Information Technology Services Agreement - American Airlines Inc. and The Sabre Group Inc.
INFORMATION TECHNOLOGY SERVICES AGREEMENT
This Agreement is between AMERICAN AIRLINES, INC., a Delaware
corporation, acting for itself and the American Related Entities, and THE SABRE
GROUP, INC., a Delaware corporation.
BACKGROUND
AMERICAN intends to engage TSG to perform for the Airline Group, and
TSG intends to perform for the Airline Group, the TSG Services pursuant to this
Agreement at market-based rates which take into account on an aggregate basis,
among other things, the rights and obligations under this Agreement, the
amounts charged by other providers of similar services, the Airline Group's
size as a recipient of similar services, the SLA Standards required of TSG, the
geographic factors involved in providing the TSG Services to the Airline Group,
the exclusivity commitments made by the Airline Group, and the Retained Rights.
AGREEMENT
IN CONSIDERATION OF the terms and conditions of this Agreement,
the receipt and sufficiency of which are hereby acknowledged, AMERICAN and TSG,
intending to be legally bound, hereby agree as follows:
Article I -- Definitions and Interpretation
1.1. DEFINITIONS. All terms beginning with a capital letter in this
Agreement are defined in Exhibit A: Definitions and Interpretations. Exhibit A
also sets forth various interpretive matters for this Agreement.
1.2. EXHIBITS. When this Agreement refers to an Exhibit described in this
Section, such Exhibit is deemed incorporated herein by reference for all
purposes. All Exhibits, as are agreed to after the Effective Date, shall be
deemed incorporated herein upon the Parties Consent.
Exhibit Title
------- -----
A Definitions and Interpretation
B TSG Services Description
C Rate and Reset Schedule
D Services Subject to SLA
E Agreed SLAs
F New/Out-of-scope Services Procedures
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G Response/Resolution Procedures for SLA Problems
H SITA Relationship
I Key Employees
J Non-disclosure/Confidentiality Agreement
K Termination Liquidated Damages Calculation
L Transition Assistance Service Descriptions
M Dispute Resolution Appendix
N Non-disclosure/Non-competition Agreement
O AG Self-performed Services
P Electronic Travel Distribution System
Article II -- Term
2.1. TERM OF AGREEMENT. Unless earlier terminated pursuant to Article
XXIV -- Termination or unless extended in accordance with Section "2.3.
EXTENSIONS OF THE TERM," this Agreement shall be effective on the Effective
Date and continue in effect until 11:59 p.m. June 30, 2006, except that this
Agreement shall cease to be effective for:
A. The Three-year Services at 11:59 p.m. June 30, 1999; and
B. The Five-year Services at 11:59 p.m. June 30, 2001.
2.2. TERM FOR AN UNIDENTIFIED SERVICE. If a TSG Service is not identified
as a Three-year Service, Five-year Service, or Ten-year Service, AMERICAN and
TSG shall agree in writing the period of time such service is subject to this
Agreement.
2.3. EXTENSIONS OF THE TERM. The term of this Agreement as applicable to
the Three-year Services, Five-year Services, and Ten-year Services may be
extended in accordance with this Section 2.3.
A. For Three-year Services:
(1) AMERICAN may extend the applicability of this Agreement
to the Three-year Services until September 30, 1999; provided,
AMERICAN gives TSG Notice prior to June 30, 1998.
(2) If AMERICAN fails to give TSG Notice, at least six months
prior to the end of the term then applicable to the Three-year
Services, that AMERICAN will not renew this Agreement for the
Three-year Services, then the Three-year Services shall be
subject to this Agreement for an additional six months beyond
the end of the then current term applicable to the Three-year
Services.
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(3) If AMERICAN fails to give TSG Notice, at least six months
prior to the end of the term then applicable to the Three-year
Services, that AMERICAN will not renew this Agreement for the
Three-year Services, and this Agreement has already been
extended pursuant to Subsection A(2) of this Section 2.3, then
the Three-year Services shall be subject to this Agreement for
an additional three years beyond the end of the then current
term applicable to the Three-year Services.
B. For Five-year Services:
(1) If AMERICAN fails to give TSG Notice, on or before
January 1, 2001, that AMERICAN will not renew this Agreement
for the Five-year Services, then the Five-year Services shall
be subject to this Agreement until 11:59 p.m. June 30, 2002.
(2) If the applicability of this Agreement to the Five-year
Services is extended to June 30, 2002 and AMERICAN fails to
give TSG Notice, on or before January 1, 2002, that AMERICAN
will not renew this Agreement for the Five-year Services, then
the Five-year Services shall be subject to this Agreement
until 11:59 p.m. June 30, 2005.
C. For Ten-year Services:
(1) If AMERICAN fails to give TSG Notice, on or before
January 1, 2006, that AMERICAN will not renew this Agreement
for the Ten-year Services, then this Agreement shall remain in
effect and the Ten-year Services shall be subject to this
Agreement until 11:59 p.m. June 30, 2007.
(2) If the term of this Agreement is extended to June 30,
2007 and AMERICAN fails to give TSG Notice, on or before
January 1, 2007, that AMERICAN will not renew this Agreement
for the Ten-year Services, then this Agreement shall remain in
effect and the Ten-year Services shall be subject to this
Agreement until 11:59 p.m. June 30, 2012.
Article III -- Services and Exclusivity
3.1. SERVICES IN GENERAL. Pursuant to this Agreement, TSG shall perform
the TSG Services for the Airline Group.
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3.2. ACCESS TO AND USE OF FACILITIES. The Airline Group shall provide
such access to the Airline Group's facilities as is necessary to enable TSG to
perform its obligations under this Agreement and to the extent that the Airline
Group may grant TSG such access rights as an agent; provided that all rights of
access granted to TSG at any airport locations are subject to Airport
Regulations and at any Airline Group leased facilities are subject to any
applicable lease restrictions.
A. If a TSG employee is occupying space in an Airline Group facility
at the Airline Group's request and primarily for the Airline Group's
convenience, then the Airline Group will not charge TSG for any
facility rent expense related to such TSG employee, but TSG shall be
responsible for all significant out-of-pocket expenses of the Airline
Group incurred because of the presence of such TSG employee,
including Device Support and Voice Network Services.
(1) Provided, however, if a TSG employee is occupying space
at the System Operations Control Center or at AMERICAN's
Capacity Planning Department, then the Airline Group will
charge TSG the same amount for rent that a TSG employee would
incur if occupying space at the Solana facility and TSG shall
be responsible for all significant out-of-pocket expenses of
the Airline Group incurred because of the presence of such TSG
employee, including Device Support and Voice Network Services.
For as long as the Solana facility is not essentially full,
the Parties consider the cost of occupying space at the Solana
facility to be zero. The cost of occupying space at the
Solana facility in 1996 is zero.
B. If a TSG employee is occupying space in an Airline Group facility
not at the Airline Group's request, the Airline Group will charge TSG
for a pro rata share of facility rent expense related to such TSG
employee, and TSG shall be responsible for all significant
out-of-pocket expenses of the Airline Group incurred because of the
presence of such TSG employee, including Device Support and Voice
Network Services.
C. If an Airline Group employee is occupying space in an TSG
facility at TSG's request and primarily for TSG's convenience, then
TSG will not charge the Airline Group for any facility rent expense
related to such employee of the Airline Group, but the Airline Group
shall be responsible for all significant out-of-pocket expenses of
TSG incurred because of the presence of such Airline Group employee,
including Device Support and Voice Network Services.
D. If an Airline Group employee is occupying space in a TSG facility
not at TSG's request, then TSG will charge the Airline Group for a
pro rata share of facility rent
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expense related to such employee of the Airline Group at the same
rate that the Airline Group charges its departments occupying similar
space, if any. Additionally, the Airline Group shall be responsible
for all significant out-of-pocket expenses of TSG incurred because of
the presence of such Airline Group employee at a TSG facility,
including Device Support and Voice Network Services.
E. Where one Party's employees are occupying space at the other
Party's facilities, both Parties intend that their employees' usage
of the other Party's LAN will be approximately equal. If the Airline
Group's usage of TSG's LAN significantly exceeds TSG's usage of the
Airline Group's LAN or TSG's usage of the Airline Group's LAN
significantly exceeds the Airline Group's usage of TSG's LAN, the
Account Managers shall meet to negotiate what, if any, compensation
or remedial action is appropriate.
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
3.3. NEW/OUT-OF-SCOPE SERVICES. When TSG and AMERICAN expressly agree in
writing in accordance with Exhibit F: New/Out-of-scope Services Procedures, TSG
shall perform a New/Out-of-scope Service.
3.4. TSG'S RIGHTS TO MANAGE ITS RESOURCES. Subject to the other
provisions of this Agreement, including Article XVI -- Key Employees and
Related Provisions and Section "4.1. TSG'S CHANGES TO LOCATIONS," TSG shall
have the right, at TSG's cost and expense, so long as there is no Material
Adverse Impact, to manage all resources used in providing the TSG Services as
TSG deems appropriate, including relocating data centers, TSG equipment, TSG
personnel, and other TSG resources. Nevertheless, if any such relocation
effected with the reasonable belief that it would not have any Material Adverse
Impact actually has a Material Adverse Impact, TSG shall reimburse the Airline
Group for any increase in the Fees, any more than a de minimis increase in an
expense incurred by the Airline Group, and any increase in the Taxes payable by
the Airline Group.
3.5. KEEPING TECHNOLOGY CURRENT. TSG agrees to use reasonable efforts,
without an increase in charges to the Airline Group or the costs the Airline
Group would have to bear, to keep the technology used in providing the TSG
Services to the Airline Group current, and at a level at least as high as the
level that TSG uses for its internal operations and at least comparable to the
level of technology generally used in the air transportation industry. Except
as provided in Section "3.8. REFRESH FOR DEVICE SUPPORT," in the event that
technology improvements would cause TSG to incur costs in addition to the costs
TSG would otherwise have incurred in providing the TSG Services or would cause
the Airline Group to incur costs it would not otherwise incur, the Airline
Group and TSG shall meet to discuss whether to implement such improvements. At
the Airline Group's sole option, TSG will (i) implement such improvements and
charge the Airline Group for TSG's increased costs or (ii) not implement such
improvements and continue to use TSG's then- existing technology. For the
avoidance of doubt, nothing in this Section 3.5 shall be construed as relieving
TSG of its
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obligation to provide, at no additional charge to the Airline Group,
installation, support, and upgrades to the software identified in the "SG
Commercial Software Product List" in Exhibit B: TSG Services Description.
3.6. ADDITIONAL TSG COSTS IN A SHARED ENVIRONMENT. Except as otherwise
expressly provided in this Agreement, the Current Rates will not increase if
TSG upgrades the hardware or software it uses to provide the TSG Services. If
such an upgrade causes an increase in the Airline Group's Fees and if the
increase in Fees is not commensurate with the benefits of such upgrade
attainable in the reasonably foreseeable future, the Airline Group shall have
no obligation to pay such increase in Fees.
3.7. EFFICIENCY AND COST EFFECTIVENESS. TSG shall use commercially
reasonable efforts to use efficiently those resources chargeable to the Airline
Group, and in so doing will (i) consider the Airline Group's needs, (ii) make
schedule adjustments consistent with the Airline Group's priorities, (iii)
delay the performance of non-critical functions within established limits, and
(iv) consider the needs of TSG's other contractual commitments.
3.8. REFRESH FOR DEVICE SUPPORT. The Airline Group shall receive, at
TSG's expense (except for the expense of upgrading desktop hardware which is at
the Airline Group's expense), the benefits of upgrades to Off-the-shelf
Software included within Device Support as soon as reasonably practicable, but
in any event within twelve months of such upgrades' becoming commercially
available or when TSG implements such upgrades in production (which does not
include any beta testing) for its own employees, whichever is sooner. The cost
of such upgrades, including installation and license fees, shall be borne
solely by TSG through the software charge included in the monthly Device
Support charge.
A. AMERICAN agrees to provide TSG with at least six months Notice of
non-renewal of Device Support in accordance with Section "2.3.
EXTENSIONS OF THE TERM."
B. AMERICAN's Notice of non-renewal shall not affect the rights of
the Airline Group under this Section 3.8 for the remainder of the
term of the Three-year Services, including Device Support.
C. If the Airline Group declines to permit TSG to install an upgrade
to software necessary to provide Device Support and the Airline Group
is the only Device Support customer of TSG to decline, and such
declining causes TSG increased costs, the Airline Group shall
reimburse TSG for such costs.
3.9. TSG SUPPORT FOR THIRD PARTY PRODUCTS. TSG shall arrange for and
manage Third Party Standard Support for Third Party Supported Products. TSG
and AMERICAN acknowledge that such products require TSG to obtain support
services from
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certain third-party vendors, and that TSG's ability to provide any support to
the Airline Group for such products may be impaired if TSG is unable to obtain
the required support from such third-party vendors.
A. When TSG learns that any Third Party Supported Product is an
Unsupported Product, TSG shall, at TSG's expense:
(1) Immediately give AMERICAN Notice;
(2) Discuss with AMERICAN the options available; and
(3) At AMERICAN's sole option:
a. Use reasonable efforts to obtain a replacement
product for such Unsupported Product within twelve
(12) months of notification to AMERICAN pursuant to
Subsection A(1) of this Section 3.9;
b. Use reasonable efforts to obtain services to
substitute for Third Party Standard Support for such
Unsupported Product, provided that TSG and AMERICAN
negotiate new SLA Standards for such Unsupported
Product, if necessary; or
c. Discontinue attempting to obtain services to
substitute for Third Party Standard Support of such
Unsupported Product after the first anniversary of
the notification to AMERICAN.
B. TSG and the Airline Group shall use reasonable efforts to
minimize any costs required to transfer the Airline Group to a
replacement product.
3.10. EXCLUSIVITY. Subject to Section "2.1. TERM OF AGREEMENT," TSG is
the exclusive provider to the Airline Group of certain services as described in
this Section 3.10.
A. TSG is the exclusive provider of the following services:
(1) Data Center Services, except for the operation of
External Client Server Development;
(2) Data Network Services;
(3) Voice Network Services;
(4) Distributed Systems Services;
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(5) Providing Development, Maintenance, and Enhancement
services for Real Time Applications; and
(6) Providing Maintenance and Enhancement services for
Existing Applications.
B. For any New/Out-of-scope Service or Significant Services that TSG
performs that create software and for any TSG Development, TSG is the
exclusive provider of Maintenance and Enhancement services for such
TSG- created or TSG-developed software until the Expiration Date.
C. Although Client Server Development is not an Exclusive Service,
if the Airline Group selects TSG to perform Client Server
Development, TSG has the exclusive right:
(1) To operate the client server application created by such
Client Server Development until June 30, 2001 or until such
later date as the Five-year Services are subject to this
Agreement pursuant to Section "2.3. EXTENSIONS OF THE TERM,"
if such client server application requires an operator other
than the end user; and
(2) To perform the Maintenance and Enhancement services for
such client server application until the Expiration Date.
D. Although acquiring Off-the-shelf Software to replace existing
client server applications or to provide new client server
applications is not an Exclusive Service, if the Airline Group
acquires Off-the Shelf Software to replace existing client server
applications or to provide new client server applications and such
software requires Significant Services performed by TSG, and if such
client server application requires an operator in addition to the end
user, TSG has the exclusive right to operate such Off-the-shelf
Software until June 30, 2001 or until such later date as the
Five-year Services are subject to this Agreement pursuant to Section
"2.3. EXTENSIONS OF THE TERM."
E. AMERICAN's exercise of the Retained Rights are subject to the
restrictions and limitations under this Agreement during the term of
this Agreement.
3.11. NON-EXCLUSIVE SERVICES. Services that are not Exclusive Services
include the following:
A. Development other than Development of Real Time Applications.
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B. Client Server Development services.
C. New/Out-of-scope Services.
D. AG Self-performed Services.
E. Acquiring and using Off-the-shelf Software other than as
described in Subsection F of this Section 3.11.
F. Acquiring and using Off-the-shelf Software for incorporation into
or integration with TSG Operated Software, if both of the following
conditions are met:
(1) TSG does not offer services with comparable functionality
for fees less than or equal to such Off- the-shelf Software's
license fee; and
(2) TSG performs or approves related incorporation or
integration of the Off-the-shelf Software with the TSG
Operated Software.
G. Acquiring and using Enhancements for Existing Applications
requiring specific intellectual property or specific functions that
TSG does not then possess; provided TSG performs or approves the
related integration of such Enhancements with the Existing
Applications.
H. The Airline Group is not prohibited or restricted from entering
into any agreement to receive, or from receiving, any royalty from
the marketing by a third-party developer of software developed by
that Person for any member of the Airline Group as permitted by this
Section 3.11.
3.12. ENGAGING THIRD PARTIES FOR NON-EXCLUSIVE SERVICES. If the Airline
Group solicits offers from third parties to perform Non-exclusive Services, the
Airline Group shall also solicit an offer from TSG; provided, however, that if
the Airline Group solicits an offer for maintenance or enhancement services
from a third party for Development that such third party performed, the Airline
Group shall have no obligation to solicit an offer from TSG. In such instances
where required to solicit an offer from TSG, if the Airline Group makes such a
solicitation in writing, including by issuing an RFP or an RFQ, the Airline
Group shall promptly provide TSG with a copy.
A. TSG shall have the opportunity to compete with third parties in
any bidding for Non-exclusive Services; provided, however, the
Airline Group is not obligated to accept TSG's offer or grant TSG any
preferential treatment.
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B. The Airline Group may use third parties pursuant to Section
"5.11. AUDITING CODE EFFICIENCY," subject to compliance with Section
"14.8. CONFIDENTIALITY AND THIRD PARTIES."
3.13. EFFECT OF DIVESTITURES, MERGERS, AND ACQUISITIONS. If a member of
the Airline Group creates a Spin-off Company and the Spin-off Company's
declining to use the TSG Services would be likely to result in a decrease of
more than ten percent of the Fees that were payable to TSG for the twelve
months preceding the month in which the Spin-off Company became a Spin-off
Company, then either the Airline Group shall cause such Spin-off Company to be
obligated to use the TSG Services in accordance with this Agreement or the
Airline Group shall pay Termination Liquidated Damages in accordance with
Exhibit K: Termination Liquidated Damages Calculation.
A. If the Airline Group acquires another carrier in the airline
business and merges its airline operations with such other carrier,
then such carrier's information technology operations shall possess
all the rights and benefits and be subject to all of the obligations
of the Airline Group under this Agreement on a date agreed to in
writing by AMERICAN and TSG, and in any event as soon as reasonably
practicable in light of the commercial circumstances, including the
duration of such carrier's existing commitments and the extent of any
termination penalties. If causing such carrier's information
technology operations to be subject to this Agreement is not
reasonably practicable within twelve months after the Airline Group
begins to merge airline operations, then the Airline Group and TSG
shall mutually determine appropriate compensation for TSG.
B. If the Airline Group acquires another carrier in the airline
business and does not merge its airline operations with such other
carrier, then such carrier's information technology operations and
services shall become subject to this Agreement at AMERICAN's sole
discretion.
C. If the Airline Group acquires any entity (including another
carrier), AMERICAN may cause the information technology services of
such entity to become subject to this Agreement upon Notice to TSG;
provided TSG is given a reasonable period of time in which to
transfer such entity's information technology operations and services
to TSG. In such event, TSG shall provide TSG Services to the entity
at the Current Rates; provided that if TSG incurs reasonable,
necessary, and Extraordinary Costs for establishing TSG's ability to
provide TSG Services to such entity and such costs will result in a
lower profit margin to TSG than would have occurred if the additional
volume or services were provided for the Airline Group's own use with
the then current TSG facilities, AMERICAN shall reimburse TSG for
such costs; provided further, however, that TSG has given AMERICAN
Notice in advance of incurring such costs.
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D. If the Airline Group creates an Affiliated Spin-off Entity, such
Affiliated Spin-off Entity shall possess all the rights and benefits
and be subject to all of the obligations of the Airline Group under
this Agreement, including the right to use the Existing Applications
in accordance with this Agreement without payment of any license
fees.
3.14. CHANGES IN DEMAND FOR TSG SERVICES. The Airline Group shall inform
TSG within a reasonable time of material changes in the Airline Group's
requirements for TSG Services to enable TSG to adjust its resources. The
Parties acknowledge that changes in the Airline Group's requirements because of
unforeseen circumstances, such as a labor strike against AMERICAN, may not be
communicated in advance; but AMERICAN or the affected member of the Airline
Group shall inform TSG of such material changes as soon as possible and shall
periodically provide TSG updated information as to such material changes.
3.15. PREFERRED CUSTOMER FOR DEPLOYMENT OF SKILLED PERSONNEL. TSG shall
provide necessary, skilled personnel to staff any and all Airline Group
projects; provided AMERICAN gives TSG Notice of material changes in the Airline
Group's requirements for TSG's personnel.
3.16. SPECIAL PROVISIONS FOR RESERVATIONS 800 SERVICES. TSG shall manage
Reservations 800 Services in accordance with this Section 3.16.
A. TSG shall promptly provide AMERICAN with a copy of all
information from prospective vendors of the Reservations 800
Services, including vendor-related performance and proposal
information.
