General Agreement - Cheap Tickets Inc. and Delta Air Lines Inc.
General Agreement
-----------------
This General Agreement (this "Agreement"), dated May 14, 2001, is by and
---------
between Cheap Tickets, Inc., a Delaware corporation with an address at 1440
Kapiolani Blvd., Honolulu, Hawaii 96814 ("CTI"), and Delta Air Lines, Inc., a
---
Delaware corporation having a principal place of business at 1030 Delta
Boulevard, Hartsfield Atlanta International Airport, Atlanta, Georgia 30320
("Delta").
-----
Recitals:
--------
Delta is a major carrier providing scheduled air transportation services to
domestic and international destinations. CTI is an ARC accredited travel agency
and distributor of leisure travel products that operates an internet site (the
"Web Site"), toll-free call centers (the "Call Centers") and retail stores (the
-------- ------------
"Travel Stores") that sell travel products and services to the public including,
-------------
without limitation, airline tickets, hotel rooms and rental cars.
CTI desires (i) to sell Delta fares published through the Airline Tariff
Publishing Company ("ATP") and available for sale by Delta appointed agents for
scheduled air transportation ("Delta Published Fares"); (ii) to participate in
Delta's net fare program (the "Net Fare Program") to offer and sell Delta fares
----------------
that are not so published ("Delta Unpublished Fares") to customers; and (iii)
for Delta to participate in CTI's opaque air fare program, which provides for
the offer and sale of unpublished fares on the Web Site without identifying the
carrier prior to ticketing (the "Opaque Fare Program").
-------------------
Delta desires (i) to authorize CTI to sell Delta Published Fares; (ii) for
CTI to participate in Delta's Net Fare Program; and (iii) to participate in
CTI's Opaque Fare Program.
In connection with each of the above, the parties desire to document their
understandings in this Agreement and the following related agreements by and
between the parties: (i) an Agency Agreement dated as of the date hereof; (ii)
various net fare agreements (the "Net Fare Agreements"); (iii) a Warrant to
-------------------
purchase 1,626,426 shares of CTI common stock (the "Warrant") dated as of the
-------
date hereof; and (iv) an Investor Rights Agreement dated as of the date hereof
(this Agreement, the Agency Agreement, the Net Fare Agreements, the Warrant and
the Investor Rights Agreement are collectively referred to herein as the
"Transaction Documents").
---------------------
In consideration of the covenants and agreements set forth in the
Transaction Documents, the parties agree as follows:
<PAGE>
1. Definitions
-----------
As used in this Agreement, terms with their initial letters capitalized (or
otherwise defined) shall have the meanings assigned to them in this
Agreement.
2. Preferred Airline Status
-------------------------
2.1 During the term of this Agreement, CTI will designate and promote
Delta as a "Preferred Airline" in all CTI distribution channels,
whether now existing or created later including, without limitation,
the Web Site, the Call Centers and the Travel Stores. As a Preferred
Airline, Delta shall receive the benefits set forth on Exhibit 2.1
-----------
attached hereto and incorporated herein by reference, including with
respect to Delta's participation in the Opaque Fare Program.
2.2 During the term of this Agreement, CTI shall not designate and promote
more than three (3) U.S.-based airlines as a Preferred Airline,
including Delta.
3. Participation in the Opaque Fare Program
----------------------------------------
3.1 Participation. Delta shall participate in the Opaque Fare Program and,
-------------
in connection therewith, will provide CTI with Delta Unpublished Fares
subject to the Opaque Restrictions (defined herein) for select origin
and destination city pairs (each, an "O&D") identified by Delta in
---
accordance with the terms and conditions set forth in this Article 3.
CTI will brand the Opaque Fare Program as "SuperCheapTickets" or such
other brand that CTI may determine from time to time which will
distinguish the Opaque Fare Program from its other product offerings.
3.2 Opaque Fare Program Ticket Restrictions and Related Matters
-----------------------------------------------------------
a. Delta Unpublished Fares provided to CTI under the Opaque Fare Program
must be issued in accordance with the rules and restrictions described
below in Section 3.2(b), and such additional reasonable fare rules and
--------------
restrictions as are provided by Delta to CTI from time to time (such
as for specific routings or flight/day criteria on certain O&Ds) (the
"Opaque Restrictions"). None of the Opaque Restrictions shall be
-------------------
modified, removed or waived at any time without the prior written
consent of Delta. At all times during the term of this Agreement,
Delta will control and determine the Delta Unpublished Fares and
levels of inventory provided to CTI for use in the Opaque Fare
Program. It is expressly understood and agreed that Delta makes no
commitment whatsoever regarding the level of inventory, number of O&Ds
or the level of Delta Unpublished Fares that will be provided to CTI
for sale through the Opaque Fare Program.
