Orbitz 2012 Annual Report Download - page 83

ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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Stock Purchase Agreement
On January 26, 2010, Travelport purchased 9,025,271 shares of our common stock for $50.0 million in cash (see
Note 6 - Term Loan and Revolving Credit Facility).
Separation Agreement
We entered into a Separation Agreement with Travelport at the time of the IPO. This agreement, as amended, provided
the general terms for the separation of our respective businesses. When we were a wholly-owned subsidiary of Travelport,
Travelport provided guarantees, letters of credit and surety bonds on our behalf under our commercial agreements and leases
and for the benefit of regulatory agencies. Under the Separation Agreement, we were required to use commercially reasonable
efforts to have Travelport released from any then outstanding guarantees and surety bonds. As a result, Travelport no longer
provides surety bonds on our behalf or guarantees in connection with commercial agreements or leases entered into or replaced
by us subsequent to the IPO. Our ability to pay dividends may require the prior consent of Travelport.
Master License Agreement
We entered into a Master License Agreement with Travelport at the time of the IPO. Pursuant to this agreement,
Travelport licenses certain of our intellectual property and pays us fees for related maintenance and support services. The
licenses include our supplier link technology; portions of ebookers' booking, search and vacation package technologies; certain
of our products and online booking tools for corporate travel; portions of our private label vacation package technology; and
our extranet supplier connectivity functionality.
The Master License Agreement granted us the right to use a corporate online booking product developed by Travelport.
We have entered into a value added reseller license with Travelport for this product.
GDS Service Agreement
In connection with the IPO, we entered into the Travelport GDS Service Agreement, which expires on December 31,
2014. The Travelport GDS Service Agreement is structured such that we earn incentive revenue for each air, car and hotel
segment that is processed through the Travelport GDSs. This agreement requires that we process a certain minimum number of
segments for our domestic brands through the Travelport GDSs each year. Our domestic brands were required to process a total
of 31.4 million, 32.8 million and 33.7 million segments through the Travelport GDSs during the years ended December 31,
2012, 2011 and 2010, respectively. Of the required number of segments, 16.0 million segments were required to be processed
each year through Worldspan, and 15.4 million, 16.8 million and 17.7 million segments were required to be processed through
Galileo during the years ended December 31, 2012, 2011 and 2010, respectively. The required number of segments processed
in future years for Worldspan is fixed at 16.0 million segments, while the required number of segments for Galileo is subject to
adjustment based upon the actual segments processed by our domestic brands in the preceding year. Our failure to process at
least 95% of these segments through the Travelport GDSs would result in a shortfall payment of $1.25 per segment below the
required minimum. We are not subject to these minimum volume thresholds to the extent that we process all eligible segments
through the Travelport GDS. No payments were made to Travelport related to the minimum segment requirement for our
domestic brands for the years ended December 31, 2012, 2011 and 2010.
The Travelport GDS Service Agreement also requires that ebookers use the Travelport GDSs exclusively in certain
countries for segments processed through GDSs in Europe. Our failure to process at least 95% of these segments through the
Travelport GDSs would result in a shortfall payment of $1.25 per segment for each segment processed through an alternative
GDS provider. We failed to meet this minimum segment requirement during each of the years ended December 31, 2011 and
2010, and as a result, we were required to make shortfall payments of $0.4 million to Travelport related to each of these years.
There was not a shortfall for the year ended December 31, 2012.
Hotel Sourcing and Franchise Agreement
We entered into a Master Supply and Services Agreement (the “GTA Agreement”) with GTA, a wholly-owned subsidiary
of Travelport, which became effective on January 1, 2008. Under the GTA Agreement, we pay GTA a contract rate for hotel and
destination services inventory it makes available to us for booking on our websites. The contract rate exceeds the prices at
which suppliers make their inventory available to GTA for distribution and is based on a percentage of the rates GTA makes
such inventory available to its other customers. We are also subject to additional fees if we exceed certain specified booking