B. AMERICAN may participate with TSG in all negotiations with such
prospective vendors.
C. AMERICAN, in its sole discretion, shall make all final decisions
concerning the selection of vendors for providing Reservations 800
Services; provided, however, if AMERICAN does not follow TSG's
recommendations concerning Reservations 800 Services, AMERICAN and
TSG agree to amend the SLA Standards applicable to the Reservations
800 Services, if necessary.
D. If AMERICAN, after consultation with TSG, decides that the
Airline Group can perform 800 Decision Tree Support more efficiently
than TSG, such services shall cease to be TSG Services, and the
Airline Group shall perform 800 Decision Tree Support for itself.
AMERICAN's election to perform 800 Decision Tree Support shall not
change the Parties' other rights or obligations under this Section
3.16.
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3.17. SPECIAL PROVISIONS CONCERNING SITA AND SITA SERVICES. The Parties'
arrangement regarding SITA Services and the SITA Agreements is set forth in
this Section 3.17.
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
B. Although AMERICAN shall remain the contracting party under the
SITA Agreements until they are assigned to TSG, TSG shall have all of
the rights and benefits and all of the obligations and burdens under
the SITA Agreements as if AMERICAN had assigned to TSG, and TSG had
assumed, the SITA Agreements as of July 1, 1996.
(1) Those rights and benefits shall include the right of
TSG to cause AMERICAN to purchase for TSG's own use and for
the use of TSG's customers all services provided by the SITA
Group pursuant to the SITA Agreements. Accordingly, AMERICAN
hereby authorizes TSG to purchase as AMERICAN's agent, on the
Airline Group's behalf and on behalf of TSG and its other
customers, the SITA Services. TSG and AMERICAN agree that
charges for the SITA Services shall be invoiced to AMERICAN
and paid by TSG to AMERICAN and that, with respect to the SITA
SABREnet Services, the special payment and other terms
provided in Exhibit H: SITA Relationship shall apply.
(2) Those obligations and burdens, which TSG hereby
accepts and agrees to perform, shall include the obligation to
meet all of the commitments and obligations, financial and
otherwise, that AMERICAN may incur under the SITA Agreements
(other than obligations related to the SITA Services consumed
by AMERICAN and its Affiliates other than TSG and its
subsidiaries, except for any amount paid by AMERICAN and its
Affiliates to TSG for SITA Services consumed by AMERICAN and
its Affiliates other than TSG and its subsidiaries), including
the obligations of payment (including any fees, penalties, or
interest for late payment or nonpayment), indemnification
obligations, and commitments to meet the financial minimums
under the SITA Agreements.
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(3) As long as AMERICAN remains responsible to SITA as
the contracting party under the SITA Agreements, TSG shall
purchase through AMERICAN at least the minimum volume of
telecommunications services offered by the SITA Group that
AMERICAN is obligated to purchase from the SITA Group pursuant
to the SITA Agreements. The Parties' rights and obligations
stated above in this Section 3.17 shall terminate upon
AMERICAN's assignment to TSG, and TSG's assumption, of the
SITA Agreements.
C. Because AMERICAN will remain, on or after the Effective Date,
the contracting party under the SITA Agreements, and therefore
responsible to the SITA Group thereunder, AMERICAN shall have the
benefit of the indemnification set forth in Section "20.8. SITA
INDEMNIFICATION."
3.18. SPECIAL PROVISIONS CONCERNING CUSTOM SOFTWARE. TSG and the Airline
Group acknowledge that software used and developed under this Agreement is
custom software for specific uses.
3.19. ELECTRONIC TRAVEL DISTRIBUTION SYSTEM. The Parties' agreements
regarding the use of PSS/FPC in connection with any Electronic Travel
Distribution System for the benefit of the Airline Group are set forth in
Exhibit P; Electronic Travel Distribution System.
Article IV -- Locations of Services
4.1. TSG'S CHANGES TO LOCATIONS. Nothing in this Agreement shall prevent
TSG from changing, consolidating, eliminating or adding, after the Effective
Date, its locations at which it provides the TSG Services so long as such
changes, consolidations, eliminations or additions cause no Material Adverse
Impact on the Airline Group and provided that if any TSG Services are performed
on-site at the Airline Group's locations on the Effective Date, TSG may not
change the location of such service without AMERICAN's Consent.
A. TSG shall consult with AMERICAN concerning such changes,
consolidations, eliminations or additions.
B. TSG's application developers are not considered "on-site" unless
expressly assigned as of the Effective Date to share an office area
with the user department.
C. TSG shall not move the TSG Operated Software or hardware for the
Real Time Applications known as Passenger Services Systems (PSS) and
Flight Operating Systems (FOS) located at the Secure Computer Center,
located at 4000 N. Mingo Road, Tulsa, Oklahoma 74116-5020 as of the
Effective Date, without the Airline Group's Consent.
4.2. AIRLINE GROUP'S REQUESTED CHANGES AT ITS LOCATIONS. If the Airline
Group wishes TSG to change, consolidate, eliminate or add any functions that
must be performed at the Airline Group's locations, it shall so notify TSG.
TSG shall promptly
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provide AMERICAN with a good faith estimate of the cost, if any, of making such
change, consolidation, elimination or addition. TSG will make such change,
consolidation, elimination or addition upon AMERICAN's approval of such cost
estimate, which approval will be given at AMERICAN's sole discretion.
Article V -- Service Levels
5.1. SERVICE LEVELS IN GENERAL. For each of the TSG Services or systems
specified in Exhibit D: Services Subject to SLA, AMERICAN and TSG shall
establish an SLA. It is the intention of TSG to provide good service to the
Airline Group, to correct problems with any TSG Services, and to cooperate with
the Airline Group to resolve any reasonable, remediable dissatisfaction with a
TSG Service.
A. The SLAs agreed to by the parties as of the Effective Date are
specified in Exhibit E: Agreed SLAs.
B. For SLAs not agreed to by the parties as of the Effective Date,
TSG and AMERICAN shall use their reasonable best efforts to establish
such SLAs before December 31, 1996 or as soon thereafter as
practicable. Upon the Parties' Consent, an SLA established after the
Effective Date shall be deemed incorporated into Exhibit E: Agreed
SLAs for all purposes.
C. TSG and AMERICAN intend that TSG perform the TSG Services at
levels above the SLA Standards. Both Parties acknowledge that the
actual levels of performance are likely to fluctuate.
D. In general TSG shall strive to improve continually its actual
performance and, subject to Subsections D(1) and D(2), shall not
knowingly act in a manner that will reduce its level of performance.
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
(2) If TSG identifies cost-saving opportunities for itself
that will reduce its levels of performance, but such reduction
will be de minimis, AMERICAN and
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TSG shall cooperate to enable TSG to take advantage of such
cost-saving opportunities.
E. Prior to engaging a subcontractor in accordance with Article VI
-- Subcontracting, TSG and AMERICAN shall establish an SLA Standard
for the service(s) to be subcontracted.
5.2. SLA REQUIREMENTS. All SLAs shall conform in substance to the
requirements specified in this Section.
A. Each SLA shall specify the SLA Standard for the services subject
to such SLA.
B. Each SLA shall specify one of the following categories in which
the service is designated: "Critical TSG Service," "High Risk TSG
Service," "Medium Risk TSG Service," or "Low Risk TSG Service." If
no such category is specified, such service shall be deemed as
designated "Low Risk TSG Service."
C. Each SLA shall establish its Performance Increases and
Performance Decreases, if any, with the intention that over the
course of a calendar year the Performance Increases and Performance
Decreases shall be equal. Further, in rare circumstances, the
Parties may balance one SLA established to yield Performance
Increases more than Performance Decreases with another SLA
established to yield corresponding Performance Decreases more than
Performance Increases, so that over the course of a calendar year the
intended Performance Increases and Performance Decreases from the two
SLAs shall be equal. Nevertheless, nothing in this Section 5.2 shall
be construed as requiring the actual Performance Increases to equal
the Performance Decreases while this Agreement is in effect.
D. For services designated as Critical TSG Service or High Risk TSG
Service, each SLA may specify Performance Increases for Exceptional
Performance and Performance Decreases for Inadequate Performance;
provided, however, that nothing in this Section 5.2 shall be
construed as requiring both a Performance Increase and a Performance
Decrease be applicable to the same measure of performance.
E. Each SLA may specify one or more SLA Service Termination Events.
5.3. HISTORICAL SLA STANDARDS. For each TSG Service, the SLA Standard
shall be established at the Historical SLA Standard or the New Historical SLA
Standard. If performance level information is unavailable for 1994 and 1995,
the SLA Standard shall be established at the performance levels measured in
1996, excluding data points where performance levels are clearly unacceptable,
and consequently, the 1996 performance levels are the Historical SLA Standard
for such service.
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A. Nothing in this Section 5.3 shall be construed as preventing TSG
and AMERICAN from agreeing to an SLA Standard that differs from the
Historical SLA Standard or the New Historical SLA Standard.
B. While this Agreement is in effect, TSG shall establish and
maintain the SLA Database.
C. TSG shall provide a query and report capability to the SLA
Database as part of the TSG Services.
5.4. MONITORING. TSG shall capture and retain information, for storage in
the SLA Database, and monitor its performance of the TSG Services in accordance
with the SLAs. TSG's adherence to the SLA Standards shall be evaluated every
month.
5.5. [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
5.6. COSTS BORNE EXCLUSIVELY BY TSG. TSG shall bear all expenses and
investments required to achieve performance to meet the Historical SLA
Standards and New Historical SLA Standards. TSG shall bear all its own
expenses of investigating and correcting Inadequate Performance.
5.7. [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
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5.8. PERFORMANCE REVIEWS. The Airline Group's Account Manager and TSG's
Account Manager shall meet at least monthly to review TSG's adherence to the
SLA Standards. TSG shall provide AMERICAN, at least ten days in advance of
such meeting, with such performance reports as have been reasonably requested
by AMERICAN.
5.9. CORRECTION OF PERFORMANCE. TSG is obligated to cure or correct its
errors, mistakes, and deficiencies in service; and credit or repay the Airline
Group for any excess Fees resulting from such errors, mistakes, or deficiencies
as follows:
A. TSG shall perform Re-runs subject to Section "7.10. PAYMENT FOR
RE-RUNS."
B. TSG shall cure all instances of Inadequate Performance. To
effectuate such cure, AMERICAN and TSG shall proceed in accordance
with Exhibit G: Response/Resolution Procedures for SLA Problems.
C. For TSG Services for which there is no SLA Standard:
(1) TSG shall cure or correct its errors, mistakes, and
deficiencies in service and, [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED]
(2) If in AMERICAN's sole discretion, TSG's performance of a
service for which there is no SLA Standard becomes
unacceptable, AMERICAN and TSG shall negotiate an SLA Standard
within 30 days after AMERICAN requests such negotiation.
5.10. EXPIRATION, TERMINATION, AND SLA STANDARDS. TSG shall continue to
have the obligation to meet the SLA Standards during Transition Assistance.
When TSG cannot meet an SLA Standard due to a cause reasonably under the
Airline Group's control or due to a Force Majeure Event:
A. The Airline Group waives any associated Performance Decreases;
and
B. The Airline Group may not terminate this Agreement for Inadequate
Performance pursuant to Section "24.2. TERMINATION FOR INADEQUATE
PERFORMANCE."
5.11. AUDITING CODE EFFICIENCY. Subject to Section "14.8. CONFIDENTIALITY
AND THIRD PARTIES," AMERICAN may evaluate, or engage a third party to evaluate,
the efficiency of software used by TSG to provide the TSG Services or software
developed by TSG and funded by or licensed to the Airline Group. AMERICAN may
require that TSG
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make reasonable changes to such software to improve its efficiency and charge
AMERICAN at Current Rates for making such changes. If TSG fails to make such
changes, the Airline Group may engage a third party to make such changes
subject to Section "14.8. CONFIDENTIALITY AND THIRD PARTIES."
5.12. ANNUAL SURVEY. TSG will annually survey a representative sample of
the Airline Group's personnel who use the TSG Services to evaluate their
satisfaction relating to the TSG Services. TSG and AMERICAN will agree in
writing to the survey's sample group, format, objectives, measures of
satisfaction, and desired levels of satisfaction. If such survey reveals that
satisfaction has fallen significantly below desired levels, TSG shall develop a
plan to improve satisfaction in those areas where satisfaction has fallen below
such levels. TSG shall present the plan to AMERICAN within six weeks following
compilation of the survey results.
Article VI -- Subcontracting
6.1. NO SUBCONTRACTING PRIMARY RESPONSIBILITIES. TSG may not subcontract
any of TSG's Primary Responsibilities without AMERICAN's Consent. Such Consent
is at AMERICAN's sole discretion.
6.2. PERMITTED SUBCONTRACTING. The Airline Group hereby consents to all
subcontracting of the TSG Services by TSG in effect on the Effective Date. TSG
may subcontract TSG Services other than TSG's Primary Responsibilities, except
that to subcontract any service which TSG then currently performs for the
Airline Group and for which the total Fees typically charged to the Airline
Group are in excess of $10,000,000 (ten million dollars) per year, TSG must
obtain AMERICAN's Consent.
A. TSG shall promptly Notify AMERICAN of its intent to enter into
any subcontract. Prior to the time of subcontracting, AMERICAN and
TSG shall document historical service levels in order to establish an
SLA Standard if one does not already exist pursuant to Subsection E
of Section "5.1. SERVICE LEVELS IN GENERAL."
B. TSG is responsible for monitoring and managing the performance of
all subcontractors.
C. TSG shall remain responsible in accordance with this Agreement
for the TSG Services subcontracted. If, as the result of TSG's
subcontracting any TSG Service, the performance of that TSG Service
falls below the level of TSG's previous actual, typical performance,
then TSG shall work with the subcontractor to restore the performance
of that TSG Service to such previous actual, typical performance
level.
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D. Even if an inadequacy in a subcontractor's performance does not
amount to a breach of this Agreement or Inadequate Performance, if
AMERICAN is dissatisfied with the performance of any subcontractor,
AMERICAN shall promptly notify TSG and TSG and AMERICAN shall discuss
means to resolve AMERICAN's dissatisfaction.
E. TSG shall provide in its agreements with subcontractors such
written provisions as are sufficient to enable TSG to comply with the
provisions of this Agreement.
F. TSG shall reimburse the Airline Group for any increase in the
Fees, any more than a de minimis increase in an expense incurred by
the Airline Group, and any increase in the Taxes payable by the
Airline Group due to TSG's subcontracting one or more TSG Services.
Article VII - Fees
7.1. RATE AND RESET SCHEDULE. The Fees charged by TSG to the Airline
Group, and payable by the Airline Group to TSG, for the TSG Services shall be
in accordance with the Rates set forth in the Rate and Reset Schedule
applicable for each calendar year.
A. The Rate and Reset Schedule for each calendar year states the
Current Rates, which are applicable to the TSG Services rendered
during that year, and the Reset Formulas according to which the
Current Rates can be reset for the next year.
B. If the Rate and Reset Schedule does not include a Current Rate
corresponding to any TSG Service, then, unless the next sentence
applies, the charge for that TSG Service shall be deemed included in
other Current Rates. If TSG rendered a service substantially the
same as any TSG Service without charge before the Effective Date,
then it will continue to render that TSG Service without charge after
the Effective Date, unless a Rate for that TSG Service is included in
the Rate and Reset Schedule; provided, however, that this does not
apply to prototypes which TSG provided without charge for the Airline
Group's use before the Effective Date.
C. The Rate and Reset Schedule in effect on the Effective Date
states the Rates applicable during 1996 and the Reset Formulas to set
Rates for 1997.
D. The Rates included in the Rate and Reset Schedule will be
recalculated or re-established by the Parties each calendar year, as
described in Sections "7.2. ESTABLISHING RATES FOR EVEN-NUMBERED
YEARS" and "7.3. ESTABLISHING RATES FOR ODD-NUMBERED YEARS." The
Reset Formulas for the TSG Services Benchmarked in an Odd- numbered
Year will be renegotiated
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and established as described in Subsection A of Section "7.3.
ESTABLISHING RATES FOR ODD-NUMBERED YEARS." The Rate and Reset
Schedule shall be deemed amended in each event described above in
this Subsection D. The Reset Formulas for the TSG Services that are
not Benchmarked will continue without adjustment as stated in the
Rate and Reset Schedule.
7.2. ESTABLISHING RATES FOR EVEN-NUMBERED YEARS. For each Even-numbered
Year, the Rates shall be calculated and established as follows:
A. In the preceding Odd-numbered Year, the Parties shall:
(1) Determine, by May 1 of that Odd-numbered Year, the
Projected Annual Volume for the next Even- numbered Year;
(2) Determine the Projected Annual Reset Fees, in
accordance with Section "7.4. PROJECTED ANNUAL RESET FEES,"
for the next Even-numbered Year;
(3) Conduct the Benchmarking Process in accordance with
Section "7.5. BENCHMARKING" to obtain the Benchmark Results
for the next Even-numbered Year; and
(4) Determine the Projected Negotiated Rates and the
Projected Annual Negotiated Fees, in accordance with Section
"7.6. PROJECTED ANNUAL NEGOTIATED FEES," for the next
Even-numbered Year.
B. The Projected Negotiated Rates corresponding to the Projected
Annual Negotiated Fees shall be the applicable Rates for the TSG
Services rendered during the next Even-numbered Year, unless the
difference (expressed as an absolute value) between the Projected
Annual Negotiated Fees and the Projected Annual Reset Fees is greater
than the Adjustment Amount.
C. If the Projected Annual Reset Fees exceed the Projected Annual
Negotiated Fees by an amount greater than the Adjustment Amount, the
annual Fees projected for the next Even-numbered Year shall be the
result of subtracting the Adjustment Amount from the Projected Annual
Reset Fees.
D. If the Projected Annual Negotiated Fees exceed the Projected
Annual Reset Fees by an amount greater than the Adjustment Amount,
the annual Fees projected for the next Even-numbered Year shall be
the result of adding the Adjustment Amount to the Projected Annual
Reset Fees.
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E. If either Subsection C or Subsection D of this Section 7.2
applies, the Parties shall then negotiate the Rates applicable to the
TSG Services that were Benchmarked so that all of the Rates
(including those for TSG Services not Benchmarked) result, when
applied to the Projected Annual Volume for the next Even-numbered
Year, in the aggregate amount of the projected annual Fees, and those
Rates shall apply to the TSG Services rendered during the next
Even-numbered Year.
7.3. ESTABLISHING RATES FOR ODD-NUMBERED YEARS. The Rates applicable to
the TSG Services rendered during 1997 shall be calculated and established by
applying the Reset Formulas set forth in the Rate and Reset Schedule in effect
on the Effective Date to the Current Rates (in effect during 1996). The Rates
for each subsequent Odd-numbered Year shall be calculated and established as
follows:
A. In each Odd-numbered Year, for the TSG Services Benchmarked in
that year, the Parties shall negotiate and establish, and set forth
in the Rate and Reset Schedule, Reset Formulas for the next
Odd-numbered Year.
B. The Rates calculated and established by applying those new Reset
Formulas, and by applying the continuing Reset Formulas for the TSG
Services not so Benchmarked, to the Current Rates shall be the
applicable Rates for the TSG Services rendered during the next
Odd-numbered Year, unless Subsection C or Subsection D of Section
"7.2. ESTABLISHING RATES FOR EVEN-NUMBERED YEARS" applied to the
preceding Even-numbered Year.
C. If Subsection C or Subsection D of Section "7.2. ESTABLISHING
RATES FOR EVEN-NUMBERED YEARS" applied to the preceding Even-numbered
Year, then the Parties shall determine the Projected Annual Reset
Fees, in accordance with Section "7.4. PROJECTED ANNUAL RESET FEES,"
for the next Odd-numbered Year and adjust the Projected Annual Reset
Fees by:
(1) If Subsection C of Section "7.2. ESTABLISHING RATES FOR
EVEN-NUMBERED YEARS" applied, subtracting the Capped
Adjustment, or
(2) If Subsection D of Section "7.2. ESTABLISHING RATES FOR
EVEN-NUMBERED YEARS" applied, adding the Capped Adjustment.
D. If Subsection C of this Section 7.3 applies, the Parties shall
then negotiate the Rates applicable to the TSG Services that were
most recently Benchmarked so that all of the Rates (including those
for TSG Services not so Benchmarked) result, when applied to the
Projected Annual Volume for the next Odd-numbered Year, in the
aggregate amount of the Projected Annual Reset Fees as adjusted in
accordance with
Information Technology Services Agreement
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Subsection C of this Section 7.3, and those Rates shall apply to the
TSG Services rendered during the next Odd-numbered Year.
7.4. PROJECTED ANNUAL RESET FEES. The Parties shall determine the
Projected Annual Reset Fees for the next calendar year by:
A. Establishing Rates by applying the Reset Formulas to the Current
Rates;
B. Multiplying those reset Rates by the Projected Annual Volume for
the next calendar year; and
C. If the Projected Annual Reset Fees are being determined for an
Even-numbered Year and Subsection C of Section "7.3. ESTABLISHING
RATES FOR ODD-NUMBERED YEARS" applied to the preceding Odd-numbered
Year, then:
(1) If Subsection C(1) of Section "7.3. ESTABLISHING RATES
FOR ODD-NUMBERED YEARS" applied, subtracting any Unapplied
Capped Adjustment from the product described in Subsection B
of this Section 7.4, or
(2) If Subsection C(2) of Section "7.3. ESTABLISHING RATES
FOR ODD-NUMBERED YEARS" applied, adding any Unapplied Capped
Adjustment to the product described in Subsection B of this
Section 7.4.
