Exhibit 10.12
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS
OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPA-
RATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
AIRLINE PARTICIPATION AGREEMENT
THIS AGREEMENT (this "AGREEMENT"), dated December 31, 1998, is by and among
xxxxxxxxx.xxx Incorporated, a Delaware corporation with an address at Five Xxxx
Xxxxx Xxxx, Xxxxxxxxxxx 00000 ("PRICELINE INC."), PriceLine Travel, Inc., a
Delaware corporation with an address at 0 Xxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx
00000 ("PRICELINE TRAVEL" and, together with Priceline Inc., being collectively
referred to herein as "PRICELINE"), and the undersigned airline, whose principal
place of business is set forth on the signature page of this agreement
("Airline").
PRELIMINARY STATEMENT:
Priceline provides a service that allows consumers to purchase airline
tickets at an offer price determined by the consumer (the "Priceline Service").
The consumer identifies the departure and return dates for travel and the price
the consumer is willing to pay for the airline ticket(s). Priceline then
determines if it is able to fulfill the customer's offer and, if it is able to
do so, PriceLine Travel issues a ticket to the customer on the applicable
carrier.
Airline desires to participate in the Priceline Service and, in connection
therewith, will provide Priceline with unpublished fares subject to the
Restrictions (defined herein) for select origin and destination city pairs
(each, an "O&D") identified by Airline in accordance with the terms and
conditions set forth in this Agreement.
Priceline desires to include Airline as a participating carrier in the
Priceline Service and to have access to such unpublished fares in accordance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:
I. TICKET RESTRICTIONS AND RELATED MATTERS
1. Airline shall make available unpublished fares to Priceline for O&Ds
identified by Airline in accordance with the terms and conditions
set forth in this Agreement. Unpublished fares provided to Priceline
must be issued in accordance with rules
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and restrictions provided to Priceline from time to time. By way of
example, unpublished fares on certain O&D's may require specific
routings or be flight/day specific. At all times during the term of
this Agreement, Airline will control and determine the unpublished
fares and levels of inventory provided to Priceline. It is expressly
understood and agreed that Airline makes no commitment whatsoever
regarding the level of inventory, number of O&Ds or the level of
unpublished fares that will be provided to Priceline.
2. All tickets issued by Priceline for carriage on Airline (each, a
"PRICELINE TICKET") shall be subject to the following restrictions
(the "RESTRICTIONS"):
(a) All Priceline Tickets will be non-refundable, non-endorsable
and non-changeable;
(b) All travel will be round-trip with no stopovers or open-jaw
travel permitted;
(c) Frequent Flyer mileage and upgrades will not be permitted;
provided, Airline may offer such benefits to the extent that it
is impractical to impose such frequent flyer restrictions on
Priceline Tickets;
(d) Priceline customers must agree to (i) make up to 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, departing during the 6 a.m. - 10 p.m. time period
[unless the customer has specified a request to 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.);
(e) 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;
(f) All Priceline Tickets require instant ticketing guaranteed with
a major credit card if Priceline is able to provide an airline
ticket within the customer's requested price, departure and
return date parameters;
(g) Priceline Ticket reservations are limited to no more than eight
persons traveling in the same itinerary; and
(h) In any seven-day calendar 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. A Priceline customer may, within a
seven-calendar day period, make an offer for travel in a
different airport pair or on different dates of travel.
Priceline will not sell a ticket to a Priceline customer in
response to a second (or subsequent) offer for a Trip within a
seven calendar day period; provided, that Priceline may sell a
ticket in connection with a second offer if the
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Priceline customer (i) raises the offer by a minimum of [**]
and (ii) accepts, as part of the second offer, (x) a travel
package which includes a hotel or rental car offer, or (y) a
product or service co-marketed by Priceline such as a credit
card or long distance telephone service; provided further, that
Priceline shall limit the number of such second offers to not
greater than twenty percent (20%) of first offers.
3. Airline may include, in addition to the Restrictions, other fare
rules and conditions for Priceline Tickets issued on Airline such as
advance purchase or Saturday night stay requirements. Priceline also
reserves the right to impose additional restrictions on Priceline
Tickets, including a Saturday night stay requirement, as part of the
Restrictions.
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 set forth in Sections I.2
(a)-(f) 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 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.
5. The Restrictions will be communicated by Priceline to the customer
via the Internet (or through Priceline's customer service
representatives if the consumer contacts Priceline through its toll
free customer service number), and will be set forth on ticketing
and/or itinerary documentation issued by PriceLine Travel.
6. All Priceline Tickets issued for carriage on Airline shall be
subject to the published conditions of carriage and the fare rules
of Airline, to the extent such conditions and fare rules are
consistent with the Restrictions. 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.