-2-
<PAGE>
b. All tickets (each, an "Opaque Ticket") issued by CTI through the
-------------
Opaque Fare Program on any airline participating in the Opaque Fare
Program (each a "Participating Carrier") shall be subject to the
following general restrictions (the "Restrictions"):
(i) Opaque Tickets will be non-refundable, non-endorsable, non-
transferable and non-changeable;
(ii) All travel will be round-trip with no stopovers or open-jaw
travel permitted;
(iii) Frequent flyer mileage and upgrades will not be permitted;
(iv) Opaque Fare Program customers must agree to accept a ticket
on any Participating Carrier;
(v) All Opaque Fare Program travel reservations and bookings
shall be made without allowing Opaque Fare Program customers
to specify, request or require a certain carrier, flight or
time of day (other than requiring no overnight flights) on
the specified date(s) of travel. Carrier attributes
including, without limitation, name, carrier code, flight
times, equipment type and connecting points shall not be
revealed to customers until after a transaction is
completed;
(vi) All Opaque Tickets require instant ticketing guaranteed with
a major credit card if CTI is able to provide an airline
ticket within the customer's departure and return date
parameters;
(vii) Opaque Ticket reservations are limited to no more than eight
(8) persons traveling in the same itinerary; and
(viii) All travel will require a Saturday night minimum stay
requirement and an advance purchase requirement of three (3)
days or greater.
c. The Restrictions will be communicated by CTI to the customer via the
Web Site (or through CTI's customer service representatives if the
consumer contacts CTI through its toll free customer service number),
and the Restrictions set forth in subparagraphs (i), (ii) and (iii) of
Section 3.2(b) will additionally be set forth on ticketing and/or
--------------
itinerary documentation issued by CTI.
d. All Opaque Tickets issued for carriage on Delta shall be subject to
the published conditions of carriage and the fare rules of Delta, to
the extent such conditions and fare rules are consistent with the
Restrictions. Delta will honor all Opaque Tickets issued for travel on
Delta in accordance with the Restrictions and other rules and
conditions established by Delta in accordance with Section 3.2(a)
hereof.
3.3 Opaque Ticket Reservations, Bookings, Payment and Fulfillment.
--------------------------------------------------------------
-3-
<PAGE>
a. Delta will file Delta Unpublished Fares and rules for Opaque Tickets
with the computer reservation system ("CRS") used by CTI.
---
[****]
b. CTI shall not identify Delta in any advertising for Opaque Tickets.
c. All Delta Unpublished Fares made available by Delta for sale through
the Opaque Fare Program shall not be commissionable (but shall be
included for purposes of determining CTI's market share levels for
purposes of the O&D Market Share Program described in Section 5.2
-----------
hereof) and shall be inclusive of the domestic federal transportation
excise tax. All such Delta 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 Opaque
Ticket.
d. In all Opaque Fare Program transactions for Delta, CTI will be the
merchant of record and will pay all associated merchant credit card
fees. All Opaque Tickets sold on Delta will be settled through ARC.
e. All tickets of Delta issued through the Opaque Fare Program will be
issued by CTI using a specific agency ARC number or numbers to be
provided to Delta by CTI from time to time. In collecting payment for
Opaque Tickets, CTI will act as the agent of Delta pursuant to Agent's
ARC Agent Reporting Agreement with the Airlines Reporting Corporation
("ARC").
---
f. CTI will encourage its customers to accept electronic ticketing for
all Opaque Tickets sold on Delta by imposing an additional charge for
the issuance of paper tickets and maintaining the issuance of
electronic tickets as the default option for Delta fares on the Opaque
Fare Program. After issuance of Opaque Tickets for Delta fares, CTI
will promptly forward to the customer a receipt of proof of purchase
and contract of carriage on Delta.
g. All Opaque Tickets issued in paper form for carriage on Delta will be
issued by CTI on standard ARC traffic documents and will be validated
with Delta'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
[****] - CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
-4-
<PAGE>
Section 3.3(c) above. The auditor's coupon will show Delta's
--------------
Unpublished Fare as authorized by CTI.