The Projected Annual Reset Fees for the next calendar year must be determined
by October 1 of the year in which the determination is being made.
7.5. BENCHMARKING. In each Odd-numbered Year, the Parties shall conduct
the Benchmarking Process, with appropriate consideration to, among other
things, the rights and obligations under this Agreement, the Airline Group's
size as a recipient of data processing services, the SLA Standards required of
TSG, the geographic factors involved in providing the TSG Services to the
Airline Group, the exclusivity commitments made by the Airline Group for
services, and the Retained Rights.
A. On or before May 1 of each Odd-numbered Year, the Parties shall
jointly select and engage one or more Benchmark Providers. The
Parties agree that they are to mutually solicit and evaluate the
qualifications and methodologies of prospective Benchmark Providers.
B. The agreement with the Benchmark Provider or Benchmark Providers
shall contain, at a minimum, provisions substantially similar to the
following provisions:
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(1) The Benchmark Provider or Benchmark Providers shall
complete the Benchmarking Process and submit the Benchmark
Report on or before September 1 of the Odd-numbered Year.
(2) The Benchmark Report shall contain sufficient information
to demonstrate that the Benchmark Provider or Benchmark
Providers have compared the TSG Services to those services
offered by a representative group of providers of data
processing services with reasonable consideration of, among
other things, the various factors described in the first
sentence of this Section 7.5.
(3) The Benchmark Report shall state the Benchmark Results
and shall be delivered to both Parties.
(4) Each of the Parties shall pay one-half of the fees and
reimbursable expenses (if any) of each Benchmark Provider.
C. The Benchmark Provider shall evaluate all Current Rates, except
Third-Party Pass-Through Charges, Hourly Labor Rates, and any Rates
for which there is not a market that can serve as a reasonable
comparison.
D. The Parties may, but shall not be obligated to, accept all or any
portion of the Benchmark Report or use in any manner any of the
Benchmark Results. Nevertheless, the Parties intend that the
Benchmark Results be available in each Odd-numbered Year as a
guideline for their negotiations of Rates and Reset Formulas.
7.6. PROJECTED ANNUAL NEGOTIATED FEES. By October 1 of each Odd-numbered
year, the Parties shall determine the Projected Annual Negotiated Fees for the
next Even-numbered Year by multiplying the corresponding Projected Negotiated
Rates by the corresponding Projected Annual Volume (though, if the Parties
agree, this Projected Annual Volume need not be the same as the one submitted
to the Benchmark Provider or Benchmark Providers for the Benchmarking Process).
7.7. LIMITED USE OF PROJECTED FEES. The determination of projected annual
Fees of any kind in accordance with any preceding Section of this Article VII
is solely for the purpose of establishing Rates. None of those projections of
annual Fees is a target for or a limit on any actual annual Fees, and neither
Party shall have any right or remedy because any actual annual Fees do not
conform to or correspond with projected annual Fees.
7.8. RECOURSE TO DISPUTE RESOLUTION. If, because of any Dispute, the
Parties fail to determine any essential component of the establishment of any
Rate by the applicable date specified in a preceding Section of this Article
VII, the Parties shall promptly resolve that
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Dispute, as soon as practicable after the specified date, in accordance with
Article XXIII -- Dispute Resolution.
A. If that Dispute is not resolved by January 1 of the year for
which any Rate is to be effective, the preceding year's Rate for the
corresponding TSG Service shall continue in effect pending
resolution.
B. The Rate determined by resolution of that Dispute shall be deemed
effective January 1 as though the Parties had timely agreed.
Accordingly, either on the due date of the first invoice due after
that Dispute is resolved or the due date of the first invoice
covering any period on or after January 1, whichever is later, either
TSG shall credit the Airline Group any excess Fees received since
January 1 or the Airline Group shall pay TSG any additional Fees due
to TSG since January 1.
7.9. PERFORMANCE ADJUSTMENT OF FEES. The Fees shall increase in the event
of Exceptional Performance and decrease in the event of Inadequate Performance.
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
B. No later than December 20 of each year at a meeting of the
Airline Group's CIO and the applicable TSG division president,
AMERICAN and TSG shall agree to the net increase or decrease in Fees
resulting from the Performance Increases and Performance Decreases
for the prior twelve-month period ended November 30. The December
invoice submitted to AMERICAN in the succeeding January shall reflect
such agreed net increase or decrease.
C. The final invoice after termination or Expiration of this
Agreement shall reflect the net increase or decrease in Fees
resulting from the Performance Increases and Performance Decreases
for the period commencing on December 1 of the previous year to the
date of termination or Expiration.
7.10. PAYMENT FOR RE-RUNS. [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED]
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7.11. FEE REDUCTIONS FOR DROPPING CERTAIN MAINTENANCE. Upon Notice to TSG,
for certain specified devices, AMERICAN may elect to terminate the TSG Services
that provide maintenance as part of Device Support, subject to Section "3.10.
EXCLUSIVITY." If AMERICAN so elects, TSG shall reduce Fees by an amount equal
to the maintenance savings and AMERICAN and TSG shall mutually determine what,
if any, modification there will be to the applicable SLA Standard.
7.12. MOST FAVORED CUSTOMER. [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED]
7.13. PAYMENTS FOR THIRD PARTY SOFTWARE UPON DISAFFILIATION. If AMERICAN
and TSG cease to be Affiliates, TSG shall pay such license fees, and any
applicable or related Taxes, for the Transferred Third Party Software and the
Other Third
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Party Software as are required to enable the Airline Group to continue to
receive the TSG Services.
Article VIII -- Invoices and Payment
8.1. INVOICES. The Airline Group is only required to pay for services
provided by TSG pursuant to the prices and other terms and conditions of this
Agreement or as otherwise expressly agreed in writing by the Parties. TSG
shall use reasonable efforts to submit an invoice to the Airline Group for the
prior month's Fees on or before the eighth Business Day of every month. Such
invoice is due and payable and the Airline Group shall pay such invoice within
thirty days after the Airline Group's receipt of such invoice, except as
otherwise provided in Section "8.2. DISPUTED INVOICES."
8.2. DISPUTED INVOICES. If there is a Disputed Invoice, the Airline Group
may withhold a portion of the amount stated in the Disputed Invoice in
accordance with this Section 8.2.
A. If the Disputed Invoice is greater than or equal to the prior
month's invoice, the Airline Group shall pay TSG all undisputed
amounts, [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] provided
that the Airline Group may withhold the payment of taxes on disputed
amounts without regard to the limitations specified in this
Subsection and amounts calculated herein shall be net tax
calculations.
B. If the Disputed Invoice is less than the prior month's payment,
the Airline Group shall pay TSG all undisputed amounts, [TEXT OMITTED
- CONFIDENTIAL TREATMENT REQUESTED] therefore, in such event
and irrespective of the amount in dispute, the Airline Group may not,
in respect to the Disputed Invoice, withhold payment of any amount in
excess of [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] of the
Disputed Invoice; provided, however, that the Airline Group may
withhold payment of taxes on disputed amounts without regard to the
limitations specified in this Subsection and amounts calculated
herein shall be net tax calculations.
C. In no event shall a Party's adherence to the provisions of this
Section 8.2 be construed as constituting a waiver by either Party of
any claims against the other Party.
8.3. BILLING PROCEDURES. Each invoice submitted to the Airline Group
shall be in accord with this Section 8.3.
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A. Each invoice shall indicate the Fees and, subject to changes made
pursuant to Section "8.4. NEW BILLING SYSTEM" and Section "9.6.
COOPERATION," will include separate sub-totals for taxable and
nontaxable services and property.
B. Along with every invoice TSG shall provide relevant written
information to substantiate the Fees, including supporting
documentation of resource usage, information concerning TSG Software
Income, the offset in Fees pursuant to Section "11.4. OFFSET OF
FEES," and the reduction in Fees pursuant to Section "7.9.
PERFORMANCE ADJUSTMENT OF FEES."
C. TSG shall promptly provide the Airline Group with such
information as AMERICAN reasonably requests to understand or verify
the contents of the invoice. TSG shall bear the cost of any TSG
Services required to fulfill such requests.
D. Without AMERICAN's Consent, TSG shall not make any changes to the
procedures for producing invoices, the billing allocation methodology
for any TSG Service, or to the form or format of invoices or
substantiating information that is routinely provided to the Airline
Group.
8.4. NEW BILLING SYSTEM. At its own expense, TSG shall design, develop,
and implement the New Billing System. TSG and AMERICAN shall mutually develop
specifications for the New Billing System, and upon written acceptance of such
specifications by both AMERICAN and TSG, TSG shall proceed with the development
of the New Billing System.
A. After written acceptance by both Parties, the specifications of
the New Billing System may not change without both Parties' Consent.
B. At a minimum the New Billing System shall possess the capability
to account for and bill such Taxes as are applicable.
C. If AMERICAN requests and agrees to pay for it, TSG shall provide
additional capability to permit AMERICAN to accommodate additional
functionality (e.g., to report the Airline Group's non-TSG
information technology expenditures).
8.5. INTEREST ON OVERDUE AMOUNTS. [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED]
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Article IX -- Transfer and Property Taxes
9.1. ALLOCATION OF RESPONSIBILITY FOR CERTAIN TAXES. AMERICAN shall be
responsible for (and shall indemnify TSG for) Taxes imposed on, based on, or
measured by any consideration for, any transfer of services or property by TSG
to the Airline Group pursuant to this Agreement; provided, however, that TSG
shall be responsible for (and shall indemnify Airline Group for) all Taxes that
are imposed on, based on or measured by TSG's acquisition, ownership, or use of
property or services, or the provision of property or services to TSG. Neither
Party shall be liable to the other Party for interest included in Taxes in
excess of interest at the rate set forth in Section "8.5. INTEREST ON OVERDUE
AMOUNTS" or penalties and additions to taxes to the extent such interest,
penalties, and additions to taxes result from tax return positions taken by the
other Party that are unrelated to this Agreement or from the willful misconduct
or gross negligence of the other Party.
9.2. CLAIM OF EXEMPTION. The Airline Group shall pay any Taxes for which it
is responsible which are invoiced by TSG to the Airline Group under Article
VIII -- Invoices and Payment unless the Airline Group promptly provides TSG
with an exemption certificate, resale certificate or letter explaining why the
Airline Group believes the Tax is not applicable. Such certificate or letter
does not relieve AMERICAN of ultimate liability under this Article IX to the
extent the taxing authority disagrees with the Airline Group's position that no
such Tax is due; provided, that AMERICAN shall have no liability for Taxes
either not yet due and payable or Taxes being contested (unless payment is a
condition to contest) in accordance with Section "9.4. CONTESTS OF TAX
ASSESSMENTS." TSG may at any time require AMERICAN to deliver a letter of
advice from outside counsel, selected by AMERICAN and reasonably acceptable to
TSG, that AMERICAN's position is reasonable under the tax law. The cost of
such a letter shall be split equally between the Parties. If such a letter is
not delivered within 30 days of the request, AMERICAN must pay the Taxes
invoiced.
9.3. PROPERTY TAXES. Subject to the terms of other leases or agreements,
each of TSG and each member of the Airline Group is responsible for the
reporting and payment of any ad valorem taxes due on property owned by it or
leased by it from a third party.
9.4. CONTESTS OF TAX ASSESSMENTS. If TSG receives notice from any taxing
authority with respect to an assessment or potential assessment or imposition
of any Tax that AMERICAN would be responsible for paying pursuant to Section
"9.1. ALLOCATION OF RESPONSIBILITY FOR CERTAIN TAXES," TSG shall promptly
send Notice to AMERICAN of such notice, and shall, if AMERICAN requests, timely
contest, or if AMERICAN so elects permit AMERICAN to contest, such proposed
Tax, at AMERICAN's expense and in a forum and with counsel selected by AMERICAN
and reasonably acceptable to TSG, until such assessment has been upheld by the
decision of an appellate court; provided,
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however, that prior to any judicial contest TSG may require (as a condition to
such judicial contest) a letter from counsel selected by AMERICAN and
reasonably acceptable to TSG that there is a reasonable tax basis for such
contest. Any Notice given to a Party under this Section 9.4 shall also be
copied directly to the tax department of that Party, in care of the Director of
Taxes, at the address indicated in Section "28.2. ADDRESSES," and such Notice
must be given no fewer than five Business Days before any statutory deadline
for filing the timely protest of the assessment identified in such Notice. TSG
may compromise, settle, or resolve a Tax contest under this Section 9.4 without
AMERICAN's consent (provided such compromise, settlement, or resolution is
limited only to the Taxes for the tax period involved) if TSG waives its
indemnity rights under this Article IX -- Transfer and Property Taxes with
respect to the Taxes being contested. Otherwise, TSG may not compromise,
settle, or resolve the Tax contest without AMERICAN's Consent.
9.5. REFUNDS. Either Party may, at its expense, require the other to
choose and do one of the following:
A. Apply for and diligently pursue a refund of Taxes otherwise
payable by or subject to indemnification by the requiring Party under
this Article IX,
B. If permitted by law, assign its rights to a refund claim for such
Taxes to the requiring Party,
C. Pay to the requiring Party the amount of Taxes claimed by the
refund claim with interest at the statutory refund rate, or
D. Follow the Dispute Resolution Procedure and pay to the requiring
Party the amount the arbitrator determines is reflective of the
weighted probability of success of recovery of Taxes (with no
reduction for attorneys' fees) had the claim been pursued at the
judicial level until the result had been determined by the decision
of an appellate court; provided, however, that before recourse to the
Dispute Resolution Procedure, such other Party shall produce, if
requested by the requiring Party, a letter of advice from outside
counsel selected by such other Party and reasonably acceptable to the
requiring Party (the cost of which letter is to be split equally
between the Parties) that such other Party's refusal to pursue a
refund claim is based on a reasonable tax position that the amounts
are not refundable.
9.6. COOPERATION. Each Party shall provide the other with such
cooperation as is reasonable, at the request of the other Party, to minimize
Taxes incurred in connection with this Agreement. In the case of AMERICAN,
such cooperation shall include providing TSG any applicable resale
certificates; information regarding use of materials, services, or sales; or
other exemption certificates. In the case of TSG, such cooperation shall
include providing AMERICAN applicable information regarding delivery or use of
materials, services, or sales;
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and at the request of AMERICAN, taking additional steps to minimize Taxes.
Such steps shall also include:
A. Providing itemized (or non-itemized) invoices or billing;
B. Separating (or combining) any of the TSG Services;
C. Changing the location at which services or property are
delivered, provided, or used pursuant to this Agreement;
D. Permitting any member or members of the Airline Group to
assign to one of its or their Affiliates all or part of its or
their rights under this Agreement, including the right to take
delivery of services or property;
E. Using reasonable efforts to require any third party to take
steps reasonably available to such third party to minimize
Taxes;
F. Permitting TSG to assign to one of its Affiliates all or part
of TSG's obligations under this Agreement; and
G. Amending this Agreement;
provided, however, that neither Party shall be required to take any step that
would be materially disadvantageous to its business or operations or would
require it to incur material additional costs unless the other Party agrees to
reimburse it for that material disadvantages or those additional costs. In the
case of either Party, such cooperation shall include maintaining records, as
reasonably necessary for tax purposes (and in any event for at least six years
from date of the transactions to which such records relate); making such
records available to the other Party (or permitting the other Party to copy, at
its expense, such records); and making information in its possession and
employees with technical expertise available (at the providing Party's cost) as
reasonably necessary in connection with the preparation of any tax returns or
any audit or tax contest or refund claim. It is not intended that one Party is
necessarily to share in any tax savings realized by the other Party through the
actions or cooperation taken under this Section 9.6.
9.7. TAXES ON THIRD-PARTY PASS-THROUGH CHARGES. Notwithstanding anything
to the contrary in this Agreement, to the extent any Taxes are imposed on or
with respect to any Third-Party Pass-Through Charges, or on any mark-ups or
fees related to the Third-Party Pass-Through Charges, which Taxes exceed the
Taxes that would have applied to a transfer of services or property directly to
any member of the Airline Group from the third-party vendor from which TSG
acquires services or property, TSG shall be responsible for (and shall
indemnify the Airline Group for) such additional Taxes, it being the intent of
the Parties
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that the Airline Group's liability for Taxes imposed on or measured by any
Third-Party Pass-Through Charges, or any mark-ups or fees related to the
Third-Party Pass-Through Charges, shall be no greater than if the Airline Group
had purchased directly from the third-party vendor, instead of through TSG, the
services and/or property to which such Third-Party Pass-Through Charges relate.
TSG may (with any necessary consent of the third-party vendor and with
AMERICAN's Consent) assign to AMERICAN (or, as AMERICAN may direct, one or more
of the American Related Entities) the rights of TSG under that agreement or
those agreements necessary for the Airline Group to obtain such services or
property directly from the third-party vendor or permit AMERICAN to otherwise
obtain such services or property directly from the third-party vendor to
minimize such additional Taxes.
9.8. ADDITIONAL TAX CONTESTS. If AMERICAN receives notice from any taxing
authority with respect to an assessment or potential assessment or imposition
of any Tax that TSG would be responsible for paying pursuant to Section "9.1.
ALLOCATION OF RESPONSIBILITY FOR CERTAIN TAXES," AMERICAN shall promptly send
Notice to TSG of such notice, and shall, if TSG requests, timely contest, or if
TSG so elects permit TSG to contest, such proposed Tax, at TSG's expense and in
a forum and with counsel selected by TSG and reasonably acceptable to AMERICAN,
until such assessment has been upheld by the decision of an appellate court;
provided, however, that prior to any judicial contest AMERICAN may require (as
a condition to such judicial contest) a letter from counsel selected by TSG and
reasonably acceptable to AMERICAN that there is a reasonable tax basis for such
contest. Any Notice given to a Party under this Section 9.8 shall also be
copied directly to the tax department of that Party, in care of the Director of
Taxes, at the address indicated in Section "28.2. ADDRESSES," and such Notice
must be given no fewer than five Business Days before any statutory deadline
for filing the timely protest of the assessment identified in such Notice.
AMERICAN may compromise, settle, or resolve a Tax contest under this Section
9.8 without TSG's consent (provided such compromise, settlement, or resolution
is limited only to the Taxes for the tax period involved) if AMERICAN waives
its indemnity rights under this Article IX -- Transfer and Property Taxes with
respect to the Taxes being contested. Otherwise, AMERICAN may not compromise,
settle, or resolve the Tax contest without TSG's Consent.
9.9. NO OTHER TAX INDEMNITY. This Article IX contains the exclusive
allocations pursuant to this Agreement of responsibilities between, and
indemnification obligations of, the Parties regarding Taxes. For the avoidance
of doubt, the Parties intend that Article XX -- Indemnification does not apply
to Taxes.
9.10. TAXES AND DISPUTE RESOLUTION. Except as specified in Subsection D of
Section "9.5. REFUNDS," Disputes between the Parties concerning this Article IX
are subject to the Dispute Resolution Procedure, except that Disputes as to the
amount of Tax, if any, owed to a taxing authority (including Disputes between a
Party and a taxing authority) may be
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resolved by any appropriate administrative or legal procedure available to a
Party or the Parties under this Agreement apart from the Dispute Resolution
Procedure.
9.11. AMERICAN'S PARTICIPATION IN THE OKLAHOMA QUALITY JOBS PROGRAM. TSG
acknowledges that AMERICAN may receive significant incentive payments over the
next ten years from the State of Oklahoma in return for participation in the
State's Quality Jobs Program. Under AMERICAN's agreement with the State
(accepted October 26, 1995), AMERICAN must maintain a certain number of
full-time positions in Oklahoma, which number may include any jobs transferred
by AMERICAN to another company (such as TSG). TSG agrees it will cooperate
with requests by AMERICAN to track all positions transferred to it by AMERICAN
and will supply any information requested by AMERICAN for AMERICAN's compliance
obligations under the Quality Jobs Program. TSG will also permit the Oklahoma
Tax Commission and Oklahoma Employment Security Commission to audit TSG records
for purposes of checking compliance under the Program. To the extent not
otherwise covered under this Agreement, TSG assumes no obligation for reduced
or eliminated benefits under the Quality Jobs Program suffered by AMERICAN in
the event TSG's full time positions in Oklahoma are reduced; however, TSG
agrees it will provide AMERICAN Notice of a reduction in TSG's employment in
Oklahoma to a level below 1,500 full-time positions, and TSG will cooperate
with AMERICAN in an effort to avoid any loss in AMERICAN's entitlement to
benefits under the Quality Jobs Program as the result of any such reduction.