II. PRICELINE TICKET RESERVATIONS, BOOKINGS, PAYMENT AND FULFILLMENT
1. Airline will file unpublished fares and rules for Priceline Tickets
with the computer reservation system ("CRS") used by Priceline
Travel.
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2. Priceline will determine the price at which tickets are sold based
on customer offers received through the Priceline Service. Priceline
shall not advertise prices or fares below Airline's published or
unpublished fares.
3. All unpublished fares made available by Airline for sale through the
Priceline Service shall not be commissionable and shall be
inclusive, where applicable, of the applicable domestic federal
transportation excise tax. All such unpublished fares shall be
exclusive of any domestic federal segment taxes, and any domestic or
international fuel, departure, arrival, passenger facility, airport,
terminal and/or security taxes or surcharges which, when applicable,
must be added to the fare amount collected from the passenger and
shown on the Priceline Ticket.
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. 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
ARC.
6. All tickets of Airline issued through the Priceline Service will be
issued by PriceLine Travel using Agency ARC: 00-00000-0. In
collecting payment for Priceline Tickets, PriceLine Travel will act
as the agent of Airline pursuant to Agent's ARC Agent Reporting
Agreement with the Airlines Reporting Corporation ("ARC").
7. 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). In the event a Priceline customer requests Airline to
provide a separate electronic ticket receipt for an electronic
ticket, the price shown on Airline's receipt will reflect that such
ticket is a "bulk" electronic ticket.
8. 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.
9. Subject to the provisions of Paragraph II.5 above, all Priceline
paper tickets for carriage on Airline will be issued by PriceLine
Travel on standard ARC traffic
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documents and will be validated with Airline's validation in
accordance with ARC requirements. The passenger coupon will show
"bulk" for the fare amount and will include all additional
collections noted in Paragraph II.3 above. The auditor's coupon will
show the Airline's unpublished fare as authorized by PriceLine
Travel.
10. 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.
11. At the request of Airline, Priceline will 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."
III. PRICELINE TICKET ALLOCATION METHODOLOGY
Priceline shall establish an allocation methodology that determines
when participating airlines will be given the first opportunity to
fill a customer ticket request, and may give preference to one or
more participants in establishing such methodology. Priceline will
work in good faith with each participating airline to assist such
airline in achieving its objective for the Priceline Service within
the context of the allocation system.
IV. PRICELINE CUSTOMER SERVICE; JOINT MARKETING
1. Priceline will provide twenty-four hour customer support services to
all Priceline customers through a toll-free number at the customer
support center 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.
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.
3. Priceline will respond to Priceline customer questions and issues
pertaining to special handling requirements for Priceline Tickets
including processing any
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special customer handling requirements in respect of Priceline
Tickets issued on Airline.
V. CONFIDENTIALITY
1. Priceline and 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 party. As used herein, the term "CONFIDENTIAL INFORMATION"
shall mean this Agreement and its subject matter, and proprietary
information that is provided to or obtained from one party to the
other party including 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, including
the unpublished fares provided by Airline to Priceline pursuant to
this Agreement. The recipient of Confidential Information may only
disclose such information to its employees on a need-to-know basis.
2. 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 five (5) years thereafter, except to the extent such data:
(a) 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,
(b) becomes available to the recipient on a non-confidential
basis from a source other than the disclosing party or its
affiliated companies, provided that such source is not bound by any
confidentiality obligations to the disclosing party or its
affiliated companies (as applicable); or
(c) 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.
3. 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 the provisions hereof. In the event that such
protective order or other remedy is not obtained, or the disclosing
party waives (in writing) compli-
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ance 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
4. The recipient of Confidential Information will exercise reasonable
commercial care in protecting the confidentiality of the other
party's Confidential Information.
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.
6. Priceline will not identify Airline's participation in the Priceline
Service until a customer is booked and confirmed for ticketing.
Further, Priceline will not, in any media (including its Internet
site), indicate that Airline is participating or has participated in
the Priceline Service 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. Except as set forth above, Priceline will not
disclose Airline's participation in the Priceline Service without
Airline's prior consent. Airline will not disclose its participation
in the Priceline Service without Priceline Inc.'s prior consent.
VI. PROPRIETARY MARKS
During the term of this Agreement 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 Paragraph
VI 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.
VII. REPORTING; AUDIT RIGHTS
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1. Priceline will provide monthly reports in a format designated by
Airline summarizing (i) information concerning each ticket issued
by PriceLine Travel on Airline; (ii) aggregate information (i.e. non
airline specific) for all tickets issued by PriceLine Travel in each
O&D that Airline participates; and (iii) aggregate information for
all Priceline offers from customers not ticketed in each O&D that
Airline participates.
2. Priceline will provide to Airline an annual statement by Priceline's
independent accounting firm or other qualified third-party
concerning Priceline's compliance with the Priceline Ticket
Allocation Methodology specified in Section III and all reporting
obligations required by this Agreement.