3.4 Opaque Ticketing Procedures. CTI will handle sales of Opaque Tickets
---------------------------
according to the procedures described in Exhibit 2.1 attached hereto.
-----------
3.5 Opaque Fare Program Customer Service.
-------------------------------------
a. CTI will provide customer support services to all Opaque Fare Program
customers through a toll-free number during at least such hours as CTI
makes available support services to its customers generally. Customer
support will be adequately staffed with personnel trained to take
Opaque Ticket requests by phone and respond to all customer inquiries
for related service and support.
b. CTI will use commercially reasonable efforts to ensure that its
customer service representatives provide quality customer service and
support to Opaque Fare Program customers in a prompt, reliable and
courteous manner.
c. CTI will respond to Opaque Fare Program customer questions and issues
pertaining to special handling requirements for Opaque Tickets
including processing any special customer handling requirements in
respect of Opaque Tickets issued on Delta.
3.6 Reporting. CTI will provide monthly reports in a format reasonably
---------
designated by Delta summarizing (i) information concerning each fare
issued by CTI through the Opaque Fare Program on Delta; and (ii)
aggregate information (not identifying any air carrier) for all fares
issued by CTI through the Opaque Fare Program in each O&D in which
Delta participates.
3.7 Modifications to the Restrictions. None of the Restrictions shall be
---------------------------------
modified, removed or waived at any time without the prior written
consent of Delta.
3.8 No Exclusivity. Delta's participation in CTI's Opaque Fare Program
--------------
shall be non-exclusive to Delta and to CTI. As such, Delta may
participate in other programs similar to the Opaque Fare Program, and
CTI may invite other airlines to participate in the Opaque Fare
Program.
4. Net Fare Program
----------------
4.1 Subject to the terms of the Net Fare Agreements, Delta will make
available point of sale Delta Unpublished Fares for distribution
through the Call Centers, the Web Site and the Travel Stores. Delta
will control and determine the Delta Unpublished
-5-
<PAGE>
Fares and levels of inventory provided to CTI in the Net Fare Program.
It is expressly understood and agreed that Delta makes no commitment
whatsoever regarding the level of inventory, number of O&Ds or the
level of Delta Unpublished Fares that will be provided to CTI through
the Net Fare Program.
4.2 CTI will serve as merchant of record for all Delta Net Fares sold by
CTI pursuant to the Net Fare Agreements.
4.3 [****]
5. Override and Incentive Program
------------------------------
5.1 Pursuant to the terms of the Agency Agreement, Delta will make
available to CTI a point of sale override commission (the "POS
---
Commission") in conjunction with domestic Published Fares sold by CTI
----------
Call Centers and Travel Stores (but not sales through the Web Site).
5.2 Pursuant to the terms of the Agency Agreement, Delta will also make
available to CTI participation in an additional O&D Market Share
Program that will allow CTI to potentially earn a performance based
quarterly incentive on sales of Published Fares. Delta may update
periodically the performance goals expected of CTI in the O&D Market
Share Program; provided, however, that the maximum increase in
performance goals for each level of incentive compensation shall not
exceed the amounts set forth in the following table:
---------------------------------------------------------------------
Maximum increase in target O&D
MSP compared to same quarter in
Incentive compensation level: prior calendar year:
---------------------------------------------------------------------
[****] [****]
---------------------------------------------------------------------
[****] [****]
---------------------------------------------------------------------
[****] [****]
---------------------------------------------------------------------
[****] [****]
---------------------------------------------------------------------
[****] [****]
---------------------------------------------------------------------
[****] [****]
---------------------------------------------------------------------
[****].
[****] - CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
-6-
<PAGE>
For purposes of this Section 5.2, the terms "O&D" and "O&D MSP" shall
----------- --- -------
have the meanings assigned to such terms in the Agency Agreement.
5.3 [****]
5.4 [****]
6. Other Benefits to CTI
---------------------
6.1 SkyMiles Program. Delta will provide to CTI the opportunity to
----------------
purchase SkyMiles(R) frequent flyer miles, on terms mutually agreeable
by the parties, for CTI to use in promotions that promote Delta. Any
such promotions must be approved by Delta in advance in writing.