If, while AMERICAN is participating in the Quality Jobs Program, a governmental
incentive program is introduced in Oklahoma for which TSG could claim benefits,
but AMERICAN's counting TSG positions to claim benefits under the Quality Jobs
Program prevents TSG from counting those same TSG positions in order to claim
benefits under such new incentive program, then the Parties shall proceed as
follows:
A. The Parties shall determine whether the greatest aggregate
estimated benefits would result from:
(1) The separate participation of both Parties in the new
incentive program (without AMERICAN's counting any TSG
positions),
(2) AMERICAN's continued participation in the Quality
Jobs Program (with AMERICAN's continuing to count the TSG
positions),
(3) Only AMERICAN's participation in the new incentive
program (without its counting any TSG positions), or
(4) Only TSG's participation in the new incentive
program.
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The Parties agree that one or both of them shall pursue the
participation in the program or programs that would result in the
greatest aggregate estimated benefits (without regard to the
allocation of those benefits between the Parties).
B. If the Parties determine that only one of them should
participate, as described in one of Subsections A(2) through A(4) of
this Section 9.11, then the Parties shall share in the benefits of
that participation in the Quality Jobs Program or the new incentive
program as follows:
(1) AMERICAN's share of the benefits shall be in the
ratio of (a) the estimated benefit to AMERICAN of either its
participation in the Quality Jobs Program or its participation
in the new incentive program, whichever is greater, over (b)
the aggregate estimated benefits would result from the sum of
(i) AMERICAN's participation in the Quality Jobs Program or
its participation in the new incentive program, whichever is
greater, and (ii) TSG's participation in the new incentive
program.
(2) TSG's share of the benefits shall be in the ratio of
(a) the estimated benefit to TSG of its participation in the
new incentive program, over (b) the aggregate estimated
benefits would result from the sum of (i) AMERICAN's
participation in the Quality Jobs Program or its participation
in the new incentive program, whichever is greater, and (ii)
TSG's participation in the new incentive program.
The estimated benefit to AMERICAN of its continued participation in
the Quality Jobs Program shall be calculated assuming AMERICAN
continues to count the TSG positions.
Article X - Ownership of Data
10.1. OWNERSHIP OF DATA. The AG Data is the exclusive property of the
Airline Group. AG Customer Data is the exclusive property of an AG Customer
and/or the Airline Group, as determined by such agreements as the Airline Group
may have with such AG Customer and is deemed proprietary. Data about which
there is an ambiguity as to ownership shall be treated as AG Data and subject
to the provisions of this Agreement until its ownership is resolved in
accordance with Article XXIII -- Dispute Resolution. This Agreement does not
purport to address the ownership of any data other than AG Data or AG Customer
Data.
10.2. USE OF DATA. TSG shall use the AG Data and the AG Customer Data only
in providing services pursuant to this Agreement. Except as otherwise
expressly agreed in writing, TSG shall not and shall not attempt to sell,
license, provide, disclose, use, pledge,
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hypothecate, and/or in any other way transfer the AG Data or the AG Customer
Data. All such attempts shall be void and without legal effect. With
AMERICAN's Consent, TSG may use the AG Data or AG Customer Data for such other
purposes and for such compensation as AMERICAN and TSG may agree in writing.
10.3. RISK OF DATA LOSS. When AG Data or AG Customer Data is in TSG's
possession or under TSG's control and an event occurs that prevents or hinders
the access to or reliable use of such data, TSG shall cure and re-create or
restore such data as quickly as the Airline Group needs such data in its
operations.
A. Such re-creation or restoration shall be at [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED]
B. Where re-creation or restoration of such data is at the Airline
Group's expense, TSG shall obtain the Airline Group's Consent before
performing such re-creation or restoration that will incur Fees
greater than $5,000 (five thousand dollars).
10.4. DATA SECURITY. TSG shall maintain safeguards for protecting against
the loss and disclosure of the AG Data and AG Customer Data no less rigorous
than such safeguards as are in effect on the Effective Date. Such safeguards
include, the safeguards described in TSG's existing reference materials. The
Airline Group shall safeguard all data owned by TSG in the Airline Group's
possession.
10.5. COPIES OF DATA FOR THE AIRLINE GROUP. Upon written request to TSG,
TSG shall provide a copy of all or a portion of AG Data and AG Customer Data,
as requested by AMERICAN, on such media as requested by AMERICAN. TSG's
providing such data is a service within the scope of the TSG Services and is at
the Airline Group's expense. TSG shall never refuse for any reason, including
the Airline Group's material breach of this Agreement, to provide the Airline
Group with copies of the AG Data and AG Customer Data in accordance with this
Section 10.5. TSG hereby expressly agrees that the Airline Group may obtain
injunctive relief (in accordance with the Dispute Resolution Procedure) to
enforce the provisions of this Section 10.5.
10.6. MEDIA CONTAINING DATA. As between the Airline Group and TSG, the
Airline Group is the exclusive owner of all AG Data and all AG Customer Data
recorded on any media irrespective of which party owns the media.
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Article XI -- Software Ownership
11.1. OWNERSHIP OF NEW SOFTWARE. TSG and the Airline Group intend that
their respective contributions to all software developed by means of the TSG
Services or the New/Out-of-scope Services performed by TSG after the Effective
Date be merged into inseparable or interdependent parts of a unitary whole as a
joint work; and consequently, that all such software is Jointly Owned Software.
11.2. RIGHTS IN JOINTLY OWNED SOFTWARE. TSG and the Airline Group agree
that their respective rights in and to the Jointly Owned Software are subject
to the limitations of this Section 11.2. For the avoidance of doubt, unless
otherwise expressly provided in this Agreement, neither Party shall have any
obligation to pay the other Party any royalty, fee, or other compensation for
exercising rights with respect to the Jointly Owned Software.
A. The Airline Group may not license, sublicense, market, disclose,
modify, prepare Derivative Works, transfer, or otherwise commercially
exploit the Jointly Owned Software without TSG's Consent, except as
expressly provided in the following:
(1) While this Agreement is in effect, the Airline Group and
its Affiliates may use and possess the Jointly Owned Software
as follows:
a. Subject to Section "3.10. EXCLUSIVITY," the
Airline Group and its Affiliates may use and possess
the Jointly Owned Software for their own internal
use, including use in their air transportation
business.
b. The Airline Group may use the Jointly Owned
Software in accordance with Article XII -- Marketing
and Related Rights.
c. The Airline Group may disclose, display,
distribute, or license the executable code of Jointly
Owned Software at no charge (other than for shipping,
handling, or investment cost recovery) to customers
and prospective customers of its air transportation
business for the purposes of increasing the Airline
Group's air transportation revenue.
d. The Airline Group may disclose the Jointly Owned
Software to software developers that the Airline
Group is permitted under this Agreement to engage,
subject to Section "14.8. CONFIDENTIALITY AND THIRD
PARTIES."
e. The Airline Group shall obtain TSG's Consent
prior to displaying Jointly Owned Software to a
potential TSG Customer of such software who or which
has expressed an interest in licensing such software.
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(2) Upon the Expiration or termination of this Agreement, the
Airline Group and its Affiliates may use and possess the
Jointly Owned Software as follows:
a. The Airline Group and its Affiliates may use and
possess the Jointly Owned Software for their own
internal use, including use in their air
transportation business.
b. The Airline Group may use and possess the Jointly
Owned Software in accordance with the Section "12.5.
MARKETING RIGHTS AFTER EXPIRATION OR TERMINATION."
c. The Airline Group may disclose, display,
distribute, or license the executable code of Jointly
Owned Software at no charge (other than for shipping,
handling, or investment cost recovery) to customers
and prospective customers of its air transportation
business for the purposes of increasing the Airline
Group's air transportation revenue.
d. The Airline Group and its Affiliates may modify
the Jointly Owned Software and prepare Derivative
Works of Jointly Owned Software for their internal
use, including use in their air transportation
business, and may engage another entity to modify or
prepare Derivative Works on behalf of the Airline
Group and its Affiliates solely for such internal
use.
e. The Airline Group and its Affiliates may engage
another entity to operate the Jointly Owned Software
for the Airline Group's and its Affiliates' internal
use, including use in their air transportation
business.
f. The Airline Group shall obtain TSG's Consent
prior to displaying Jointly Owned Software to a
potential TSG Customer of such software who or which
has expressed an interest in licensing such software.
(3) The Airline Group and its Affiliates possess the same
rights in Derivative Works of Jointly Owned Software, prepared
by the Airline Group or its Affiliates, or on their behalf, as
the Airline Group possesses in the Jointly Owned Software on
which the Derivative Work is based.
B. The rights of TSG in and to the Jointly Owned Software are limited
only as follows:
(1) The Airline Group and its Affiliates may use and possess
the Jointly Owned Software in accordance with Subsection A of
this Section 11.2.
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(2) In accordance with Section "11.4. OFFSET OF FEES," TSG
shall reduce the Fees payable by AMERICAN.
(3) In accordance with Section "11.5. ROYALTY AFTER
EXPIRATION OR TERMINATION," TSG shall pay AMERICAN a royalty.
(4) For such entities that AMERICAN identifies in writing to
TSG, TSG shall license the Jointly Owned Software on terms and
conditions that are substantially similar to such terms and
conditions as TSG licenses other comparable software and for a
commercially reasonable fee.
11.3. PROTECTION OF SOFTWARE RIGHTS AGAINST THIRD PARTIES. If any Party
shall become aware of any infringement or misappropriation by any third party
of the Transferred Software, the Jointly Owned Software, or the TSG Owned
Software, it shall promptly give Notice to the other Party of such infringement
or misappropriation.
A. TSG, may, at its own expense, institute suit against such third
party and the Airline Group shall fully cooperate with TSG to enjoin
such infringement or misappropriation and shall, if requested by TSG,
join with TSG as a party to any action brought by TSG for such purpose.
[The Parties intend that TSG bear all expenses connected with such suit
and that the Airline Group bear such expenses; provided, however, that
if the Airline Group desires to retain its own counsel, it shall do so
at its own cost and expense; and provided, further, that either Party
may, in its sole discretion, upon Notice to the other Party, choose not
to bear any further expense of such suit.]
B. If TSG, does not institute suit against such third party before
the earlier of 120 days after receiving Notice of such infringement or
misappropriation or 30 days prior to the expiration of the statute of
limitations, then AMERICAN may, at its expense, institute suit against
such third party, and TSG shall fully cooperate with AMERICAN to
enjoin such infringement or misappropriation and if reasonably
necessary, shall, if requested, join with AMERICAN as a party to any
action brought by AMERICAN for such purpose. AMERICAN shall bear all
expenses connected with such suit, provided, however, that if TSG
desires to retain its own counsel, it shall do so at its own cost and
expense.
C. Any recovery as a result of any suit pursuant to this Section 11.3
shall belong to a Party in the same percentage as such Party bore the
expense of such suit; excluding, however, a Party's cost and expense
in retaining its own counsel when such Party did not institute such
suit.
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11.4. OFFSET OF FEES. So long as this Agreement is in effect, TSG shall
retain all license fees and other compensation that TSG receives arising out of
the Jointly Owned Software; provided, however, that in accordance with this
Section 11.4, TSG shall offset the Fees otherwise payable to TSG by AMERICAN
until, [for a specific application that is a Derivative Work of Jointly Owned
Software, more than [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] of its
program instructions are original materials funded by one or more entities
other than the Airline Group.]
A. TSG shall use reasonable efforts to establish and obtain license
fees from third parties for the Jointly Owned Software that are
commensurate with the license fees charged by third parties for
comparable software.
B. For all Jointly Owned Software, solely funded by the Airline
Group, and other than Enhancements, TSG shall offset the Fees
otherwise payable by AMERICAN to TSG by an amount equal to twenty
percent of the TSG Software Income; provided, [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED]
C. In the case of all Enhancements other than Shared Host
Enhancements, TSG shall offset the Fees otherwise payable by AMERICAN
to TSG by an amount equal to twenty percent of the TSG Software
Income; provided, [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
D. Except for Airport Check-in System, if a TSG multi-host customer
(other than the Airline Group) will receive use of a Shared Host
Enhancement/Development, TSG shall offset the Fees by an amount equal
to [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
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E. If TSG does not offset the Fees charged to AMERICAN by the amount
of [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] described
Subsection D of this Section 11.4, then AMERICAN may pay TSG to Code
Out such other TSG multi-host customer and such customer may not use
such Shared Host Enhancement/Development. If the Airline Group
chooses not to Code Out a TSG customer and if TSG has received
incremental revenue for such customer's use of a Shared Host
Enhancement/Development, then TSG shall offset the Fees otherwise
payable by AMERICAN to TSG by an amount equal to such incremental
revenue up to [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] that
would have been due under Subsection D of this Section 11.4.
F. The Fees for TSG's Code Out are within the scope of TSG Services
and AMERICAN shall pay the Fees incurred for such services; provided,
however, if TSG later distributes or uses such Shared Host
Enhancement/Development for TSG Customers for which TSG has not offset
the Fees charged to AMERICAN by the amount of such customer's pro rata
share described in Subsection D above, TSG shall refund the Fees
incurred by AMERICAN to Code Out and TSG shall offset the Fees in
accordance with Subsection D of this Section 11.4.
11.5. ROYALTY AFTER EXPIRATION OR TERMINATION. After the Expiration or
termination of this Agreement, for all Jointly Owned Software that was, at the
time of its writing, funded solely by the Airline Group, and until, for a
specific application that is a Derivative Work of Jointly Owned Software, more
than [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] of its program
instructions are original materials funded by one or more entities other than
the Airline Group, TSG shall pay AMERICAN a royalty equal to [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED]of the TSG Software Income; provided, [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
11.6. COPIES OF SOFTWARE FOR AMERICAN. Upon written request to TSG, TSG
shall provide a copy of all or a portion of Jointly Owned Software and
Documentation as requested by AMERICAN, on such media as requested by AMERICAN.
TSG's providing such software is a service within the scope of the TSG Services
and is at AMERICAN's expense. TSG shall never refuse for any reason, including
AMERICAN's material breach of this Agreement, to provide AMERICAN with copies
of such software in accordance with this Section 11.6. TSG hereby expressly
agrees that AMERICAN may obtain injunctive relief (in accordance with the
Dispute Resolution Procedure) to enforce the provisions of this Section 11.6.
11.7. JOINTLY USED AND FUNDED SOFTWARE. For certain software that TSG uses
to provide services to TSG and/or TSG Customers and to AMERICAN, AMERICAN and
TSG shall continue to jointly fund Development and Enhancements as TSG's
predecessor and
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AMERICAN did prior to the Effective Date. The process of allocating AMERICAN's
and TSG's relative share of the cost shall remain as such process existed on
the Effective Date with the intent of reflecting the relative value to each
Party. TSG and AMERICAN shall, prior to the commencement of development,
negotiate an offset to the Fees, if any, for TSG's distribution or use of such
software and a royalty percentage, if any, for such distribution or use of such
software to be payable upon and after the Expiration Date or the Termination
Date provided; however, no such offset or royalty shall be due to the Airline
Group for any application that is a Derivative Work of such software once more
than [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] of its program
instructions are original materials funded by one or more entities other than
the Airline Group.
Article XII -- Marketing and Related Rights
12.1. SERVICES PROVIDED BY THE AIRLINE GROUP TO ITS CUSTOMERS. In
accordance with this Article, the Airline Group may require TSG to perform TSG
Services for the Airline Group to enable the Airline Group to provide services
to AG Customers.
12.2. THE AIRLINE GROUP'S PROVISION OF SERVICES TO AG CUSTOMERS. Unless
otherwise expressly specified in this Section 12.2, the Airline Group may
provide the AG Mixed Services without TSG's consent, and such incremental use
of TSG Services as may be used by the Airline Group and/or AG Customers shall
be charged to the Airline Group at the Current Rates in accordance with the
Rate and Reset Schedule, except as expressly described in this Section 12.2.
A. The Airline Group may provide Operations Mixed Services to AG
Customers.
B. Subject to Section "12.3. FORMER TSG PROSPECTS," the Airline
Group may provide Alliance Mixed Services to AG Customers.
C. If TSG incurs reasonable, necessary, and Extraordinary Costs for
establishing the Airline Group's ability to provide Alliance Mixed
Services to a specific AG Customer and such costs will result in a
lower profit margin to TSG than would have occurred if the additional
volume or services were provided for the Airline Group's own use with
the then current TSG facilities, the Airline Group shall reimburse TSG
for such costs; provided, however, that TSG has given the Airline
Group Notice in advance of incurring such costs.
D. The Airline Group may provide Other Mixed Services to AG Customers
in accordance with the following:
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[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
a. If TSG and the Airline Group do not agree within
ten Business Days of commencing such negotiations,
TSG and the Airline Group shall each state in writing
its position concerning the AG Other Mixed Services
Costs and proceed in accordance with Article
XXIII--Dispute Resolution; provided, however, that
the sole question for the arbitrator(s) to determine
is which Party's position concerning the AG Other
Mixed Services Costs to accept.
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
E. Provided, however, the Airline Group may provide Other Mixed
Services without TSG's consent, as follows:
(1) If the AG Other Mixed Services Costs for such services do
not exceed [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
of the AG Other Mixed Services Fees for such services; and
(2) The AG Other Mixed Services Fees are reasonably
anticipated as not exceeding [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED] per year per AG Customer.
12.3. FORMER TSG PROSPECTS. If at any time any member of the Airline Group
agrees in writing to provide Alliance Mixed Services to an entity that has
expressed serious interest in acquiring a software license or services from TSG
and TSG has provided to such entity a written proposal to provide similar
software or services and such entity continues to be a
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realistic opportunity for TSG, as demonstrated by TSG's active marketing
efforts, except that such entity's agreement with AMERICAN obviates its need to
acquire software or services from TSG, AMERICAN and TSG shall negotiate
appropriate compensation, considering the circumstances, that AMERICAN shall
pay to TSG.
12.4. EXISTING ALLIANCES. Nothing in this Agreement is intended to modify
the Parties' pre-existing rights or obligations in existing agreements
concerning services substantially similar to AG Mixed Services, as the Airline
Group may have in effect on the Effective Date.
12.5. MARKETING RIGHTS AFTER EXPIRATION OR TERMINATION. After the
Termination Date or the Expiration Date, subject to Section "11.2. RIGHTS IN
JOINTLY OWNED SOFTWARE," the Airline Group may use TSG Operated Software to
provide services to AG Customers in accordance with this Section 12.5. Except
as expressly provided otherwise in this Section 12.5, the Airline Group may use
the TSG Operated Software to provide AG Mixed Services without payment to TSG
of any compensation, including license fees and royalties.
A. The Airline Group may use the TSG Operated Software, subject to
receiving any necessary consents from the licensors of the Transferred
Third Party Software and the Other Third Party Software.
B. For four years after the Termination Date or Expiration Date, the
provisions of Section "12.3. FORMER TSG PROSPECTS" shall remain in
effect, except if there is Termination For Cause by AMERICAN, in which
event TSG shall be due no compensation pursuant to Section "12.3.
FORMER TSG PROSPECTS."
C. In circumstances where the Airline Group would not have been
permitted to provide AG Mixed Services under Subsection D(2) of
Section "12.2. THE AIRLINE GROUP'S PROVISION OF SERVICES TO AG
CUSTOMERS" before the Termination Date or the Expiration Date, the
Airline Group may use the TSG Operated Software to provide services to
AG Customers and shall pay TSG a license fee for the use of such
software until, for a specific application that is a Derivative Work
of such software, more than [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] of its program instructions are original materials written
by one or more entities other than TSG, as follows:
(1) If this Agreement expired in accordance with its term or
terminated pursuant to Sections "24.3. TERMINATION FOR A
FORCE MAJEURE EVENT," or "24.5. TERMINATION BECAUSE OF
ACQUISITION OF TSG," the Airline Group shall pay TSG [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
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(2) In the event of Termination For Cause by AMERICAN, and if
a Fair License Fee is [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] of the AG Other Mixed Services Fees or more, the
Airline Group shall pay TSG [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED]
(3) Until June 30, 2006, if this Agreement was terminated
pursuant to Section "24.4. TERMINATION FOR CONVENIENCE," the
Airline Group and TSG shall mutually agree to [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED]
(4) After June 30, 2006, if this Agreement was terminated
pursuant to Section "24.4. TERMINATION FOR CONVENIENCE," the
Airline Group shall pay TSG [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED]
D. To the extent that AMERICAN's use of any of the Transferred
Software or the Transferred Third-Party Software to provide AG Mixed
Services under this Section 12.5 would constitute the exercise of
rights in excess of the Retained Rights, TSG and AMERICAN shall
mutually agree to a [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
incremental use in excess of the Retained Rights for providing such
services to AG Customers.
E. The Airline Group may enter into an agreement with an AG Customer
pursuant to this Section 12.5 prior to the determination of [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
Article XIII -- Non-competition
13.1. SEPARATE NON-COMPETITION AGREEMENT. Commencing on the Effective Date
and continuing for specified periods as set forth therein, the members of the
Airline Group must comply with the terms of the Non-competition Agreement among
AMERICAN, AMR, TSG Corporation, and TSG dated as of the Effective Date, which
restricts such members of the Airline Group from providing certain described
services to other Persons. Such restrictions do not, however, prohibit the
Airline Group's exercise of rights under Article XII -- Marketing and Related
Rights.
