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EXHIBIT 10.40
ULTRASWITCH USER AGREEMENT
This Agreement is entered into by and between THE HOTEL INDUSTRY
SWITCH COMPANY, a Delaware corporation (hereinafter "THISCO"), and LA QUINTA
INNS, INC. (hereinafter "HOTEL"), to be effective the 23rd day of February,
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.
(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
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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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 HOTEL and other UltraSwitch
Users meeting or exceeding the UltraSwitch Specifications. Subject to the
duties of HOTEL 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 HOTEL. 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 HOTEL'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 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.
*Confidential Treatment Requested
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THISCO will not discriminate among UltraSwitch Users in processing
reservations through the UltraSwitch.
2.2. Duties of HOTEL. Through the UltraSwitch Interface, HOTEL 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 HOTEL and the Reservation Providers, to reserve and
cancel rooms authorized for sale by HOTEL and receive a confirmation
acknowledgment of any such transaction. All information provided by HOTEL 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 HOTEL 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 HOTEL 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 HOTEL. HOTEL agrees
to cooperate with THISCO in modify ing and enhancing the UltraSwitch.
2.4 Modification of UltraSwitch User System. In the event HOTEL
modifies its central reservation system, or modification of its central
reservation system is required for the implementation, operation, modification
or enhancement of the UltraSwitch, HOTEL shall pay all necessary costs
associated with such modification to its system. In the event HOTEL modifies
its central reservation system and such modification requires THISCO to modify
the Interface, HOTEL 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 HOTEL to
modify its reservation system, HOTEL 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 HOTEL for the
particular modification exceeds $10,000.00.
3.0 FEES AND COSTS
3.1 Reservation and Status Change Fees. For the use of the UltraSwitch
Interface, HOTEL shall pay THISCO as follows:
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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.
3.2 Guaranteed Annual Minimum Reservation Fee. During each calendar
year of this Agreement, HOTEL shall pay THISCO a reservation fee for at least
[*] Net Reservations, whether or not such Net Reservations actually occur.
*Confidential Treatment Requested
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3.3 Payment of Fees and Costs. THISCO will invoice HOTEL monthly for
all fees, costs, and additional costs incurred by THISCO that are to be paid by
HOTEL pursuant to this Agreement. HOTEL 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, HOTEL 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. HOTEL 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. HOTEL 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 HOTEL. 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,
HOTEL may terminate this Agreement at any time within 30 days after the
expiration of the cure period provided in Section 6.3.
5.2 Termination by THISCO. Upon the occurrence of an Event of Default
(as hereinafter defined) by HOTEL and the failure of HOTEL to cure such default
after notice and opportunity to cure as provided by Section 6.3 hereof, THISCO
may terminate this
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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 HOTEL (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
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
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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 HOTEL 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. HOTEL 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 HOTEL is subject to prior written approval of THISCO
provided HOTEL 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 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. HOTEL agrees to
indemnify
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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 HOTEL's fault and through no fault of THISCO ("THISCO's
Losses"). THISCO agrees to indemnify and hold harmless HOTEL, and HOTEL's
affiliates and their directors, officers, employees and stockholders, from and
against any losses, claims, liabilities, damages or expenses (including
reasonable attorney's fees) ("HOTEL's Losses") occurring on account of THISCO's
fault and through no fault of HOTEL. 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 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.
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.
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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 HOTEL 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 HOTEL of such provision(s) and HOTEL
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 HOTEL, 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 HOTEL.
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.
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 HOTEL, with respect to UltraSwitch or any
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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 HOTEL
without the prior written consent of the non-assigning party, and such consent
shall not be unreasonably withheld or delayed provided that HOTEL 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: HOTEL:
The Hotel Industry Switch Company LA QUINTA INNS, INC.
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 0000 000 X. Xxxxx Xxxxxx
Xxxxxx, Xxxxx 00000 Post Office Box 2636
Attention: Xxxx X. Xxxxx, III Xxx Xxxxxxx, Xxxxx 00000
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.
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.
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10.08 Entire Agreement. This Agreement and the exhibits attached
hereto constitute the entire agreement between THISCO and HOTEL 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
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
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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 HOTEL'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 23rd day of February, 1996.
THE HOTEL INDUSTRY SWITCH LA QUINTA INNS, INC.
COMPANY
By: /s/ XXXX X. XXXXX, III By: /s/ X.X. XXXXXXX, XX.
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Xxxx X. Xxxxx, III (name) X.X. Xxxxxxx, Xx.
President -------------------------------
(title) SR VP Accounting & Admin
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