6.2 Delta Equity Account. Subject to the terms and conditions set forth in
--------------------
Exhibit 6.2 attached hereto and incorporated herein by reference,
during the term of this Agreement Delta shall establish for CTI a
Delta Equity Account to be used by CTI for corporate business travel
credit with travel credits (the "Delta Credits") in amount of [****]%
-------------
of the annual Delta flown revenues (net of applicable commissions,
overrides, charges, surcharges and taxes) received by Delta for air
transportation sold by CTI at fares made available under this
Agreement; provided, however, such Delta Credits shall not exceed
$[****] per year.
6.3 AD 100 Tickets. During each calendar quarter that the Agency Agreement
--------------
is in effect, in the event that CTI earns an incentive compensation
during any such quarter, Delta shall provide CTI with fifty ([****])
([****] domestic and [****] international) AD-100 tickets, subject to
the standard terms and conditions of Delta's AD-100 program then in
effect.
[****] - CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
-7-
<PAGE>
7. Affirmative Covenants of CTI. Within ninety (90) days of the date set
----------------------------
forth at the top of this Agreement, CTI shall fulfill the following
obligations, each subject to Delta's reasonable satisfaction:
(a) Provide to Delta a beta demonstration of the Web Site and Call Centers
display screens that provide for Delta receiving the Preferred Airline
rights and benefits set forth in Article 2 and Exhibit 2.1 hereof;
-----------
(b) Make any modifications to its Opaque Fare Program service to comply
with the terms and conditions set forth in Article 3 hereof;
(c) Report all sales of Delta tickets via the internet including, without
limitation, via the Web Site and through the Opaque Fare Program,
through dedicated ARC numbers; and
(d) Require and provide that all purchases of Delta tickets through CTI
via the Web Site or the Opaque Fare Program, will be immediate
ticketing and have no reservation holding period.
8. Representations and Warranties of CTI. CTI represents and warrants to
-------------------------------------
Delta as follows:
8.1 Organization and Qualification. CTI is a duly organized and validly
------------------------------
existing corporation in good standing under the laws of the State of
Delaware and has the corporate power and authority to own, operate and
lease the properties and assets it now owns, operates or leases and to
conduct its business as it is now being conducted.
8.2 Authority Relative to this Agreement. CTI has the corporate power and
------------------------------------
authority to execute and deliver the Transaction Documents and to
consummate the transactions contemplated thereby in accordance with
the terms thereof. The execution and delivery of the Transaction
Documents and the consummation of the transactions contemplated
thereby have been duly authorized by all necessary corporate action on
the part of the CTI. The Transaction Documents have been duly and
validly executed and delivered by CTI and are, assuming due execution
and delivery thereof by Delta and that Delta has full legal power and
right to enter into the Transaction Documents, valid and binding
obligations of CTI, enforceable against CTI in accordance with their
terms, except as enforcement thereof may be limited by the
availability of certain equitable remedies or by bankruptcy,
insolvency or similar laws affecting creditors' rights generally.
9. Representations and Warranties of Delta. Delta represents to CTI as
---------------------------------------
follows:
-8-
<PAGE>
9.1 Organization and Qualification. Delta is a duly organized and validly
------------------------------
existing corporation in good standing under the laws of the State of
Delaware and has the corporate power and authority to own, operate and
lease the properties and assets it now owns, operates or leases and to
conduct its business as it is now being conducted.
9.2 Authority Relative to this Agreement. Delta has the corporate power
------------------------------------
and authority to execute and deliver the Transaction Documents and to
consummate the transactions contemplated thereby in accordance with
the terms thereof. The execution and delivery of the Transaction
Documents and the consummation of the transactions contemplated
thereby have been duly authorized by all necessary corporate action on
the part of the Delta. The Transaction Documents have been duly and
validly executed and delivered by Delta and are, assuming due
execution and delivery thereof by CTI and that CTI has full legal
power and right to enter into the Transaction Documents, valid and
binding obligations of Delta, enforceable against Delta in accordance
with their terms, except as enforcement thereof may be limited by the
availability of certain equitable remedies or by bankruptcy,
insolvency or similar laws affecting creditors' rights generally.
10. Confidentiality
---------------
10.1 Subject to the other terms of this Section 10, CTI and Delta 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 the Transaction Documents and their 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 Delta to CTI pursuant to this Agreement. The recipient
of Confidential Information may only disclose such information to its
employees on a need-to-know basis.