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Article XIV -- Confidential Information
14.1. CONFIDENTIAL INFORMATION. Except as otherwise provided in this
Agreement, information gathered or compiled by TSG for AMERICAN is proprietary
to AMERICAN and TSG may not sell such information to other Persons. In
addition, the following information is Confidential Information, whether
acquired under or in connection with this Agreement or obtained in connection
with the relationship of the Airline Group and TSG or its subsidiaries or
predecessors before the Effective Date:
A. Information relating to the other Party's business, customers,
financial condition, performance, or operations that the other Party
treats as confidential or proprietary.
B. The terms and conditions of this Agreement and all pricing,
charges, fees, credits, and invoices connected with this Agreement.
C. Information concerning any breach under, or any Dispute regarding,
this Agreement.
D. Information that is the confidential information of a third party
and disclosed to a Party subject to an obligation of confidentiality.
E. Any other information, whether in a tangible medium or oral and
whether proprietary to the other Party or not, that is marked or
clearly identified by the other Party as confidential or proprietary.
F. The other Party's trade secrets.
G. TSG Highly Confidential Information.
H. The Parties' conduct, decisions, documents, and negotiations as
part of, and the status of, any Dispute resolution proceedings under
the Dispute Resolution Procedure.
Though the Airline Group's Confidential Information includes the Jointly Owned
Software and the Transferred Software, the Airline Group consents to TSG's
disclosure and use of such Jointly Owned Software and Transferred Software,
subject to any such protections or assurances against disclosure for the
benefit of TSG as TSG may use or effect for its own Confidential Information.
Each of the American Related Entities shall have the same rights and benefits,
and the same duties and obligations, as AMERICAN (as a "Party") has in this
Article XIV.
14.2. EXCLUDED INFORMATION. The following information is not considered
Confidential Information to the extent that the information:
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A. Is or becomes publicly available or available in the industry
other than as a result of any breach of this Agreement or of any other
duty of that Party;
B. Is or becomes available to that Party from a source that, to that
Party's knowledge, is lawfully in possession of that information and
is not subject to a duty of confidentiality, whether to the other
Party or another Person, violated by that disclosure; or
C. Is independently developed without reference to the Confidential
Information.
14.3. USE OF CONFIDENTIAL INFORMATION. Except as expressly permitted by
this Agreement, all Confidential Information shall be held and protected by the
recipient in strict confidence, shall be used by the recipient only as required
to render performance or to exercise rights and remedies under this Agreement,
and shall not be disclosed to any other Person.
14.4. STANDARD OF CARE. Each Party shall use at least the same degree of
care in maintaining the confidentiality of the Confidential Information as that
Party uses with respect to its own proprietary or confidential information, and
in no event less than reasonable care.
14.5. PERMITTED DISCLOSURES. A Party may disclose Confidential Information
to its officers, directors, employees, legal representatives, accountants, or
tax advisors, on a need-to-know basis, in order to give effect to this
Agreement. Each Party must inform each such Person to whom any Confidential
Information is so communicated of the duty of confidentiality regarding that
information under this Agreement and impose on that Person the obligation to
comply with this Article XIV regarding the Confidential Information.
14.6. REQUIRED DISCLOSURES. Each Party may disclose Confidential
Information in response to a request for disclosure by a court or another
Governmental Authority, including a subpoena, court order, or audit-related
request by a taxing authority, if that Party:
A. Promptly notifies the other Party of the terms and the
circumstances of that request;
B. Consults with the other Party, and cooperates with the other
Party's reasonable requests to resist or narrow that request;
C. Furnishes only information that, according to written advice
(which need not be a legal opinion) of its legal counsel, that Party
is legally compelled to disclose; and
D. Uses reasonable efforts to obtain an order or other reliable
assurance that confidential treatment will be accorded the information
disclosed.
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A Party need not comply with these conditions to disclosure, however, to the
extent that the request or order of the Governmental Authority in effect
prohibits that compliance. A Party may also disclose Confidential Information
without complying with these conditions to the extent that the Party is
otherwise legally obligated to do so (including for the purposes of complying
with applicable securities laws), as confirmed by advice of competent and
knowledgeable legal counsel. Further, a Party may disclose Confidential
Information, without complying with these conditions, (i) in connection with a
tax audit to representatives of a taxing authority or (ii) in connection with a
tax contest in which that Party uses reasonable efforts to assure that
confidential treatment will be accorded the information disclosed.
14.7. TITLE TO INFORMATION. The Confidential Information disclosed by one
Party to the other Party shall remain the property of the disclosing Party, and
nothing in this Article XIV grants or confers any ownership rights in any of
that information to the other Party.
14.8. CONFIDENTIALITY AND THIRD PARTIES. If AMERICAN selects a third party
to perform software audit services pursuant to Section "5.11. AUDITING CODE
EFFICIENCY," and/or other services, including maintenance services, enhancement
services, or development services, and such third party will obtain access to
TSG Highly Confidential Information, AMERICAN must obtain TSG's Consent.
A. Nevertheless, except as provided in Subsection B of this
Section 14.8, if TSG can demonstrate that such third party is then a
competitor of TSG in the development or marketing of any software
product having functionality substantially similar to the software to
which that third party will obtain access, or is likely to become such
a competitor within two years, then TSG's Consent shall be at its sole
discretion.
B. TSG may not unreasonably withhold its Consent, however:
(1) As to every third party that is capable or competent
to perform and that has bid, or expressed a willingness, to
perform at or near the same price as any third party to which
TSG has withheld its Consent in accordance with Subsection A
of this Section 14.8; or
(2) When such Consent is necessary to enable the Airline
Group to enter into an operating or marketing alliance or any
other marketing relationship that is intended to increase the
Airline Group's passenger or cargo revenue.
C. Third parties, including Successor Providers, to which TSG's
Confidential Information is to be disclosed or with access to TSG's
Confidential Information, other than TSG Highly Confidential
Information, shall first execute a non-disclosure/confidentiality
agreement substantially in the form of Exhibit J: Non-
disclosure/Confidentiality Agreement.
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D. Third parties, including Successor Providers, to which TSG Highly
Confidential Information is to be disclosed or with access to TSG
Highly Confidential Information shall first execute a
non-disclosure/non- competition agreement substantially in the form of
Exhibit N: Non-disclosure/Non-competition Agreement.
14.9. IRREPARABLE HARM. The Parties acknowledge that any disclosure or
misappropriation of Confidential Information in violation of this Agreement
could cause irreparable harm, the amount of which may be extremely difficult to
estimate, thus making any remedy at law or in damages inadequate. Each Party
therefore agrees that the other Party shall have the right, afforded in Section
B.4(b) of Exhibit M: Dispute Resolution Appendix, to apply to any court of
competent jurisdiction for a temporary or provisional order restraining any
breach or impending breach of this Article XIV. This right shall be in
addition to any other remedy available under this Agreement.
14.10. GENERAL KNOWLEDGE. Each Party understands that the other Party may
enhance its generalized knowledge and experience while this Agreement is in
effect and that the other Party may already possess or hereafter obtain
concepts, data, discoveries, ideas, information, inventions, know-how,
knowledge, methodologies, processes, products, skills, techniques or other work
product, whether or not patentable, that are generally similar to Confidential
Information it may receive under this Agreement. This Agreement shall not be
interpreted as limiting such other Party's rights to develop, disclose,
display, market, obtain, own, publish, provide, release, sell, transfer, or
use, in any manner whatsoever, any such generalized knowledge and experience or
any such concepts; provided, however, that such other Party shall in all events
comply with the preceding Sections of this Article XIV.
14.11. CONFIDENTIALITY AND BENCHMARKING. Nothing in this Article XIV
precludes the Airline Group from disclosing (subject to an appropriate
nondisclosure agreement) their business requirements, including services,
service level requirements, geographic location data, and resource consumption,
to the Benchmark Providers or prospective Benchmark Providers or to any other
Person in connection with an RFP or RFQ permitted by this Agreement. Such
disclosure may not include, however, any code or detailed descriptions of
functionality of any TSG Operated Software or descriptions of the service level
performance of TSG under this Agreement.
14.12. RESEARCH. If any TSG Service creates patentable subject matter other
than software, TSG, at its sole expense, may seek patent protection, and shall
own whatever patents may issue, for such patentable subject matter. Until
Expiration or termination of this Agreement, TSG shall offset the Fees
otherwise payable by AMERICAN to TSG by an amount equal to twenty percent of
revenue TSG receives for the licensing, sale, and third-party use of such
patents for the duration of such patents and any renewals. After Expiration or
termination of this Agreement, TSG shall pay AMERICAN a royalty of twenty
percent of revenue TSG receives for the licensing, sale, or third-party use of
such patents for the duration of such patents and any renewals.
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Article XV -- Security
15.1. SECURITY IN GENERAL. TSG shall provide security for the AG Data and
AG Customer Data in accordance with Section "10.4. DATA SECURITY." TSG shall
provide physical and electronic security for the TSG Services no less rigorous
than such physical and electronic security as are in effect on the Effective
Date.
Article XVI -- Key Employees and Related Provisions
16.1. DESIGNATION OF KEY EMPLOYEES. In accordance with this Section 16.1,
AMERICAN and TSG shall designate the Key Employees.
A. TSG and AMERICAN may designate as Key Employees up to twenty
percent of the total number of full-time TSG employees assigned to
provide services to AMERICAN. The parties anticipate that the maximum
number of Key Employees will be approximately [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] upon the Effective Date.
B. At the commencement of each New/Out-of-scope Services,
Development, and significant Enhancement project to be performed by
TSG, TSG and AMERICAN shall agree as to the personnel who are
designated as Key Employees for the duration of such projects or
phases of such projects.
C. A TSG employee performing Maintenance may be mutually designated
as a Key Employee for a period of twenty- four consecutive months.
Without AMERICAN's consent, TSG may remove a Key Employee who provides
Maintenance and who has been on the Key Employee List for more than
twenty-four consecutive months, but TSG must promptly provide a
replacement TSG employee who has suitable training and skills and who
is designated as a Key Employee.
D. Each year during the budgeting process for determining maintenance
fees, the parties determine the Key Employees for the maintenance of
each Application. No more than [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] of the employees providing maintenance for such Application
may be designated as a Key Employees, except when fewer than 10
employees are providing maintenance for such Application; in which
case there may be up to [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] employees designated as Key Employees.
E. AMERICAN and TSG shall meet quarterly to revise the Key Employee
List. TSG and AMERICAN must mutually agree in writing before a TSG
employee is designated a Key Employee.
F. TSG may request that an employee be removed from the Key Employee
List prior to the end of the twenty-four month period if:
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(1) The removal of the employee from the Key Employee List
would not materially adversely affect the services that the
Key Employee was providing to the Airline Group.
(2) TSG can promptly provide the Airline Group with a
replacement employee to be added to the Key Employee List who
has suitable training and skills.
(3) AMERICAN retains the right of final approval, which shall
not be unreasonably withheld, over all changes to the Key
Employee List pursuant to this Subsection F.
G. If TSG removes a Key Employee pursuant to Subsection F of this
Section 16.1 and such removal directly or indirectly causes any
significant service problems, including project delays, project
overruns, programming errors, or service performance degradation, TSG
shall promptly commence correcting such service problems, including,
if necessary, replacing the new Key Employee.
H. TSG shall use reasonable efforts to promptly replace a Key
Employee who ceases full-time employment at TSG for any reason,
including such employee's resignation, leave of absence, termination,
disability, or death, with another employee who possesses skills
adequate to perform the duties of such Key Employee. At the next
meeting between the Account Managers, the Parties shall mutually agree
whether anyone, and if so who, will be added to the Key Employee List.
16.2. RESTRICTIONS CONCERNING KEY EMPLOYEES. TSG hereby agrees to the
restrictions described in this Section 16.2 for Key Employees.
A. Key Employees must dedicate a minimum of 80% of their billable
time to providing services for AMERICAN's benefit.
B. TSG may not transfer a Key Employee from one project to another
project without AMERICAN's Consent.
C. TSG may not materially change the job description of a Key
Employee without AMERICAN's Consent.
16.3. REMOVAL OF PERSONNEL. In the event that AMERICAN reasonably and in
good faith determines that the continued assignment by TSG of any Account
Manager or any employee to the performance of TSG Services is adversely
affecting the interests of AMERICAN, then the Airline Group's CIO will send
TSG's President (in the case of the Account Manager's performance) or the
Account Manager (in the case of any other employee's performance) written
notice thereof, specifying the reasons therefor and requesting that the Account
Manager or employee be replaced. Promptly after its receipt of such a request
by AMERICAN, TSG shall investigate the matters stated in the request consistent
with TSG's human resources policies. The affected individual will be subject
to an evaluation
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period consistent with TSG's human resources policies for a period of four
months for the Account Manager and three months for other employees, during
which period the individual may correct such problems. During such period TSG
shall use efforts consistent with its personnel policies to improve such
individual's performance; if unsuccessful, TSG shall use reasonable efforts to
replace such employee with a person of suitable ability and qualifications if
such problems are not corrected within such period.
Article XVII -- Non-solicitation of Employees
17.1. NON-SOLICITATION OF EMPLOYEES. Except as stated in this Section 17.1,
while this Agreement is in effect and for a period of two years thereafter,
neither Party may recruit or hire the employees or Independent Contractors
engaged by the other Party, whether as employees or Independent Contractors,
without the Consent of the other Party.
A. AMERICAN may recruit and hire TSG's employees and TSG's Independent
Contractors who previously worked for AMERICAN in a capacity other
than providing services substantially similar to the TSG Services and
other than providing operations research services to AMERICAN;
provided, however, that AMERICAN first gives TSG two months' Notice
when AMERICAN intends to hire a TSG employee designated as a Level 5
employee or below and three months' Notice when AMERICAN intends to
hire a Level 6 employee or above.
B. TSG may recruit and hire AMERICAN's employees and AMERICAN's
Independent Contractors who previously worked for a division of
AMERICAN that became TSG or a predecessor of TSG; provided, however,
that TSG first gives AMERICAN two months' Notice when TSG intends to
hire an AMERICAN employee designated as a Level 5 employee or below
and three months' Notice when TSG intends to hire a Level 6 employee
or above.
C. In the event of Expiration or termination for any reason, except
for termination pursuant to Section "24.4. TERMINATION FOR
CONVENIENCE," AMERICAN may recruit and hire TSG employees and
Independent Contractors assigned by TSG primarily to perform work on
behalf of AMERICAN, and AMERICAN may facilitate and/or assist the
Successor Provider in identifying and hiring such individuals.
D. In the event of termination pursuant to Section "24.4. TERMINATION
FOR CONVENIENCE," and provided AMERICAN obtains TSG's Consent, which
may be withheld in TSG's sole discretion, AMERICAN may recruit and
hire TSG employees and Independent Contractors assigned by TSG
primarily to perform work on behalf of AMERICAN, and AMERICAN may
facilitate and/or assist the Successor Provider in identifying and
hiring such individuals; provided, however, that if TSG does not
consent to the hiring of such employee or Independent Contractor, the
cost for such person shall be excluded from the Wind-down Costs.
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E. If an employee's employment or an Independent Contractor's
engagement with a Party terminates, then without the Consent of such
Party, the other Party may not recruit, hire, or engage such former
employee or Independent Contractor, whether as an employee or
Independent Contractor, for a period of twelve months after the date
of termination of such employee's employment or such Independent
Contractor's engagement.
Article XVIII -- Parties' Relationship
18.1. INDEPENDENT PARTIES. The Parties are independent; each has sole
authority and control of the manner of, and is responsible for, its performance
of this Agreement. This Agreement does not create or evidence a partnership or
joint venture between the Parties. Neither Party may create or incur any
liability or obligation for or on behalf of the other Party, except as
described in this Agreement. This Agreement does not restrict TSG from
providing or rendering any services, including services like the TSG Services,
to any other Person; nothing in this Agreement, however, gives TSG the right to
provide or render any services in violation of any other agreement entered into
by the Parties.
18.2. ADVERTISING. While this Agreement is in effect, TSG has exclusive
right to advertise both as the "preferred provider" of information technology
services to AMERICAN and as possessing a "strategic relationship" with
AMERICAN; provided, that the TSG Services are more than 50% of all the services
AMERICAN receives that are similar to the TSG Services; and provided further,
that the Airline Group may endorse a third-party provider as the "preferred
provider" of a particular service that is not (and need not be) provided by
TSG. Nothing in this Section shall be construed as permitting TSG to use any
trademark or service mark of AMERICAN without AMERICAN's Consent, which
AMERICAN may give in its sole discretion.
18.3. AUTHORITY OF ACCOUNT MANAGERS AND OTHERS. Except as expressly
authorized in this Section 18.3, only an officer of a Party may bind that
Party.
A. TSG and AMERICAN may change Account Managers upon notice to the
other; provided, however, that TSG's appointment of an Account Manager
is subject to AMERICAN's Consent.
B. AMERICAN and TSG agree that the Account Managers shall serve as
the general points of contact between the parties.
C. The Airline Group's CIO has the following authority:
(1) The Airline Group's CIO may bind AMERICAN to an agreement
with TSG to perform any service for which there is a charge,
and such agreement must be in writing;
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(2) [TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED]
(3) The Airline Group's CIO shall submit a list of AMERICAN
employees that may bind AMERICAN to an agreement with TSG to
perform any TSG Services or New/Out-of-scope Services; and
until the Airline Group's CIO provides such list to TSG,
AMERICAN shall not claim that an AMERICAN employee lacked the
authority to authorize work.
Article XIX -- Warranties
19.1. MUTUAL WARRANTIES. Each Party warrants and represents to the other
Party as follows:
A. That it has the requisite corporate authority to enter into and
perform this Agreement;
B. That its execution, delivery, and performance of this Agreement
have been duly authorized by all requisite corporate action on its
behalf;
C. That this Agreement is enforceable against it; and
D. That it has obtained all consents or approvals of Governmental
Authorities and other Persons that are conditions to its entering into
this Agreement.
E. Provisions to the contrary notwithstanding, nothing in this
Agreement shall be construed as a warranty by either party concerning
the Transferred Software or the Transferred Third Party Software.
19.2. TSG'S WARRANTIES. TSG hereby warrants and represents as follows:
A. That it has all requisite authority to use any software that it
has obtained after the Effective Date to provide the TSG Services and
the New/Out-of-scope Services;
B. That none of the software that it develops to provide the TSG
Services will wilfully infringe the patent, infringe the copyright, or
misappropriate the trade secrets of another;
C. That a substantial part of the incentive compensation of TSG
employees for whom a significant portion of work consists of
performing TSG Services including, but not limited to, the Key
Employees, will depend upon AMERICAN's satisfaction as determined by
TSG in accordance with Section "5.12. ANNUAL SURVEY."
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19.3. AMERICAN'S WARRANTIES. AMERICAN hereby warrants and represents that
it possesses all requisite rights and authority to provide any software that it
provides to TSG after the Effective Date.
Article XX -- Indemnification
20.1. INJURY AND PROPERTY INDEMNIFICATION BY TSG. TSG shall indemnify,
defend, and hold harmless the Airline Group Indemnitees from and against Tort
Damages resulting from any action or omission of any employee or agent of TSG
(including any of TSG's subcontractors) in connection with this Agreement that
constitutes negligence, gross negligence, or willful misconduct of TSG or its
employees or agents.
20.2. CUSTOMER INDEMNIFICATION BY TSG. TSG shall indemnify, defend, and
hold harmless the Airline Group Indemnitees from and against Indemnifiable
Losses resulting from, arising out of, or relating to any claim by any customer
of TSG, other than any member of the Airline Group or any of its Affiliates,
arising out of TSG's rendering or providing any service similar to any of the
TSG Services to or for the benefit of that claimant.
20.3. INTELLECTUAL PROPERTY INDEMNIFICATION BY TSG. TSG shall indemnify,
defend, and hold harmless the Airline Group Indemnitees from and against
Indemnifiable Losses resulting from, arising out of, or relating to any claim
that any item of intellectual property, including software or software
specifications, provided under this Agreement by TSG, infringes a currently
existing United States copyright, misappropriates a trade secret, or wilfully
infringes a United States patent.
A. TSG shall not indemnify any of the Airline Group's
Indemnitees, however, if the claim of infringement or misappropriation
is caused by:
(1) Such Airline Group Indemnitee's misuse or
modification of such item,
(2) Such Airline Group Indemnitee's failure to use
corrections or enhancements made available by TSG,
(3) Such Airline Group Indemnitee's use of such item in
combination with any product or information not owned,
developed, or provided by TSG, except as authorized by TSG,
(4) Such Airline Group Indemnitee's distribution,
marketing, or use for the benefit of third parties of such
item, except as permitted by this Agreement or otherwise
authorized by TSG, or
(5) Any information, direction, specification, or
materials provided by such Airline Group Indemnitee or any
third party.
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B. If any such item is, or in TSG's opinion is likely to be, held
to constitute an infringing product, TSG shall, at its expense and
option, either:
(1) Procure the right for the Airline Group Indemnitee to
continue using such item,
(2) Replace such item with a non-infringing equivalent
item,
(3) Modify such item to make it non-infringing, or
(4) Accept return of such item and refund to the Airline
Group Indemnitee the Fees paid for such item, less a
reasonable amount for the Airline Group Indemnitee's use of
such item up to the time of return.
C. The rights and remedies stated in this Section 20.3 constitute
the sole and exclusive remedies of the Airline Group Indemnitees, and
TSG's entire liability, with respect to infringement and
misappropriation.
