or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof, other than reasonable costs of investigation and preparation,
unless representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. The
parties agree to cooperate to the fullest extent possible in connection with
any claim for which indemnification is or may be sought under this Agreement.
Whether or not the indemnifying party elects to assume the defense of any such
action or claim, the indemnifying party shall not be liable for any compromise
or settlement of any such action or claim effected without its consent (which
shall not be unreasonably withheld).
SECTION 9. DISCLAIMER OF WARRANTIES
9.1 Waiver of Warranties. HCC WILL NOT BE RESPONSIBLE OR LIABLE
FOR ANY FALSIFICATIONS OR INACCURACIES IN THE DATA PROVIDED BY PARTICIPANT OR
THE INFORMATION PROCESSED BY OR THROUGH THE HCC SYSTEM NOR WILL IT HAVE ANY
LIABILITY FOR ANY ACT OR FAILURE TO ACT WITH RESPECT TO THE DATA OR THE PAYMENT
OF COMMISSIONS UNLESS EXPRESSLY SET FORTH HEREIN. EXCEPT WITH RESPECT TO ANY
MISHANDLING OR IMPROPER PAYMENT OF FUNDS PAID TO HCC BY PARTICIPANT AND EXCEPT
TO THE EXTENT RESULTING FROM HCC'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, ALL
WARRANTIES, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY,
GOOD AND WORKMANLIKE PRODUCT OR SERVICE OR OTHERWISE, ARE DISCLAIMED BY HCC AND
WAIVED BY PARTICIPANT.
9.2 No Consequential Damages. Except with respect to the
indemnification provisions set forth in Section 8.1 hereof, neither party will
be liable to the other for any consequential damages caused or resulting from
any breach of this Agreement or arising out of the performance of this
Agreement, and each party hereby expressly waives such damages.
SECTION 10. MISCELLANEOUS
10.1 Arbitration of Disputes. Any controversy or claim arising out
of or relating to this contract, or the breach thereof, will be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. There
shall be a panel of three arbitrators. Each party will select one arbitrator
within thirty (30) days of notice of the dispute, and the two (2) arbitrators
selected shall select a third neutral arbitrator within thirty (30) days after
the second arbitrator is chosen. All reasonable and necessary costs and fees
(including attorney's fees) incurred in connection with the arbitration will be
borne by the losing party or assessed in the award
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as otherwise deemed appropriate by the arbitrators. If the demand for
arbitration is initiated by Participant, venue of the arbitration proceedings
will be determined by HCC. If the demand for arbitration is initiated by HCC,
venue of the arbitration proceedings will be determined by Participant.
10.2 Non-Exclusive Agreement. Each party acknowledges that this is
not an exclusive agreement with respect to reservations commissions
clearinghouse services and that each party may contract with other parties
providing same or similar services.
10.3 Status of Parties. This Agreement will not constitute a
partnership, joint venture or similar arrangement. The parties hereto are
separate and distinct entities independently contracting with each other at
arms length. HCC will not be deemed by this Agreement to be granting a license
to Participant with respect to the HCC System or any software or service xxxx
related thereto, or otherwise, this being a contract for the use and rendering
of services only.
10.4 Assignment. This Agreement is not assignable by HCC or
Participant without the prior written consent of the non-assigning party, and
such consent shall not be unreasonably withheld or delayed provided that
Participant may assign this Agreement in connection with the sale of its
reservation system or franchise system and either party may assign this
Agreement without consent in the event of a merger, consolidation, or sale of
substantially all of its assets.
10.5 Notices. All notices and other communications contemplated
hereby must be in writing (except in the case of electronically transmitted
data) and (a) personally delivered, (b) deposited in the United States mail,
first- class, registered or certified mail, return receipt requested, with
postage prepaid, (c) sent by overnight courier service (for next business day
delivery), shipping prepaid, (d) sent by telecopy with confirmation of receipt
of telecopy to the number indicated, or (e) transmitted directly to the
recipient by electronic data transmission pursuant to arrangements made between
the parties. Such notices and other communications (except in the case of
electronically transmitted data) shall be addressed as follows:
IF TO HCC: IF TO PARTICIPANT:
0000 Xxxxxx Xxxxx Xxxx. 00000 Xxxxxxxx Xxxx
Xxxxx 0000 Xxxxxx Xxxxxx, XX 00000
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxx, III Attention: General Counsel
(if by telecopy to: (if by telecopy to: (000) 000-0000)
(000) 000-0000) cc: Xxxxx X. Xxxxxx
00000 Xxxxxxxx Xxxx
Xxxxxx Xxxxxx, XX 00000
or such persons or addresses as any party may request by notice duly given
hereunder.
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Except as otherwise specified herein, notices will be deemed given and received
when received.
10.6 Controlling Law. This Agreement will be interpreted pursuant
to the laws of the State of Texas without reference to its conflict of laws
principles. Subject to the agreement to arbitrate and the jurisdiction and
venue provisions set forth in Section 10.1 hereof, any action brought relating
to or arising out of this Agreement must be brought in the state or federal
courts situated in the county and state of the residence or principal place of
business of the party against whom the action is brought (or any of them, if
more than one).
10.7 Entire Agreement. This Agreement and the Exhibits attached
hereto constitute the entire agreement between HCC and Participant with respect
to the provision of services under the HCC System and supersedes and replaces
any and all other agreements and representations, verbal or written, with
respect to the subject matter of this Agreement. There are no representations,
warranties or agreements made or relied upon by either party with respect to
the subject matter of this Agreement that are not contained in this Agreement.
10.8 Successors and Assigns. This Agreement will be binding upon
and will inure to the benefit of the legal representatives, successors and duly
authorized assigns of each party whether resulting from merger, acquisition,
reorganization or assignment pursuant to the terms hereof.
10.9 Confidentiality of the Agreement. The parties agree that the
terms and provisions of this Agreement will be kept confidential and shall be
disclosed only to those persons and entities as required by law or as permitted
by the other party hereto. The parties may, however, disclose the existence of
this Agreement to any person or entity.
AGREED to as of the date first written above.
THE HOTEL CLEARING CORPORATION CHOICE HOTELS INTERNATIONAL, INC.
By: By:
--------------------------- -------------------------------
Xxxx X. Xxxxx, III,
President Its:
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EXHIBIT "A"
Initial Information to be Provided by Participant to HCC
The fields in each commission record are the following:
-Record identifier required validated
-Chain record number required check for duplicates
-Chain/Brand code required validated
-Booking source required validated
-Property ID required validated
-PNR Number optional no checks
-Confirmation number required validated presence
-Cancellation number optional no checks
-Corporate ID number optional no checks
-Subscriber IATA number required validated HCC User
-Group/Guest last name required validated presence
-Group/Guest first name optional no checks
-Status code required validated
-Reason code optional if present, validate
-Arrival date required validated, no future
-Departure date required validated, no future
-Number of nights required validated presence
-Number of rooms required validated presence
-Commissionable revenue required validated, no neg.
-Gross Commission required validated, no neg.
-Adjustment amount required validated presence
-Net Commission due required validate computation
-Currency code required validated
-Comments optional no checks
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