10.2 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
two (2) years thereafter, except to the extent Confidential Information:
(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,
-9-
<PAGE>
(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, to CTI's knowledge, bound
by any confidentiality obligations to the disclosing party or its
affiliated companies (as applicable);
(c) is required to be disclosed by the recipient in order to comply
with applicable law or the order or other legal process of any court,
governmental or similar authority having jurisdiction over the
recipient; or
(d) is required to be disclosed by the recipient pursuant to the
requirements of the federal securities laws, including without
limitation the Securities Exchange Act of 1934, as amended, or the
rules and regulations thereunder.
10.3 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) compliance with the provisions hereof,
recipient will furnish only that portion of such Confidential Material
which is legally required and will exercise its reasonable business efforts
to obtain appropriate assurance that confidential treatment will be
accorded such Confidential Information.
10.4 The recipient of Confidential Information will exercise reasonable
commercial care in protecting the confidentiality of the other party's
Confidential Information.
10.5 CTI will not disclose (including, without limitation, by sale) to any third
party information obtained through the Opaque Fare Program concerning a
customer who has acquired a ticket on Delta.
10.6 If Delta elects not to terminate the Agency Agreement after receipt of the
Notice in Section 7.3(a) of the Agency Agreement, then Agency may make a
copy of this Agreement and the Agency Agreement available to the person or
persons who propose to acquire a majority interest in Agency in the Change
of Control transaction or the successor in interest in a proposed
transaction that constitutes a Change of Control, subject to execution of a
non-disclosure agreement, reasonably acceptable to Delta, by such person or
persons.
11. Proprietary Marks
-----------------
During the term of this Agreement neither CTI nor Delta shall use the other
party's (or its affiliates') trademarks, trade names, service marks, logos,
emblems, symbols or other
-10-
<PAGE>
brand identifiers in advertising or marketing materials, unless it has
obtained the prior written approval of the other party. The consent
required by this Article 11 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 mark, logo, emblem, symbol or
other brand identifier of the other party. CTI or Delta, 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.
12. Term of Agreement
-----------------
12.1 Subject to the terms of this Article 12, this Agreement will commence
effectively on April 1, 2001 (the "Commencement Date") and will
-----------------
continue for a period of five (5) years; provided, however, Articles 5
and 6 hereof shall only continue for a period of three (3) years from
the Commencement Date.
12.2 Any party may terminate this Agreement at any time after the
Commencement Date if another party is in material breach of its
obligations hereunder and has failed to fully cure such breach within
thirty (30) days following its receipt of notice of such breach;
provided, however, Delta may terminate this Agreement immediately in
the event CTI breaches any of the covenants set forth in Article 7
hereof.
12.3 The obligations of the parties under Articles 10, 13 and 14 of this
Agreement shall indefinitely survive the expiration or any termination
of this Agreement.
13. Indemnification
---------------
13.1 For purposes of this Section 13, "Losses" shall mean any and all
------
costs, demands, losses, claims (including any claim by a third party),
liabilities, fines, penalties, assessments, damages, including,
without limitation, interest, penalties, reasonable attorneys' fees
and expenses and all amounts paid in proceedings, claims, complaints,
disputes, arbitrations, investigations, defense or settlement of any
of the foregoing.
13.2 Except as otherwise provided in this Article 13, Delta agrees to
indemnify, defend and hold harmless CTI and its affiliates and their
respective officers, directors, agents, employees and subsidiaries
(each, a "CTI Indemnified Party") to the fullest extent permitted by
---------------------
law from and against any and all Losses resulting from, arising out of
or relating to any breach of any representation, warranty, covenant or
agreement by Delta in the Transaction Documents; provided, that Delta
--------
shall not
-11-
<PAGE>
be liable under this Section 13.2 to any CTI Indemnified Party to the
extent that it is finally judicially determined that such Losses
resulted primarily from the material breach by any CTI Indemnified
Party of any representation, warranty, covenant or agreement of such
CTI Indemnified Party contained in the Transaction Documents; and
provided, further, that if and to the extent that such indemnification
-------- -------
is unenforceable for any reason, Delta shall make the maximum
contribution to the payment and satisfaction of such Losses which
shall be permissible under applicable laws.