20.4. INJURY AND PROPERTY INDEMNIFICATION BY AMERICAN. AMERICAN shall
indemnify, defend, and hold harmless the TSG Indemnitees from and against Tort
Damages resulting from any action or omission of any employee or agent of the
Airline Group (other than TSG) in connection with this Agreement that
constitutes negligence, gross negligence, or willful misconduct of any member
of the Airline Group or its employees or agents (other than TSG).
20.5. CUSTOMER INDEMNIFICATION BY AMERICAN. AMERICAN shall indemnify,
defend, and hold harmless the TSG Indemnitees from and against Indemnifiable
Losses resulting from, arising out of, or relating to any claim by any AG
Customer or any of the customers of an AG Customer arising out of the Airline
Group's rendering or providing any AG Mixed Services to that AG Customer.
20.6. INTELLECTUAL PROPERTY INDEMNIFICATION BY AMERICAN. American shall
indemnify, defend, and hold harmless the TSG Indemnitees from and against
Indemnifiable Losses resulting from, arising out of, or relating to any claim
that any item of intellectual property, including software or software
specifications, provided under this Agreement by any member of the Airline
Group, infringes a currently existing United States copyright, misappropriates
a trade secret, or wilfully infringes a United States patent.
A. American shall not indemnify any of the TSG Indemnitees,
however, if the claim of infringement or misappropriation is caused
by:
(1) Such TSG Indemnitee's misuse or modification of such
item,
(2) Such TSG Indemnitee's failure to use corrections or
enhancements made available by any member of the Airline
Group,
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(3) Such TSG Indemnitee's use of such item in combination
with any product or information not owned, developed, or
provided by any member of the Airline Group, except as
authorized by a member of the Airline Group,
(4) Such TSG Indemnitee's distribution, marketing, or use
for the benefit of third parties of such item, except as
permitted by this Agreement or otherwise authorized by any
member of the Airline Group, or
(5) Any information, direction, specification, or
materials provided by such TSG Indemnitee or any third party.
B. If any such item is, or in American's opinion is likely to be,
held to constitute an infringing product, American shall, at its
expense and option, either:
(1) Procure the right for the TSG Indemnitee to continue
using such item,
(2) Replace such item with a non-infringing equivalent
item,
(3) Modify such item to make it non-infringing, or
(4) Accept return of such item and refund to the TSG
Indemnitee any amount paid for such item, less a reasonable
amount for the TSG Indemnitee's use of such item up to the
time of return.
C. The rights and remedies stated in this Section 20.6 constitute
the sole and exclusive remedies of the TSG Indemnitees, and American's
entire liability, with respect to infringement and misappropriation.
20.7. AIRLINE INCIDENT INDEMNIFICATION. American shall indemnify, defend,
and hold harmless the TSG Indemnitees from and against Indemnifiable Losses
resulting from, arising out of, or relating to any Airline Incident. The
Parties intend that the TSG Indemnitees be indemnified notwithstanding any
liability that TSG might otherwise have under Section "20.1. INJURY AND
PROPERTY INDEMNIFICATION BY TSG" or Section "20.2. CUSTOMER INDEMNIFICATION BY
TSG" relating to any Airline Incident.
20.8. SITA INDEMNIFICATION. TSG shall indemnify, defend, and hold harmless
the Airline Group Indemnitees from and against Indemnifiable Losses (except as
described below in this Section 20.8) that arise or accrue on or after the
Effective Date resulting from, arising out of, or relating to AMERICAN's
serving as the contracting party under the SITA Agreements. Those
Indemnifiable Losses shall:
A. Include any losses, costs, taxes, claims, liabilities,
damages, or causes of action arising from or related to the
obligations of payment (including any fees, penalties, or interest for
late payment or nonpayment), indemnification obligations, and
obligations resulting from the failure to meet the financial minimums
under the SITA Agreements.
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B. Exclude any losses or damages of the kind described in
Subsection A of this Section 20.8 related to the SITA Services
consumed by AMERICAN and its Affiliates other than TSG and its
subsidiaries (except for any amount paid by AMERICAN and its
Affiliates to TSG for SITA Services consumed by AMERICAN and its
Affiliates other than TSG and its subsidiaries).
20.9. EXPRESS NEGLIGENCE. EACH PARTY EXPRESSLY INTENDS THAT THE OTHER
PARTY'S INDEMNITEES BE INDEMNIFIED AGAINST TORT DAMAGES OR INDEMNIFIABLE LOSSES
RESULTING FROM, ARISING OUT OF, OR RELATING TO THE ORDINARY NEGLIGENCE OF ANY
SUCH INDEMNITEE OR THE JOINT OR CONCURRENT ORDINARY NEGLIGENCE OF SUCH
INDEMNITEES.
20.10. THIRD-PARTY CLAIMS. If an Indemnification Claim is based on a
Third-Party Claim:
A. The Indemnified Party shall give an Indemnification Claim
Notice promptly after it receives the Third- Party Claim. The failure
of an Indemnified Party to give an Indemnification Claim Notice shall
relieve the Indemnifying Party of its indemnification obligations only
to the extent the Indemnifying Party is actually prejudiced by that
failure.
B. The Indemnifying Party shall be entitled to defend the
Third-Party Claim, with its chosen counsel and at its own expense, if
(1) the Third-Party Claim seeks only monetary relief, and not an
injunction or other equitable relief, against the Indemnified Party,
and (2) the Indemnifying Party elects to assume, and diligently
conducts, that defense. The Indemnifying Party's election to defend
must be given by Notice to the Indemnified Party within the
Indemnification Response Period. If the Indemnifying Party conducts
the defense, the Indemnified Party may participate in that defense
with its own counsel and at its own expense.
C. If the Indemnifying Party does not elect to defend the
Third-Party Claim by Notice within the Indemnification Response
Period, or if the Indemnifying Party does not diligently conduct the
defense, the Indemnified Party shall be entitled, upon further Notice
to the Indemnifying Party, to defend the Third-Party Claim on behalf
of, and for the account and risk of, the Indemnifying Party (if it is
determined that the Indemnifying Party has an indemnification
obligation regarding that Indemnification Claim). In this
circumstance, the Indemnifying Party may participate in the defense
with its own counsel and at its own expense.
D. If there is a conflict of interest that makes it inappropriate
for the same counsel to represent the Indemnifying Party and the
Indemnified Party in defending the Third-Party Claim, the Indemnifying
Party must pay for separate counsel for the Indemnified Party.
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E. The Indemnifying Party defending a Third-Party Claim may
compromise, settle, or resolve that Third- Party Claim without the
Indemnified Party's consent if the compromise, settlement, or
resolution involves only the payment of money by the Indemnifying
Party (whether on its own behalf or behalf of the Indemnified Party)
and the third-party claimant provides the Indemnified Party a release
from all liability regarding the Third- Party Claim. Otherwise, the
Indemnifying Party may not compromise, settle, or resolve the
Third-Party Claim without the Indemnified Party's Consent.
F. The Indemnifying Party and the Indemnified Party must
cooperate with all reasonable requests of the other in defending any
Third-Party Claim.
20.11. NON-THIRD-PARTY CLAIMS. A Party's claim, on its behalf or on behalf of
its other Indemnitees, that the other Party is liable for indemnification under
any of the preceding Sections of this Article XX -- Indemnification based on
any event or action other than a Third-Party Claim shall be made by Notice to
that other Party. Any Dispute about that claimed liability shall be resolved
by the Dispute Resolution Procedure.
Article XXI -- Limitations of Liability
21.1. INTENDED ALLOCATION OF RISKS. The allocation of risks between the
Parties, and the limitations on the Parties' liabilities and remedies, set
forth in this Article XXI and elsewhere in this Agreement are specifically
intended by the Parties, as part of their bargain (i.e., part of the
consideration for their other respective benefits and obligations) in this
Agreement. The Parties acknowledge that they have negotiated, with the advice
of legal counsel, such allocation and limitations.
21.2. NEGLIGENCE AND ORDINARY MISTAKES. Except as otherwise expressly
provided in this Agreement, [TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED].
For the avoidance of doubt, nothing in this Section 21.2 affects any liability
of a Party for Tort Damages or Indemnifiable Losses under Article XX --
Indemnification.
21.3. EXTRAORDINARY MISTAKES. TSG's liability for any Extraordinary Mistake
shall be limited to its obligations described in Sections "5.9. CORRECTION OF
PERFORMANCE," "7.9. PERFORMANCE ADJUSTMENT OF FEES" (if an SLA Standard is
applicable), and "10.3 RISK OF DATA LOSS." [TEXT OMITTED-CONFIDENTIAL
TREATMENT REQUESTED]. Any act or omission of TSG that is appropriately
characterized equally as negligent and as an Extraordinary Mistake shall be
deemed an Extraordinary Mistake under this Article XXI. Likewise, any act
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or omission of TSG that is appropriately characterized equally as grossly
negligent and as an Extraordinary Mistake shall be deemed grossly negligent
under this Article XXI.
21.4. [TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED]
21.5. GROSS NEGLIGENCE AND WILLFUL MISCONDUCT. A Party's liability under or
relating in any manner to this Agreement for General Damages resulting from
that Party's gross negligence or willful misconduct, including any breach of
this Agreement by that Party constituting or caused by its gross negligence or
willful misconduct, shall be limited as follows:
[TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED]
For the avoidance of doubt, nothing in this Section 21.5 affects any liability
of a Party for Tort Damages or Indemnifiable Losses under Article XX --
Indemnification.
21.6. LIMITATION ON AMOUNT OF ALL GENERAL DAMAGES. A Party's liability for
General Damages other than Consequential Damages and punitive or exemplary
damages -- i.e., actual damages -- is not limited except to the extent provided
in this Section 21.6. A Party shall have no liability under or relating in any
manner to this Agreement for any General Damages (including Consequential
Damages, but other than or in addition to any Tort Damages or Indemnifiable
Losses under Article XX -- Indemnification or any unpaid Fees) in excess of
[TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED] per calendar year.
21.7. TIME FOR CLAIMS. A Party may assert or make a claim against the other
Party for any breach of this Agreement, or for that other Party's liability
under this Agreement (including an Indemnification Claim), only within three
years after the breach or other event constituting the basis for that claim
occurred, even if not discovered until after that three-year
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period. Nevertheless, the three-year limit on the time for asserting or making
any claim shall not apply to a claim (including an Indemnification Claim) based
on a Third-Party Claim.
21.8. WARRANTIES. Each Party's warranties in this Agreement are made solely
to and for the benefit of the other Party and, to the extent described in this
Agreement, the American Related Entities. No Person other than a Party may
assert or make a claim based on the other Party's warranties under this
Agreement; any claim by any of the American Related Entities must be made by
AMERICAN.
21.9. OFFSET. A Party entitled to any payment due from the other Party
under this Agreement may offset all or any portion of the amount of that
payment against any payment that is due from it to the other Party under this
Agreement.
21.10. EQUITABLE RELIEF. To the extent that any monetary relief available
under this Agreement is not an adequate remedy for any breach of this
Agreement, or upon any breach or impending breach of Article XIV--Confidential
Information, the non-breaching Party shall be entitled to injunctive relief as
a remedy for that breach or impending breach by the other Party, in addition to
any other remedies granted to the non-breaching Party in this Agreement. That
injunctive relief must be sought through arbitration in accordance with the
Dispute Resolution Procedure, except as permitted by Section B.4(b) of the
Dispute Resolution Appendix.
21.11. EXCLUSIVE REMEDIES. The remedies described in this Agreement are the
exclusive rights and remedies of a Party regarding any breach of this Agreement
or any matter that may be the subject of a claim for liability under or
relating to this Agreement.
21.12. NONCUMULATIVE REMEDIES. If a particular remedy for a breach of, or the
occurrence of any other event described in, this Agreement is specified in this
Agreement, that remedy shall be the exclusive remedy upon such a breach or
event. Nevertheless, if more than one remedy for such a breach or event is
specified in this Agreement, the Party entitled to a remedy must elect or
choose between the available remedies, and may not cumulate or exercise
multiple remedies, upon such a breach or event. Nevertheless, when there is a
deficiency in a service
A. Not subject to an SLA Standard, the Airline Group is not
required to elect or choose between (1) TSG's correcting or curing the
deficiency, (2) requiring that an SLA Standard be established for that
service, and (3) if caused by an Extraordinary Mistake, obtaining a
credit or repayment of the excess Fees charged or collected by TSG; or
B. Subject to an SLA Standard, the Airline Group is not required
to elect or choose between (1) TSG's correcting or curing the
deficiency, (2) obtaining any applicable Performance Decrease, and (3)
if caused by an Extraordinary Mistake, obtaining a credit or repayment
of the excess Fees charged or collected by TSG.
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21.13. WAIVER OF REMEDIES. No forbearance, delay, or indulgence by a Party in
enforcing this Agreement, within the applicable time limits stated in this
Agreement, shall prejudice the rights or remedies of that Party. No waiver of
a Party's rights or remedies regarding a particular breach of, or occurrence of
any other event described in, this Agreement constitutes a waiver of those
rights or remedies, or any other rights or remedies, regarding any other or any
subsequent breach of, or occurrence of any other event described in, this
Agreement.
21.14. WARRANTY DISCLAIMER. EXCEPT FOR THE EXPRESS WARRANTIES STATED IN THIS
AGREEMENT, NEITHER TSG NOR AMERICAN MAKES ANY OTHER WARRANTIES, EXPRESS OR
IMPLIED; AND EACH OF TSG AND AMERICAN HEREBY EXPRESSLY DISCLAIMS ALL IMPLIED
WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
21.15. CLAIMS FOR TAXES. Claims for Taxes are subject to Article IX --
Transfer and Property Taxes and not to this Article XXI, except that Sections
"21.1. INTENDED ALLOCATION OF RISKS," "21.8. WARRANTIES," "21.9 OFFSET,"
"21.10. EQUITABLE RELIEF," "21.11. EXCLUSIVE REMEDIES," and "21.13. WAIVER OF
REMEDIES" and this Section 21.15 shall apply to claims for Taxes.
Article XXII -- Force Majeure and Disaster Recovery
22.1. FORCE MAJEURE. If either Party to this Agreement shall be prevented,
hindered, or delayed in the performance or observance of any of its obligations
hereunder by reason of a Force Majeure Event, then such Party shall be excused
from any further performance or observance of the obligation(s) so affected for
as long as such circumstances prevail and such party continues to use its
reasonable efforts to recommence performance or observance whenever and to
whatever extent possible without delay; provided, however, that to the extent
that the Force Majeure Event impairs the Airline Group's operations, TSG shall
use Extraordinary Efforts. Any party so delayed in its performance shall
immediately notify the other by telephone (to be confirmed in writing within
five days of the inception of such delay) and shall describe at a reasonable
level of detail the circumstances causing such delay. If (i) any of the
above-described circumstances prevent, hinder, or delay performance of TSG's
operational obligations hereunder, and (ii) as a result thereof, AMERICAN is
prevented from conducting a significant portion of AMERICAN's normal business
operations, then TSG, with the cooperation and assistance of AMERICAN, shall
resume performance of such operational obligations or arrange for AMERICAN to
obtain alternative performance of such operational obligations. The cost to
AMERICAN of such alternative performance shall not exceed the amount that would
have been owed to TSG by AMERICAN under this Agreement as if the TSG were
providing the equivalent TSG Services without the prevention, hindrance or
delay of performance of TSG's operational obligations under this Agreement.
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A. Whenever a Force Majeure Event causes TSG to allocate limited
resources among TSG's customers at the affected service locations,
AMERICAN shall receive at least the same priority in respect of such
allocations as (a) the highest priority that AMERICAN or its
affiliates enjoyed prior to the Effective Date and (b) TSG's other
commercial customers. Unless otherwise agreed by the Airline Group's
CIO, in such events TSG shall restore the following systems in the
following order: (1) the Front End Systems, (2) the Flight Operations
Systems, (3) the Passenger Services Systems and Fare Pricing Complex
and (4) the Commercial Systems.
B. If a Force Majeure Event, other than one intentionally caused by
AMERICAN, causes one or more of the TSG Services designated as a
"Critical TSG Service" or "High Risk TSG Service" to be unavailable
for productive use, AMERICAN may terminate this Agreement pursuant to
Section "24.3 TERMINATION FOR A FORCE MAJEURE EVENT," in accordance
with the following:
(1) For each TSG Service designated as a "Critical TSG
Service" other than CargoSABRE, AMERICAN may terminate this
Agreement if TSG either fails to give AMERICAN a Force Majeure
Recovery Plan within [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] after Force Majeure Event Commencement or if the
applicable TSG Service is not restored, in accordance with its
SLA Standard, within [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] after Force Majeure Event Commencement.
(2) For the TSG Service known as CargoSABRE, AMERICAN may
terminate this Agreement if TSG either fails to give AMERICAN
a Force Majeure Recovery Plan within [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] after Force Majeure Event
Commencement or if Cargo SABRE is not restored, in accordance
with its SLA Standard, within [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED] after Force Majeure Event Commencement.
(3) When a Force Majeure Event has caused more than [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED] of the TSG Services
designated as "High Risk TSG Services" to be unavailable for
the Airline Group's productive use, AMERICAN may terminate
this Agreement if TSG either fails to give AMERICAN a Force
Majeure Recovery Plan within [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED] after Force Majeure Event Commencement
or if such TSG Service is not restored, in accordance with
its SLA Standard, within [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED] after Force Majeure Event Commencement.
(4) When a Force Majeure Event has caused more than [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED] , but fewer than
or equal to [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED],
of the TSG Services designated as "High Risk TSG Services" to
be unavailable for the Airline Group's productive use,
AMERICAN may terminate this Agreement if TSG either fails to
give AMERICAN a Force Majeure Recovery Plan within [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED] after Force
Majeure Event Commencement or if such TSG Services are not
restored, in accordance with their SLA Standards, within [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED] after Force
Majeure Event Commencement.
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(5) When a Force Majeure Event has caused any, but fewer than
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] , of the TSG
Services designated as "High Risk TSG Services" to be
unavailable for the Airline Group's productive use, AMERICAN
may terminate this Agreement if TSG either fails to give
AMERICAN a Force Majeure Recovery Plan within [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] after Force Majeure Event
Commencement or if the applicable TSG Services are not
restored, in accordance with their SLA Standards, within
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] after Force
Majeure Event Commencement.
22.2. DISASTER RECOVERY. TSG Services shall include implementation of a
disaster recovery plan as specified in the document known as Manual No. 175
entitled "AMR Corporate Contingency Plan" with a date of December 31, 1991.
Such disaster recovery plan shall be no less rigorous than that in effect
immediately prior to the Effective Date at the facilities of TSG used to
provide the TSG Services as of the Effective Date. In the event that
additional disaster recovery procedures for the applicable facilities are
reasonably requested by AMERICAN, TSG shall perform such additional disaster
recovery procedures as New/Out-of-scope Services.
Article XXIII -- Dispute Resolution
23.1. DISPUTES IN GENERAL. Except as otherwise stated in this Agreement,
the Parties shall resolve any Dispute in accordance with the Dispute Resolution
Procedure. Nevertheless, if any Person other than the Parties and their
Affiliates
A. Has initiated a lawsuit or other judicial, administrative, or
arbitration proceedings against or involving either or both of the
Parties in which a Dispute will be resolved, or
B. Is a necessary participant in any judicial, administrative, or
arbitration proceedings to resolve a Dispute and cannot be joined by
either or both of the Parties in an arbitration of that Dispute under
Section B.3 of the Dispute Resolution Appendix,
so that (in either case) the Dispute Resolution Procedure is or will be
ineffective, then the Parties need not use or follow the Dispute Resolution
Procedure to resolve that Dispute -- though the submission to jurisdiction in
Section B.5 of the Dispute Resolution Appendix shall apply if necessary.
23.2. INFORMATION FOR RESOLUTION. The Parties shall freely share, and may
disclose to any mediator or arbitrator as part of any Dispute resolution
proceeding, any and all reasonably requested relevant information, including
Confidential Information, needed to facilitate the resolution of any Dispute
and any and all information likely to lead to such relevant information.
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23.3. PAYMENT DISPUTES. With regard to payment Disputes, the Parties will
work to expedite resolution of the Dispute, with the goal of having the Dispute
resolved by the next billing cycle. To such end, all references to ten
Business Days in Sections B.1(b), B.1(c), and B.1(d) of the Dispute Resolution
Appendix shall be deemed to be seven Business Days for a payment Dispute.
23.4. CONTINUITY DURING DISPUTE. In the event of a Dispute, the Parties
shall continue to perform their respective obligations pursuant to this
Agreement.
23.5. PARTIES' AGREEMENT. Nothing in this Article XXIII or the Dispute
Resolution Procedure prevents the Parties from resolving any Dispute by mutual
agreement at any time.
Article XXIV -- Termination
24.1. TERMINATION FOR BREACH. In the event of certain breaches of this
Agreement, TSG or AMERICAN may terminate this Agreement in accordance with this
Section; provided that AMERICAN gives TSG Notice of its intent to terminate
within 180 days after the date such breach occurred.