3. 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 VII.1 and 2. Any such
audit shall be at the sole cost 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.
VIII. TERM OF AGREEMENT
1. Subject to the provisions of this Paragraph VIII, this Agreement
will commence on the date set forth on the first page of this
Agreement (the "Commencement Date") and will continue indefinitely
thereafter. Notwithstanding the foregoing, Priceline or Airline may
terminate this Agreement for any reason on 30 days prior written
notice to the other party.
2. The obligations of the parties under Paragraphs V and IX of this
Agreement shall indefinitely survive the expiration or any
termination of this Agreement.
3. In the event of written notice of termination of this Agreement in
accordance with the terms of this Paragraph VIII, all Priceline
Tickets issued on Airline prior to the effective date of termination
specified in such notice will be honored by Airline under the terms
of this Agreement.
IX. INDEMNIFICATION
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, 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 Agree-
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ment, or by the negligence or willful acts of either party or any of
their respective employees or agents.
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 Airline's breach of this
Agreement or by the negligence or willful acts of Airline or any of
its employees or agents.
X. NO EXCLUSIVITY
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.
XI. GENERAL PROVISIONS
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.
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.
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 return receipt requested, 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 If to Airline:
Priceline Inc.:
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Xxxxxxxxx.xxx Incorporated America West Airlines, 4000 East Sky
Five High Ridge Park Harbor, Phoenix, Arizona 85034
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx Attention: J. Xxxxx Xxxxx
Chief Financial Officer Vice President-Revenue
Management
Phone: (000)-000-0000 Phone: (000)-000-0000
Fax: (000)-000-0000 Fax: (000)-000-0000
WITH A COPY TO: WITH A COPY TO:
Attention: Xxxxxxx X. Xxxxx Attention:
Phone: (000)-000-0000 Phone:_____________________
Fax: (000)-000-0000 Fax: ______________________
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 Paragraph XI(3).
4. This Agreement supersedes and replaces all previous understandings
or agreement, whether oral or in any written form, with respect to
the Airline's participation in the Priceline Service or any other
subject matter addressed herein. The captions in this Agreement are
for convenience only and do not alter any terms of this Agreement.
5. This Agreement may be amended or modified only by a written
amendment executed by the parties.
6. The formation, construction, performance and validity of this
Agreement shall be governed by the internal laws of the State of
Delaware . Each party agrees that any civil suit or action brought
against it as a result of any of its obligations under this
Agreement may be brought against it either in the state or federal
courts of the principal place of business of either party, and each
party hereby irrevocably submits to the jurisdiction of such courts
and irrevocably waives, to the fullest extent permitted by law, any
objections that it may now or hereafter have to the laying of the
venue of such civil suit or action and any claim that such civil
suit or action has been brought in an inconvenient forum, and each
party further agrees that final judgment in any such civil suit or
action shall be conclusive and binding
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upon it and shall be enforceable against it by suit upon such
judgment in any court of competent jurisdiction.
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).
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 Airline's tariffs (except where such tariffs are
specifically amended by Airline under the terms of this Agreement)
and the terms of the ARC Agent Reporting Agreement and any addenda
thereto.
9. Priceline agrees to notify 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 party of a holding company, or (iii) an
intra-corporate transaction with a company under common control with
a party.
10. No party hereto shall assign or transfer or permit the assignment or
transfer of this Agreement without the prior written consent of the
other parties.
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. NO PARTY WILL BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL
DAMAGES, INCLUDING LOST REVENUES, LOST PROFITS, OR
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LOST PROSPECTIVE ECONOMIC ADVANTAGE, ARISING FROM THIS AGREEMENT OR
ANY BREACH HEREOF.
13. THE PARTIES AGREE THAT IRREPARABLE DAMAGE WOULD OCCUR IN THE EVENT
ANY PROVISION OF THIS AGREEMENT IS NOT PERFORMED IN ACCORDANCE WITH
THE TERMS HEREOF AND THAT THE PARTIES 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.
14. 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.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
on the date indicated above.
PRICELINE TRAVEL, INC. AMERICA WEST AIRLINE, INC.
/s/ Xxxxxx X'Xxxxxx /s/ J. Xxxxx Xxxxx
----------------------------------- ---------------------------------------
By: Xxxxxx X'Xxxxxx By: J. Xxxxx Xxxxx
Title: Vice President & Controller Title: Vice President - Revenue Manage-
ment
AIRLINE PRINCIPAL PLACE OF BUSINESS:
XXXXXXXXX.XXX INCORPORATED SEE NOTICE PROVISION.
/s/ Xxxx X. Xxxxxxx
-----------------------------------
By: Xxxx X. Xxxxxxx
Title: Chief Financial Officer
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