13.3 Except as otherwise provided in this Article 13, CTI agrees to
indemnify, defend and hold harmless Delta and its affiliates and their
respective officers, directors, agents, employees, and subsidiaries
(each, a "Delta Indemnified Party") to the fullest extent permitted by
-----------------------
law from and against any and all Losses resulting from, arising out of
or relating to any breach of any representation or warranty, covenant
or agreement by CTI in the Transaction Documents; provided, that CTI
--------
shall not be liable under this Section 13.3 to any Delta Indemnified
Party to the extent that it is finally judicially determined that such
Losses resulted primarily from the material breach by any Delta
Indemnified Party of any representation, warranty, covenant or
agreement of an Delta Indemnified Party contained in the Transaction
Documents; and provided, further, that if and to the extent that such
-------- -------
indemnification is unenforceable for any reason, CTI shall make the
maximum contribution to the payment and satisfaction of such Losses
which shall be permissible under applicable laws.
13.4 Each CTI Indemnified Party or Delta Indemnified Party, as the case may
be (for purposes of this Section 13.4, an "Indemnified Party"), under
-----------------
this Section 13 shall, promptly after the receipt of notice of the
commencement of any action, investigation, claim or other proceeding
against such Indemnified Party in respect of which indemnity may be
sought from Delta or CTI (for purposes of this Section 13.4, an
"Indemnifying Party") under this Section 13, notify the Indemnifying
------------------
Party in writing of the commencement thereof. The omission of any
Indemnified Party so to notify the Indemnifying Party of any such
action shall not relieve the Indemnifying Party from any liability
which it may have to such Indemnified Party unless, and only to the
extent that, such Indemnifying Party has been prejudiced thereby. In
case any such action, claim or other proceeding shall be brought
against any Indemnified Party, and it shall notify the Indemnifying
Party of the commencement thereof, the Indemnifying Party shall be
entitled to assume the defense thereof at its own expense, with
counsel satisfactory to such Indemnified Party in its reasonable
judgment; provided, however, that any Indemnified Party may, at its
-------- -------
own expense, retain separate counsel to participate in such defense at
its own expense. Notwithstanding the foregoing, in any action, claim
or proceeding in which both the Indemnifying Party, on the one hand,
and an Indemnified Party,
-12-
<PAGE>
on the other hand, are, or are reasonably likely to become, a party,
such Indemnified Party shall have the right to employ separate counsel
at the expense of the Indemnifying Party and to control its own
defense of such action, claim or proceeding if, in the reasonable
opinion of counsel to such Indemnified Party, a conflict or potential
conflict exists between the Indemnifying Party, on the one hand, and
such Indemnified Party, on the other hand, that would make such
separate representation advisable; provided, however, that the
-------- -------
Indemnifying Party shall not be liable for the fees and expenses of
more than one counsel to all Indemnified Parties. The Indemnifying
Party agrees that it will not, without the prior written consent of
the Indemnified Party, settle, compromise or consent to the entry of
any judgment in any pending or threatened claim, action or proceeding
relating to the matters contemplated hereby (if any Indemnified Party
is a party thereto or has been actually threatened to be made a party
thereto) unless such settlement, compromise or consent includes an
unconditional release of the Indemnified Party from all liability
arising or that may arise out of such claim, action or proceeding. The
Indemnifying Party shall not be liable for any settlement of any
claim, action or proceeding effected against an Indemnified Party
without the Indemnifying Party's written consent, which consent shall
not be unreasonably withheld.
14. General Provisions
------------------
14.1 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.
14.2 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.
14.3 Any notice required or permitted hereunder shall be deemed sufficient
if given in writing and delivered personally, by facsimile
transmission, by reputable overnight courier service or United States
mail, postage prepaid, to the addresses shown below or to such other
addresses as are specified by similar notice, and shall be deemed
received upon personal delivery, upon confirmed facsimile receipt, two
(2) days following deposit with such courier service, or three (3)
days from deposit in the United States mails, in each case as herein
provided:
If to CTI, Inc.: If to Delta:
-13-
<PAGE>
Cheap Tickets, Inc. Delta Air Lines, Inc.
1440 Kapiolani Blvd. 1030 Delta Boulevard
Honolulu, HI 96814 Hartsfield Atlanta International Airport
Atlanta, GA 30320
Attention: Chief Financial Officer Attention: VP-Reservations Sales
& Distribution Planning
Phone: 808-945-7439 Phone: 404-715-4079
Fax: 808-945 Fax: 404-715-
With a copy to: With a copy to:
--------------- ---------------
Morrison & Foerster LLP Delta Air Lines, Inc.