A. Upon TSG's Egregious Breach of this Agreement, AMERICAN may
terminate this Agreement, provided that AMERICAN gives TSG thirty
days' Notice of its intent to terminate and TSG fails to cure the
breach within such 30 days; and provided, further, that such cure
period will be extended an additional 30 days if TSG delivers to
AMERICAN a written plan to cure the breach. In both instances, unless
TSG cures the material breach, the termination shall be effective as
of the first day following the end of the cure period or extended cure
period as the case may be.
B. Upon AMERICAN's material breach of its obligation to pay TSG in
accordance with this Agreement, TSG may terminate this Agreement as
follows:
(1) If TSG has given Notice to AMERICAN describing the breach
in detail, the monetary amount due, and TSG's intention to
terminate pursuant to this Subsection; and if AMERICAN has not
paid such amount within [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED] after receipt of TSG's Notice; provided,
however, that the first time AMERICAN fails to pay within such
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] TSG shall
give a second Notice to AMERICAN, describing the breach in
detail, the monetary amount due, and TSG's intention to
terminate pursuant to this Subsection; and TSG may not
terminate this Agreement unless, AMERICAN has failed to pay
within [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
after receipt of such second Notice.
(2) If TSG has given Notice to AMERICAN of AMERICAN's
material breach of its obligation to pay TSG in accordance
with this Agreement three times, and AMERICAN materially
breaches its obligation to pay TSG in accordance with
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this Agreement, TSG may terminate this Agreement upon Notice
to AMERICAN.
(3) For the avoidance of doubt, AMERICAN's withholding
amounts from Disputed Invoices in accordance with Section
"8.2. DISPUTED INVOICES," are not material breaches of
AMERICAN's obligation to pay.
24.2. TERMINATION FOR INADEQUATE PERFORMANCE. Upon the occurrence of an SLA
Termination Event, AMERICAN may terminate this Agreement upon Notice to TSG
given within 180 days after the date such SLA Termination Event occurred. Upon
the occurrence of an SLA Service Termination Event, AMERICAN may terminate this
Agreement as to such TSG Service upon Notice to TSG.
24.3. TERMINATION FOR A FORCE MAJEURE EVENT. If a Force Majeure Event
occurs and pursuant to Article XXII -- Force Majeure AMERICAN is entitled to
terminate this Agreement, then AMERICAN may terminate this Agreement upon
Notice to TSG.
24.4. TERMINATION FOR CONVENIENCE. At any time after July 1, 2000 and for
any reason whatsoever, AMERICAN may terminate this Agreement upon 180 days'
Notice to TSG and upon payment of all amounts due and the Termination
Liquidated Damages.
A. AMERICAN and TSG agree that if AMERICAN exercises its right to
terminate pursuant to this Section 24.4, the losses, expenses, and
measure of damages suffered by TSG would be uncertain and difficult to
calculate. Therefore, TSG and AMERICAN agree that the Termination
Liquidated Damages are their best estimate of such losses, expenses,
and damages and are not a penalty.
B. AMERICAN shall pay TSG the Termination Liquidated Damages in
accordance with Exhibit K: Termination Liquidated Damages
Calculation.
C. Upon Notice of termination pursuant to this Section 24.4, AMERICAN
may commence use of the Transition Assistance.
24.5. TERMINATION BECAUSE OF ACQUISITION OF TSG. If any entity with annual
airline transportation revenue of one billion dollars or more acquires control
(the power to direct the management or affairs) of TSG, then AMERICAN may, at
its sole option, terminate this Agreement upon 90 days Notice; provided
AMERICAN gives Notice within 180 days of the date on which such entity acquired
TSG.
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Article XXV -- Transition Assistance; Survival
25.1. TRANSITION ASSISTANCE BY TSG. Upon Expiration or termination of this
Agreement for any reason whatsoever, AMERICAN and TSG agree that TSG shall
provide assistance to AMERICAN to obtain services to replace the TSG Services
in accordance with this Section 25.1.
A. During the Transition Period, TSG shall provide to the Airline
Group or the Successor Provider any and all assistance reasonably
requested by AMERICAN to allow the TSG Services to continue without
interruption or adverse effect and to facilitate the orderly transfer
of responsibility for the TSG Services to AMERICAN or the Successor
Provider.
(1) The assistance to be provided to the Airline Group by TSG
shall include the services listed on Exhibit L: Transition
Assistance Service Descriptions.
(2) TSG Services provided during the Transition Period are
at Current Rates.
B. TSG shall provide to AMERICAN the foregoing assistance at no
additional charge other than the Current Rates prior to the Expiration
Date or the Termination Date and for ninety days thereafter, except in
the instance of termination pursuant to Subsection B of Section "24.1.
TERMINATION FOR BREACH" or pursuant to Section "24.4. TERMINATION FOR
CONVENIENCE," TSG may provide the Transition Assistance after the
Expiration Date or the Termination Date, as the case may be, at market
rates. TSG shall use any budgeted personnel time to provide
assistance and the services in Subsection C below, to the extent
reasonably possible. If the assistance requires resources, in
addition to those regularly utilized in the daily performance of TSG
Services, AMERICAN will pay TSG for such assistance on a time and
materials basis at the Current Rates.
C. Upon Expiration of this Agreement or with respect to any
particular AG Data or AG Customer Data, on such earlier date that the
same shall be no longer required by TSG in order to render services
hereunder, such AG Data or AG Customer Data shall be, at AMERICAN's
election and expense, (i) erased from the data files maintained by
TSG, (ii) returned to AMERICAN by TSG in a form reasonably requested
by AMERICAN, or (iii) stored by TSG for such period during the term of
this Agreement as AMERICAN may request and then either returned to
AMERICAN or erased.
D. Prior to providing any of the foregoing assistance to a Successor
Provider, TSG shall be entitled to receive from such Successor
Provider, in form and substance reasonably acceptable to TSG, written
assurances that (i) such Successor Provider will maintain at all times
the confidentiality of any TSG proprietary information, software or
materials disclosed or provided to, or learned by, such Successor
Provider in connection therewith, and (ii) such Successor Provider
will use such information, software or materials exclusively for the
benefit of the Airline Group. If such
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Successor Provider executes an agreement substantially in the form of
Exhibit N: Non-disclosure/Non-competition Agreement, the Successor
Provider shall be deemed to have provided the written assurances
required by this Subsection D.
E. Upon AMERICAN's request, TSG shall provide consultation services
for at least ninety (90) days after expiration of the Transition
Period, to be charged by TSG at market rates for similar services. As
part of such consultation services, TSG will retrieve, manipulate,
convert, transfer AG Data and AG Customer Data as required by the
Successor Provider at Current Rates.
25.2. SURVIVAL. The following provisions of this Agreement shall survive
the termination or Expiration of this Agreement:
A. Article IX -- Transfer and Property Taxes.
B. Section "11.2. RIGHTS IN JOINTLY OWNED SOFTWARE."
C. Section "11.5. ROYALTY AFTER EXPIRATION OR TERMINATION."
D. Section "12.5. MARKETING RIGHTS AFTER EXPIRATION OR TERMINATION."
E. Article XIII -- Non-competition.
F. The confidentiality provisions of Article XIV -- Confidential
Information.
G. Article XVII -- Non-solicitation of Employees.
H. Article XX -- Indemnification.
I. Article XXI -- Limitations of Liability.
J. Article XXIII -- Dispute Resolution.
K. Article XXV -- Transition Assistance; Survival.
L. Article XXVII -- Auditing Rights.
M. Article XXVIII -- Notices and Other Communications.
N. Article XXIX -- Miscellaneous Provisions.
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Article XXVI -- Insurance
26.1. TSG'S INSURANCE IN GENERAL. TSG, at its own expense, shall establish
and maintain general liability, workers compensation, automotive liability and
property damage, and computer fraud protection insurance coverages for all TSG
employees and Independent Contractors involved in providing TSG Services or
New/out-of-scope Services.
26.2. AG BUSINESS INTERRUPTION INSURANCE. If AMERICAN requests in writing
that TSG obtain insurance coverage on behalf of the Airline Group or AMERICAN,
including business interruption coverage, and provided AMERICAN reimburses TSG
for all out-of-pocket costs of obtaining such coverage, then TSG shall obtain
such coverage requested and designate the Airline Group as the named insured.
Article XXVII -- Auditing Rights
27.1. OPERATIONAL AUDIT. The Airline Group and its representatives, at the
Airline Group's expense and upon reasonable notice to TSG, shall have the right
to conduct an audit of TSG's operations (i) on an annual basis and (ii) more
frequently as reasonably requested by the Airline Group to the extent that
such audit will not unreasonably disrupt the operations of TSG, in order to
verify that TSG is exercising reasonable operational procedures in accordance
with customary standards in the data processing industry in its performance of
the TSG Services and to confirm TSG's performance of its obligations hereunder.
TSG will provide the Airline Group and its representatives access to the TSG
facilities at which TSG is performing the TSG Services, to TSG's personnel, to
the Airline Group's existing data and work product and to that being developed
by TSG hereunder at such facilities, and to reasonably related documentation.
To the extent applicable to the TSG Services, such audit may include an audit
of (i) software development practices and procedures, (ii) application and
operating systems, (iii) general controls and security practices and
procedures, (iv) disaster recovery and back-up procedures, (v) invoice
processing, (vi) Service Level compliance, and (vii) resource consumption. TSG
will provide to the Airline Group and its representatives any assistance that
they reasonably require in connection therewith at no additional charge to the
Airline Group, provided, however, that the Airline Group shall pay TSG, at
Current Rates for any technical resources and application development time
utilized by TSG and any other reasonable additional costs of TSG necessary for
the audit and not otherwise provided to the Airline Group hereunder. Airline
Group may, at its discretion, provide to TSG a copy of the audit report, or a
portion thereof, resulting from each such audit upon its completion, provided,
however, that if the Airline Group does not disclose any such report or portion
thereof, such report or portion shall not be the basis of any claim asserted by
Airline Group against TSG. In conducting each operational audit, the Airline
Group shall not be entitled to review any confidential or proprietary
information of any third party and shall not materially interfere with the
ability of TSG to perform the TSG Services or services for any other customer.
For the purposes of this Section 27.1, the Airline Group's representatives
shall be deemed to include any auditors or inspectors designated by any state
or federal agency to audit the Airline Group's business.
Information Technology Services Agreement
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27.2. RECORD-KEEPING AUDITS OF CHARGES. TSG shall maintain complete and
accurate books, records and accounts, in accordance with generally accepted
accounting principles, consistently applied, to support and document all
charges to the Airline Group. TSG shall retain such records for three (3)
years after creation, or for such longer period as required to comply with
government requirements. In addition, TSG shall retain such records for the
duration of any audit conducted pursuant to this Article XXVII and for the
duration of any Dispute. TSG shall permit the Airline Group or its
representatives access to TSG's facilities to perform an audit of TSG's
records to the extent necessary to verify TSG's charges billed to the Airline
Group (i) on an annual basis and (ii) more frequently as reasonably requested
by the Airline Group if and to the extent that such audit will not unreasonably
disrupt the operations of TSG. TSG need not provide the Airline Group with
access to cost data where the cost is not the basis for product service
prices/fees or termination fees. The Airline Group may, at its discretion,
provide to TSG a copy of the audit report, or a portion thereof, resulting from
each such audit upon its completion. As soon as reasonably practicable
thereafter, the parties will review any audit report (or portion thereof)
provided to TSG and work in good faith to agree upon any reimbursement of
charges or additional payments due to either party and any appropriate future
adjustments to TSG's charges and practices. TSG shall promptly forward to the
Airline Group the full amount of all overcharges revealed by such audit. The
Airline Group will offset the audit cost against any amounts due to the TSG.
Any such financial audit shall be conducted at the Airline Group's expense,
provided, however, that if such audit demonstrates that TSG's invoiced charges
for the relevant period, excluding those Third Party Pass Through Charges that
are passed through by TSG to the Airline Group pursuant to the terms of this
Agreement, exceed the correct charges for that period by more than five
percent, TSG shall pay or reimburse the Airline Group for the reasonable costs
of such audit. In conducting any financial audit, the Airline Group shall not
be entitled to review any confidential or proprietary information of any third
party, except that the Airline Group shall be entitled to review any
third-party invoices upon which TSG based any cost-plus or pass- through
charges made to the Airline Group or any invoices necessary to ensure
compliance with Sections "7.12. MOST FAVORED CUSTOMER," "11.4. OFFSET OF FEES,"
or "11.5. ROYALTY AFTER EXPIRATION OR TERMINATION" (subject to any
confidentiality restrictions that may apply to TSG with respect to such
invoices). If confidentiality restrictions apply to any such invoices, an
officer of TSG shall certify in the form of an affidavit, duly notarized, as to
the veracity of information provided by TSG to the Airline Group concerning the
contents of such invoices. The Airline Group, at its expense, may use an
independent accountant, under confidentiality restrictions, to verify the
contents of such invoices.
27.3. TERM OF AUDITS. During the term of this Agreement, the Airline Group
shall have the right to have all of the audits specified in this Article
encompass a period of time equal to the full current year and two years prior
to the current year for a total period of thirty-six months. Upon termination
or Expiration of this Agreement, the Airline Group shall have the right to
conduct an audit pursuant to Section "27.2. RECORD-KEEPING AUDITS OF CHARGES"
within one year after the date of such termination or Expiration, or an audit
at any time after termination or Expiration pursuant to this Article as may
otherwise be required by any state or federal agency.
Information Technology Services Agreement
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Article XXVIII -- Notices and Other Communications
28.1. FORM. Each notice, request, response, demand, claim, and other
communication required or permitted under this Agreement must be in writing and
must be transmitted, delivered, or sent by:
A. Personal delivery,
B. Courier or messenger service, whether overnight or same-day,
C. Prepaid telecopy or facsimile,
D. Certified United States mail, with postage prepaid and return
receipt requested, or
E. If an authorization by American regarding the commencement of
any TSG Service, electronic mail,
in any case addressed to the other Party at the address or number for that
Party set forth in Section 28.2 (or in the case of electronic mail, the
addressee's electronic mail address), or at such other address or number as the
recipient has designated by Notice to the other Party in accordance with this
Article 28.
28.2. ADDRESSES. The Parties shall transmit, deliver, or send
communications as follows:
A. If to AMERICAN: American Airlines, Inc.
4333 Amon Carter Boulevard
Mail Drop 5357
Fort Worth, Texas 76155
Telecopier: (817) 931-6944
Attention: Account Manager's name
B. If to AMERICAN and concerning Article XXIV -- Termination or
concerning a Force Majeure Event, then a copy to:
American Airlines, Inc.
4333 Amon Carter Boulevard
Mail Drop 5624
Fort Worth, Texas 76155
Telecopier: (817) 967-9220
Attention: President
Information Technology Services Agreement
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<PAGE> 70
C. If to TSG: The SABRE Group, Inc.
4333 Amon Carter Boulevard
Mail Drop 5299
Fort Worth, Texas 76155
Telecopier: (817) 931-6382
Attention: Account Manager's name
D. If to TSG and concerning Article XXIV -- Termination or
concerning a Force Majeure Event, then a copy to:
The SABRE Group, Inc.
4333 Amon Carter Boulevard
Mail Drop 5620
Fort Worth, Texas 76155
Telecopier: (817) 967-4044
Attention: President
28.3. EFFECTIVENESS. Each communication transmitted, delivered, or sent:
A. In person, by courier or messenger service, or by certified
United States mail (postage prepaid and return receipt requested)
shall be deemed given, received, and effective on the date delivered
to or refused by the intended recipient (with the return receipt or
the equivalent record of the courier or messenger being deemed
conclusive evidence of delivery or refusal); or
B. By telecopy or facsimile transmission or by electronic mail
shall be deemed given, received, and effective on the date of actual
receipt (with the confirmation of transmission or the electronic
receipt being deemed conclusive evidence of such receipt, except where
the intended recipient has promptly notified the other Party that the
transmission is illegible).
Nevertheless, if the date of delivery or transmission is not a Business Day, or
if the delivery or transmission is after 5:00 p.m., local time in Fort Worth,
Texas, on a Business Day, the communication shall be deemed given, received,
and effective on the next Business Day.
Article XXIX -- Miscellaneous Provisions
29.1. ASSIGNMENT. Except as provided in Section "9.6. COOPERATION" or in
the next two sentences, neither Party may assign any of its rights or delegate
any of its duties or obligations under this Agreement without the other Party's
Consent. AMERICAN may assign its rights and delegate its duties and
obligations under this Agreement as a whole as part of the sale or transfer of
all or substantially all of its assets and business, including by merger or
Information Technology Services Agreement
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<PAGE> 71
consolidation, to a Person (i) that assumes and has the ability to perform
AMERICAN's duties and obligations under this Agreement; and (ii) the core or a
principal part of the business of which is not competitive with the core or a
principal part of the business of TSG. TSG may assign its rights and delegate
its duties and obligations under this Agreement as a whole as part of the sale
or transfer of all or substantially all of its assets and business involved in
any manner in providing TSG Services, including by merger or consolidation, to
a Person (a) that assumes and has the ability to perform TSG's duties and
obligations under this Agreement; and (b) the core or a principal part of the
business of which is not competitive with the core or a principal part of the
business of the Airline Group. Any attempted assignment or delegation of any
rights, duties, or obligations in violation of this Section 29.1 shall be void
and without effect. Nothing in this Section 29.1, however, precludes TSG from
subcontracting the performance of any of the TSG Services as permitted by this
Agreement or precludes AMERICAN from extending the right to receive the TSG
Services to the American Related Entities.
29.2. AMENDMENT AND WAIVER. This Agreement may be amended or modified, and
any provision of this Agreement may be discharged or waived, only by a document
signed by the party against which the amendment, modification, discharge, or
waiver is sought to be enforced.
29.3. INTEGRATION. This Agreement supersedes
A. The Services Agreement between the Air Transportation Group
and the SABRE Group dated as January 1, 1995, and the service level
agreements entered before the Effective Date under that document;
B. Any and all prior or contemporaneous oral agreements or
understandings between the Parties regarding the subject matter of
this Agreement; and
C. Any and all prior written agreements or understandings between
the Parties regarding the subject matter of this Agreement, except for
those (other than the one described in Subsection A of this Section
29.3) entered into by representatives of the Parties or their
predecessors who were at Level 6 or above when such agreements or
understandings were entered into with the knowledge and consent of
such representative's supervising officer (which agreements or
understandings shall remain effective).
29.4. SEVERABILITY. If any part of this Agreement is for any reason found
to be unenforceable, all other parts of this Agreement nevertheless remain
enforceable.
29.5. SUCCESSORS. This Agreement binds and inures to the benefit of the
Parties and their respective legal representatives, successors, and permitted
assigns.
29.6. GOVERNING LAW. This Agreement must be interpreted or construed, and
its validity determined and performance enforced, under Texas law.
Information Technology Services Agreement
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29.7. REASONABLENESS. As concerns every provision of this Agreement, TSG
and AMERICAN agree to act reasonably and in good faith unless a provision
expressly states that AMERICAN or TSG may act in its sole discretion.
29.8. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, with the same effect as if all signatories had signed the same
document. All counterparts must be construed together to constitute one, and
the same, document. 29.9. FURTHER ASSURANCES. Each Party shall take such
actions, upon request of the other Party and in addition to the actions
specified in this Agreement, as may be necessary or reasonably appropriate to
implement or give effect to this Agreement, including cooperating in the
completion of copyright registration documents.
Information Technology Services Agreement
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SIGNATURES
AMERICAN AIRLINES, INC.
By: /s/ Scott D. Nason
-------------------------------------
Scott D. Nason, Vice President-
Information Technology
Services & Chief
Information Officer
THE SABRE GROUP, INC.
By: /s/ Michael J. Durham
-------------------------------------
Michael J. Durham, President
Information Technology Services Agreement
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<PAGE> 74
Exhibit A: Definitions and Interpretation
I. Definitions.
In the Agreement, the following terms have the corresponding meanings:
"800 DECISION TREE SUPPORT": The design and programming of routing telephone
calls, managed as a component of Domestic Reservations Inbound described in
Exhibit B: TSG Services Description.
"AA FLIGHTS": Airline flight segments operated under the airline code issued
to AMERICAN by the International Air Transport Association.
"ACCOUNT MANAGERS": TSG's Account Manager and AMERICAN's Account Manager
collectively.
(1) "TSG's Account Manager": The individual so designated in writing
by TSG from time to time.
(2) "AMERICAN's Account Manager": The individual so designated in
writing by AMERICAN from time to time.
"ADJUSTMENT AMOUNT": [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
"AFFILIATE": A Person that directly or indirectly through one or more
intermediaries Controls, is Controlled by, or is under common Control with
another Person.
"AFFILIATED SPIN-OFF ENTITY": An entity that was a member of the Airline
Group, but was divested in part and remains an Affiliate of the Airline Group
or of AMR, or an entity resulting from the partial divestiture of a division or
business unit of a member of the Airline Group that remains an Affiliate of the
Airline Group or of AMR.
"AG CUSTOMER": A customer or prospective customer of the Airline Group to the
extent such customer purchases AG Mixed Services, but not any member of the
Airline Group itself.