555 West 5th Street 1030 Delta Boulevard
Suite 3500 Hartsfield Atlanta International Airport
Los Angeles, California 90013 Atlanta, GA 30320
Attention: Henry Fields, Esq. Attention: General Counsel
Phone: 213-892-5200 Phone: 404-715-2387
Fax: 213-892-5454 Fax: 404-773-1657
A party may change its address and the name of its designated
recipient of copies of notices for purposes of this Agreement by
giving the other parties written notice of the new name and the
address, phone and facsimile number of its designated recipient in
accordance with this Section 14.3.
14.4 This Agreement and the Attachments hereto, and the Transaction
Documents, supersede and replace all previous understandings or
agreements, whether oral or written, with respect to the subject
matter hereof. The captions in this Agreement are for convenience only
and do not alter any terms of this Agreement.
14.5 This Agreement may be amended or modified only by a written amendment
executed by the parties.
14.6 The formation, construction, performance and validity of this
Agreement shall be governed by the internal laws of the State of
Georgia. 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
-14-
<PAGE>
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 upon it and shall be enforceable
against it by suit upon such judgment in any court of competent
jurisdiction.
14.7 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).
14.8 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. CTI shall comply at all times with the
provisions of Delta's tariffs (except where such tariffs are
specifically amended by Delta under the terms of this Agreement) and
the terms of the Airlines Reporting Corporation ("ARC") Agent
---
Reporting Agreement and any addenda thereto.
14.9 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.
14.10 This Agreement shall not be deemed to create any partnership or
joint venture between Delta and CTI, 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.
14.11 NO PARTY WILL BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES,
INCLUDING LOST REVENUES, LOST PROFITS, OR LOST PROSPECTIVE ECONOMIC
ADVANTAGE, ARISING FROM THIS AGREEMENT OR ANY BREACH HEREOF.
14.12 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.
14.13 Each party has participated jointly in the negotiation and drafting
of this Agreement. In the event any ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties, and no presumption
-15-
<PAGE>
or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement
14.14 In the event that either party hereto is prevented from fulfilling
any of its obligations under this Agreement for a period not
exceeding one hundred twenty (120) consecutive days for a reason
beyond its control, including, but not limited to, strikes,
lockouts, work stoppages or other labor disputes, riots, civil
commotions, acts of God, fire, flood and other weather-related
reasons, governmental action or directive (a "Force Majeure Event"),
-------------------
such party shall not, by reason of being so prevented, be in breach
of this Agreement and such condition shall not be cause of
termination by the other party. If a Force Majeure Event continues
for a period in excess of one hundred twenty (120) consecutive days
as to one party which prevents that party from fulfilling in any
material way its obligations under this Agreement to the other
party, the other party shall have the right to terminate this
Agreement upon thirty (30) days' advance written notice to the other
party.
[Signatures on next page]
-16-
<PAGE>
[Signatures to the General Agreement dated May __, 2001]
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on
the date indicated above.
CHEAP TICKETS, INC. DELTA AIR LINES, INC.
/s/ Sam E. Galeotos /s/ [SIGNATURE ILLEGIBLE]
---------------------------- ---------------------------------
By: By: V Caminiti
Title: Title: SR V.P. E-BUS
Sam E. Galeotos
President and Chief Executive Officer
-------------------------------------
-17-
<PAGE>
EXHIBIT 2.1
Preferred Airline Benefits
--------------------------
If a query or request for a reservation, booking or ticket is made through any
CTI distribution channel, the default, fare led response will display the Delta
("DL") fares that result from such query or request in the following manner:
--
(1) [****]
(2) [****]
(3) [****]
(4) [****]
[****] - CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
-18-
<PAGE>
EXHIBIT 2.1
(Continued)
Additional Marketing Assistance to be provided by CTI to Delta:
--------------------------------------------------------------
1) Regular home page recognition as a CTI "Preferred Airline".
2) Bi-weekly newsletter emails - distributed to CTI subscribers in order
to highlight special fares in selected markets. The identified fares
must apply to a minimum of 5 city-pairs per market.
3) Delta Exclusive emails - distributed to CTI subscribers in order to
highlight special DL fares in selected markets. The identified fares
must apply to a minimum of 10 city-pairs per market.
4) Confirmation emails - Distributed to CTI new subscribers following
their initial sign up, in order to highlight special fares in selected
markets. The identified fares must apply to a minimum of 5 city-pairs
per market.
5) CTI will provide to Delta on a monthly basis market data relating to
CTI's top 150 domestic and 50 international markets.
-19-
<PAGE>
EXHIBIT 6.2
DELTA EQUITY ACCOUNT
--------------------
Delta shall establish a Delta Air Lines Equity Account in the name of CTI (the
"Account") to which Delta will credit as hereafter described transportation
credits that may be used by CTI to purchase air transportation on Delta anywhere
on Delta's worldwide route system. Such transportation may be used only for
travel by CTI's directors, officers and employees for business purposes.
The following terms and conditions shall govern the establishment of the Account
and the use by CTI of the Delta Credits therein:
1. Delta shall issue to CTI a Delta Equity Card that may be used to purchase
transportation from the Account. Delta Credits may be used solely for the
purchase of travel on Delta (not including the Delta Connection carriers or any
other carrier now or hereafter using Delta's two letter carrier code) and for
excess baggage charges. Travel on a Delta Connection carrier is permitted only
in exceptional circumstances at the sole discretion and with the authorization
of the local Delta Station Manager.
2. The value of tickets and other documents (including all applicable tariff
and other charges, surcharges and taxes) purchased by CTI will be debited
against the Account. All tickets shall be issued exclusively by Delta or by CTI
in accordance with mutually agreed upon procedures. All tickets will be
validated on Delta. Tickets purchased with the Delta Equity Card are subject to
all rules applicable to the general public for the fare structure selected.
3. All tickets shall be issued at the applicable published fare. Reservations
must be booked in applicable class of service, and travel is subject to all
applicable tariffs and other rules and regulations relating thereto.
Transatlantic or transpacific travel may not be booked in first class (F)
without prior approval from Delta's Leisure Sales Department. Delta reserves
the right to require, in its discretion, that reservations be made in specific
inventory classifications, and CTI understands that any such requirement may
restrict seat availability.
4. Denied boarding compensation rules shall not apply and frequent flyer
credits shall not be awarded in connection with travel pursuant to this Rider.
CTI shall imprint on each ticket issued pursuant to this Agreement the phrase
"NO FF CREDIT/DBC ALLOWED" to reflect the restrictions on frequent flyer credits
and denied boarding compensation contained herein.
5. CTI is responsible for the security of the Delta Equity Card issued to it
and is responsible for all charges made against the Account. Lost or stolen
cards should be reported immediately.
-20-
<PAGE>
6. Phone authorization, including an approval code, may be required for
purchases with the Delta Equity Card to insure that sufficient Delta Credits are
available in the Account for payment. If available Delta Credits are
insufficient for payment of any charge, CTI may use a separate form of payment
to pay the difference.
-21-
<PAGE>
7. If any charges are made that exceed the balance in the Account, CTI agrees
to pay the difference, plus a handling charge equal to five percent (5%) of the
difference. If a Delta Equity Card is used to purchase travel or other services
on carriers other than Delta and the Delta Connection carriers, Delta is
authorized to deduct from the Account Delta Credits equal to 200% of the
purchase price of such unauthorized services. Any sums payable by the CTI
pursuant to this Item 7 are payable in full immediately upon receipt of a
statement from Delta. No Delta Credits earned in accordance with this Agreement
will be posted to the Account until all such sums are paid in full, and use of
the Account will be suspended until remittance in full is received.
8. The Account shall be used solely for conducting CTI's business in the
ordinary course, and tickets purchased with the Delta Credits shall not be
bartered, sold, refunded in cash, or converted into cash compensation. The
endorsement box on tickets issued against the Delta Equity Card must be marked
"Non-Refundable in Cash," "Non-Endorseable," and Non-Transferable."
9. Delta is expressly permitted to offset any amount owed by CTI to Delta or
Delta's subsidiaries or affiliates (including WORLDSPAN) against any Delta
Credits earned hereunder.
10. CTI may not assign, pledge or otherwise transfer the Account, in whole or
in part. Delta may refuse to honor tickets issued pursuant to this Agreement
and/or reduce credits available in the Account at any time in Delta's sole
judgment, if the Account has been or is being used in any manner not authorized
by this Agreement.
11. All credits in the Account will be forfeited automatically (i) upon
termination of this Agreement by Delta and (ii) at the end of thirty (30) days
following the expiration of this Agreement by its terms or its termination for
any other reason.
12. Delta may require that tickets not be used during the blackout periods
established from time to time by Delta.
13. Not more than five (5) tickets may be used on any one Delta flight.
-22-