"AG CUSTOMER DATA": The following data:
(1) All data provided by an AG Customer or with respect to an AG
Customer in order for TSG to provide the TSG Services to an AG
Customer;
(2) All data that is provided by or on behalf of TSG to the Airline
Group by means of TSG Services intended for an AG Customer; and
Exhibit A to Information Technology Services Agreement page 1
<PAGE> 75
(3) All data that is produced by means of TSG Services as an
intermediate step in using or producing any of the AG Customer Data.
"AG DATA": The following data, whether provided or produced before, on, or
after the Effective Date:
(1) All data that is provided by or on behalf of the Airline Group to
TSG in order for TSG to provide the TSG Services, including keyed
input and electronic capture of information by the TSG Services;
(2) All data that is provided by or on behalf of TSG to the Airline
Group by means of the TSG Services, including reports, bookings and
tickets, and all other output of the TSG Operated Software;
(3) All data that is produced by means of TSG Services as an
intermediate step in using or producing any of the AG Data, including
databases and files containing AG Data; and
(4) Passenger Name Records (PNR) secured to an AMERICAN pseudo-city
code.
"AG MIXED SERVICES": Certain services provided by the Airline Group to AG
Customers in which the Airline Group uses TSG Services or TSG Operated Software
to provide such services. The AG Mixed Services consist of one or more of the
Operations Mixed Services, Alliance Mixed Services, and Other Mixed Services.
"AG OTHER MIXED SERVICES COSTS": The Fees and other amounts described below
that TSG intends to charge or other amounts that a Successor Provider intends
to charge the Airline Group to provide the Other Mixed Services to an AG
Customer. The AG Other Mixed Services Costs include the following:
(1) The Fees that would be charged to the Airline Group;
(2) License fees for use of TSG software for the benefit of AG
Customers, unless TSG cannot demonstrate with written records that TSG
previously charged such license fees to TSG Customers or unless TSG
cannot demonstrate a fair but conservative market value license fee;
and
(3) Such fees as a third party vendor will require that TSG or a
Successor Provider pay to allow an AG Customer use of such Other Mixed
Services.
"AG OTHER MIXED SERVICES FEES": The fees that the Airline Group intends to
charge an AG Customer for providing Other Mixed Services.
Exhibit A to Information Technology Services Agreement page 2
<PAGE> 76
"AG SELF-PERFORMED SERVICES": Those services described in Exhibit O: AG
Self-performed Services, to the extent that the Airline Group performed such
services for itself as of the Effective Date.
"AGGREGATE ADJUSTMENT": The difference between the Benchmark Projected Fees
and the Reset Formulas Projected Fees.
"AIRLINE GROUP": AMERICAN and the American Related Entities collectively.
"AIRLINE GROUP'S CIO": The Chief Information Officer of the Airline Group as
identified in writing by AMERICAN from time to time. The Airline Group may
change its CIO upon Notice to TSG.
"AIRLINE GROUP INDEMNITEES": The Airline Group and their respective directors,
officers, employees, and agents, and the heirs, executors, successors, and
assigns of any of those Persons.
"AIRLINE INCIDENT": An occurrence of personal injury, death, or property
damage in connection with the operation of the Airline Group's aircraft.
"AIRPORT REGULATIONS": The following, to the extent applicable to TSG while on
any Airline Group airport locations: (i) All federal, state, county and
municipal statutes and ordinances, (ii) all rules, regulations, orders and
directives of the local, state and federal governments applicable to AMERICAN's
premises or to the Airline Group's or TSG's use or occupancy thereof, and (iii)
all rules, regulations, orders, directives, terms and/or conditions imposed by
the landlord under any applicable lease or otherwise applicable to the airport
within which the airport premises are located to the extent applicable to TSG's
operations within AMERICAN's premises. The Airport Regulations shall include
all applicable federal, state and local laws, executive orders and regulations
issued pursuant thereto, including (to the extent applicable to this Agreement)
Federal Aviation Administration rules and regulations, the provisions contained
within Section 202 of Executive Order 11246 (41 C.F.R. Section 60.1.4), Section
4.2 of the Vietnam Era Veterans Readjustment Act (41 C.F.R. Section 60-205.4),
Section 503 of the Rehabilitation Act (41 C.F.R. Section 60-741-4), the
Americans with Disabilities Act of 1990, 42 U.S.C. Section 121.01 et seq., as
well as all airport and air carrier security measures (contained, in part, in
14 C.F.R. Sections 107 and 108) contained within such provisions of AMERICAN's
document known as the "Approved Security Programs Manual" as are pertinent to
TSG's operations and supplied by AMERICAN to TSG. AMERICAN may from time to
time (but without any obligation to do so) supply TSG with Notice of any
subsequently enacted security requirements arising out of changes to law,
executive order or regulation applicable to TSG's operations under this
Agreement, and such requirements shall thereafter be an obligation of TSG under
this Agreement.
Exhibit A to Information Technology Services Agreement page 3
<PAGE> 77
"ALLIANCE MIXED SERVICES": Services provided by the Airline Group to AG
Customers that are required to effect the core or principal purposes, aspects,
or elements of operating or marketing alliances that the Airline Group has
formed or any other marketing relationships that are intended to increase the
Airline Group's passenger or cargo revenue, including FlyAAway Vacations,
Ticket Delivery Services, AAdvantage services to cooperative partners,
third-party airline cargo services, Code share operations, Interline
Agreements, and AA reservations services to travel agencies, corporate travel
offices, on-line networks, and general sales agents.
"AMERICAN": American Airlines, Inc., a Delaware corporation.
"AMERICAN RELATED ENTITIES": AMERICAN's wholly owned subsidiaries and AMR
Eagle Inc. and its wholly owned subsidiaries.
"AMR": AMR Corporation, a Delaware corporation and the corporate parent of
both Parties on the Effective Date.
"ANNUAL RE-RUN CAP": [TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED] during a
period commencing on December 1 and ending on the subsequent November 30,
subject to monthly proration for shorter periods at the beginning or end of the
term of this Agreement.
"ARBITRATION RULES": The Rules for Commercial Arbitration of the American
Arbitration Association in effect at the time of an arbitration in accordance
with the Dispute Resolution Procedure.
"BASELINE MONITORING": The measures used to monitor and to report performance
levels of such TSG Services as existed on the Effective Date.
"BASELINE MONITORING COSTS": The expenses incurred by TSG and investments made
by TSG in the period July 1, 1995 through June 30, 1996 to perform Baseline
Monitoring and to achieve Historical SLA Standards.
"BENCHMARKING PROCESS": The process of the Parties' engaging one or more
Benchmark Providers and that Benchmark Provider's or those Benchmark Providers'
preparing and delivering the Benchmark Report.
"BENCHMARK PROJECTED FEES": The projected total Fees for the TSG Services if
the Current Rates were modified by Benchmark Results and applied to the
Projected Annual Volume.
"BENCHMARK PROVIDER": A Person, other than a Party or any Affiliate of a
Party, engaged to determine the anticipated market price for the next calendar
year (which shall be an Even-numbered Year) for services similar to the TSG
Services.
Exhibit A to Information Technology Services Agreement page 4
<PAGE> 78
"BENCHMARK REPORT": The written report or reports of the Benchmark Results
prepared by the Benchmark Provider or Benchmark Providers for the Parties.
"BENCHMARK RESULTS": The Benchmark Provider's or Benchmark Providers'
determination of the amounts at which the Rates should be set, and the
corresponding Fees, for the next calendar year (which shall be an Even-numbered
Year) in order to constitute or correspond to anticipated market prices for
that year for services substantially the same as TSG Services.
"BUSINESS DAY": A day other than Saturday, Sunday, national holidays in the
United States, December 30 through January 3, and AMR holidays.
"CAPPED ADJUSTMENT": The Unrealized Aggregate Adjustment, subject to a limit
or cap of the greater of:
[TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED]
"CLIENT SERVER DEVELOPMENT": Development services for client server
applications.
"CODE OUT": TSG's making such software changes are necessary to exclude TSG's
Customers other than the Airline Group from using certain software.
"CONFIDENTIAL INFORMATION": The information described in Section "14.1
CONFIDENTIAL INFORMATION."
"CONNECTIVITY SYSTEMS": VAX Services and Host Communications Complex (HCC)
described in Exhibit B: TSG Services Description.
"CONSENT": Prior, express, and written consent (which may not be unreasonably
withheld or delayed unless stated to be at a Party's sole discretion).
"CONSEQUENTIAL DAMAGES": Damages consisting of lost profits, lost income, or
lost savings or consequential, indirect, special, or incidental damages
(however described). "Consequential Damages" does not include any punitive or
exemplary damages.
"CONTROL": The right to exercise, directly or indirectly, more than fifty
percent of the voting power attributable to the equity interests in an entity.
("Controlling" and "Controlled" have correlative meanings.)
"CRITICAL TSG SERVICE": A TSG Service or system expressly designated as
"Critical" in an SLA.
Exhibit A to Information Technology Services Agreement page 5
<PAGE> 79
"CRS": An Electronic Travel Distribution System that is marketed principally to
Travel Distributors and that collects, stores, and processes, and displays and
distributes, on a neutral and unbiased basis, information concerning air and
ground transportation, lodging and other travel-related products and services
offered by system participants.
"CURRENT DP SERVICES": The following services:
(1) Providing Development, Maintenance, and Enhancements for Real
Time Applications; and
(2) Providing Maintenance and Enhancements for Existing Applications.
"CURRENT RATE": A Rate that is then in effect.
"DATA CENTER SERVICES": The following services:
(1) Real Time Services:
a. PSS/FPC;
b. Flight Operating System (FOS) described in Exhibit B: TSG
Services Description; and
c. Virtual Machine Test System (VM Test) described in Exhibit
B: TSG Services Description.
(2) Commercial Services:
a. Commercial CPU described in Exhibit B: TSG Services
Description;
b. Commercial DASD described in Exhibit B: TSG Services
Description;
c. Commercial Tape described in Exhibit B: TSG Services
Description;
d. Commercial Print described in Exhibit B: TSG Services
Description;
e. Commercial Microfiche described in Exhibit B: TSG
Services Description;
f. Commercial IMS described in Exhibit B: TSG Services
Description; and
g. Decision Enabling described in Exhibit B: TSG Services
Description.
(3) VAX Services:
a. VAX1 described in Exhibit B: TSG Services Description;
Exhibit A to Information Technology Services Agreement page 6
<PAGE> 80
b. VAX2 described in Exhibit B: TSG Services Description; and
c. VAX5 described in Exhibit B: TSG Services Description.
(4) Host Communications Complex (HCC) as described in Exhibit B: TSG
Services Description.
(5) Mail Distribution services described in Exhibit B: TSG Services
Description.
(6) Client Server Services.
"DATA NETWORK SERVICES": The following services:
(1) SABREnet described in Exhibit B: TSG Services Description;
(2) International Managed Network Services (IMNS) described in
Exhibit B: TSG Services Description; and
(3) Custom Data Networks described in Exhibit B: TSG Services
Description.
"DATA PROCESSING SERVICES": The Data Center Services described in Exhibit B:
TSG Services Description and such services as the Parties agree in writing are
Data Processing Services.
"DEPOSITORY CERTIFICATES": Depository certificates in Stichting "The SITA
Foundation," a Netherlands Foundation.
"DERIVATIVE WORK": A derivative work as defined in Title 17 U.S.C. Section
101, as amended (which on the Effective Date states: "A 'derivative work' is a
work based on one or more preexisting works, such as a translation, musical
arrangement, dramatization, fictionalization, motion picture version, sound
recording, art reproduction, abridgement, condensation, or any other form in
which a work may be recast, transformed, or adapted. A work consisting of
editorial revisions, annotations, elaborations, or other modifications, which,
as a whole, represent an original work of authorship, is a 'derivative
work'.").
"DEVELOPMENT": The creation of a new software system. For the avoidance of
doubt, Development includes writing software to replace an old system with a
new system.
"DEVICE SUPPORT": Services that are defined in Exhibit B: TSG Services
Description.
"DISPUTE": Any dispute, disagreement, claim, or controversy arising in
connection with or relating to the Agreement, or the validity, interpretation,
performance, breach, or termination
Exhibit A to Information Technology Services Agreement page 7
<PAGE> 81
of the Agreement, including any claim of breach of representation or warranty
or of non-performance and any claim regarding bodily or other personal injury
or damage to tangible property.
"DISPUTE RESOLUTION APPENDIX": Exhibit M: Dispute Resolution Appendix,
containing the Dispute Resolution Procedure for, as an integral part of, the
Agreement.
"DISPUTE RESOLUTION PROCEDURE": The procedure or process by which a Dispute
must be resolved (except as otherwise stated or modified in the Agreement) as
described in the Dispute Resolution Appendix.
"DISPUTED INVOICE": An invoice for services rendered or performed by TSG under
this Agreement of which the Airline Group disputes the accuracy.
"DISTRIBUTED SYSTEMS SERVICES": The following services:
(1) Device Support described in Exhibit B: TSG Services Description;
(2) Moves/Installs (MCDUI) described in Exhibit B: TSG Services
Description;
(3) Integration Services described in Exhibit B: TSG Services
Description;
(4) Campus Telephone System described in Exhibit B: TSG Services
Description;
(5) Electronic Mail (e-mail) described in Exhibit B: TSG Services
Description;
(6) Domestic Reservations Support described in Exhibit B: TSG
Services Description;
(7) Information Display Systems Support described in Exhibit B: TSG
Services Description;
(8) Internet Access Services described in Exhibit B: TSG Services
Description; and
(9) X.400 described in Exhibit B: TSG Services Description.
"DOCUMENTATION": Instructions and related information for the use by end users
of software including user manuals, and instructions and related information
for the operation of software including run instructions, job control
instructions, balancing procedures, and input dependencies.
"EFFECTIVE DATE": July 1, 1996.
Exhibit A to Information Technology Services Agreement page 8
<PAGE> 82
"EGREGIOUS BREACH": A material breach that constitutes an intentional,
unequivocal refusal to perform a material obligation of this Agreement that
frustrates one or more bases of the bargain between AMERICAN and TSG to the
extent that a (non-breaching) reasonable business person would not have entered
into the Agreement or would not continue performing under the Agreement.
"ELECTRONIC TRAVEL DISTRIBUTION SYSTEM": A system providing any of the
following products or services, using computers and digital electronic
transmission, via data network, telephone, wireless, or cable transmission
or otherwise:
(1) Publication and distribution of consumer travel-related
information from computerized databases.
(2) Processing of passenger travel-related reservations and related
transactions.
(3) Marketing and sales of passenger travel-related products and
services and related electronic transactions.
(4) Publication and distribution of passenger travel-related
documents (e.g., tickets).
"E-MAIL": Electronic Mail as defined in Exhibit B: TSG Services Description.
"END USER": A Person who or which becomes licensed or otherwise authorized by
AMERICAN or TSG to use software or information that is intended for use by that
Person as a consumer or in its internal business operations, and not to
provide services to third parties.
"ENHANCED DATA PROCESSING SERVICES": Services required to modify and/or
supplement the Data Processing Services and which include the following
services:
(1) Maintenance,
(2) Enhancement, and
(3) Development.
"ENHANCEMENT": One or more of the following modifications to the TSG Operated
Software:
(1) A modification to the TSG Operated Software to add a new function
or feature not contained in the TSG Operated Software's
specifications;
(2) A modification to the TSG Operated Software to add an interface
to the TSG Operated Software to Third Party Software; or
(3) Any other modification to the TSG Operated Software that is not
an Error Correction, Work-around, or Update.
"ERROR CORRECTION": A modification to the TSG Operated Software to correct a
Malfunction.
"EVEN-NUMBERED YEAR": 1998 and every second year thereafter.
"EXCEPTIONAL PERFORMANCE": TSG's exceeding certain performance criteria in any
SLA in accordance with such SLA that results in a Performance Increase.
"EXCLUSIVE SERVICES": The services described in Section "3.10. EXCLUSIVITY."
"EXISTING APPLICATIONS": All software applications or portions thereof written
by TSG or its predecessors and funded by the Airline Group.
"EXISTING CLIENT SERVER OPERATIONS": Client Server Services described in
Exhibit B: TSG Services Description, in existence as of the Effective Date.
Exhibit A to Information Technology Services Agreement page 9
<PAGE> 83
"EXPIRATION": The expiration of the term of the Agreement as stated in, or as
may be extended under, Article II -- Term, without regard to the duration of
the Transition Period. For the avoidance of doubt, "Expiration" does not
include a termination of the Agreement under Article XXIV -- Termination.
("Expire," "Expires," and "Expired" have correlative meanings.)
"EXPIRATION DATE": The date on which this Agreement Expires.
"EXTERNAL CLIENT SERVER DEVELOPMENT": Development services for client server
applications performed by the Airline Group after the Effective Date and
Development services for client server applications that are performed by a
third party.
"EXTRAORDINARY COSTS": Costs that would not have occurred if the increase in
volume arose because of the Airline Group's internal growth using TSG's then
existing facilities.
"EXTRAORDINARY EFFORTS": The same level of efforts that a party affected by a
Force Majeure Event could reasonably be expected to use on its own behalf to
remedy the consequences of such event.
"EXTRAORDINARY MISTAKE": Any action or omission of TSG in connection with
rendering or providing TSG Services under the Agreement, other than an Ordinary
Mistake, constituting a violation of TSG's written or otherwise clearly
established procedures for rendering or providing a service included in the TSG
Services, including any violation of written or otherwise clearly established
data security safeguards regarding AG Data or AG Customer Data.
"FAIR LICENSE FEE": The typical license fee that TSG or any of its
predecessors previously received for the software or a conservative estimate of
a fair market value license fee.
"FAIR TRANSACTION VALUE": The fair market value of the rights granted by TSG
to the TSG Customer in the transaction relating to the Enhancement.
"FEES": The amounts charged by TSG to the Airline Group for the TSG Services.
"FIVE-YEAR SERVICES": Those categories of the TSG Services that TSG shall
provide to the Airline Group for a period of five years commencing upon the
Effective Date. The Five-year Services consist of the Existing Client Server
Operations.
"FORCE MAJEURE EVENT": Any circumstance beyond the reasonable control of a
Party or its employees or agents, and such delay could not have been prevented
by reasonable precautions and cannot reasonably be circumvented by any of those
Persons through the use of alternative sources, work-around plans, or other
means. "Force Majeure Events" shall include acts of
Exhibit A to Information Technology Services Agreement page 10
<PAGE> 84
civil or military authority, national emergencies, fire, flood or catastrophe,
acts of God, insurrection, war or riots, but shall not include labor
difficulties or strikes. "Force Majeure Event" also shall include the failure
by AMERICAN to provide utilities to TSG's operations at CentrePort IV as
required by the Central Plant Easement Agreement between AMERICAN and TSG dated
July 1, 1996.
"FORCE MAJEURE EVENT COMMENCEMENT": The date and time that a Force Majeure
Event commences.
"FORCE MAJEURE RECOVERY PLAN": A written plan for restoring a TSG Service
affected by a Force Majeure Event or for circumventing the consequences of a
Force Majeure Event on a TSG Service.
"GENERAL DAMAGES": Losses, claims, obligations, demands, assessments, fines
and penalties (whether civil or criminal), liabilities, expenses and costs
(including reasonable fees and disbursements of legal counsel and accountants),
bodily and other personal injuries, damage to tangible property, and other
damages, of any kind or nature, suffered or incurred by a Person. For the
avoidance of doubt, "General Damages" includes not only actual damages, but
also punitive and exemplary damages and Consequential Damages.
"GOVERNMENTAL AUTHORITY": Any federal, state, local, or foreign government or
governmental, quasi-governmental, administrative, or regulatory authority,
agency, body, or entity, including any court or other tribunal.
"HIGH RISK TSG SERVICE": A TSG Service or system designated as "High Risk" in
an SLA.
"HISTORICAL SLA STANDARD": The minimum performance level of a service
commensurate with the performance levels typical of such service during the
years 1994, 1995, and 1996, except for such periods of time when the
performance levels were clearly unacceptable.
"HOURLY LABOR RATES": The hourly rates charged by the SABRE Decision
Technologies division of TSG for applicable development, maintenance,
enhancement, and consulting services.
"INADEQUATE PERFORMANCE": TSG's failure to meet the applicable SLA Standard for
a specific service that results in a Performance Decrease.
"INDEMNIFIABLE LOSSES": Losses, claims, obligations, demands, assessments,
fines and penalties (whether civil or criminal), liabilities, expenses and
costs (including reasonable fees and disbursements of legal counsel and
accountants), bodily and other personal injuries, damage to tangible property,
and other damages, of any kind or nature, actually suffered or
Exhibit A to Information Technology Services Agreement page 11
<PAGE> 85
incurred by a Person. "Indemnifiable Losses" consists only of actual damages,
and excludes any Consequential Damages and any punitive or exemplary damages
(however described).
"INDEMNIFICATION CLAIM": A claim or demand of a Party, on its behalf or on
behalf of one or more of its other Indemnitees, based on a Third-Party Claim,
for indemnification under Article XX -- Indemnification.
"INDEMNIFICATION CLAIM NOTICE": A notice from the Indemnified Party describing
an Indemnification Claim and the amount or the estimated amount of that
Indemnification Claim to the extent then feasible (though that estimate shall
not be determinative of the final amount of that Indemnification Claim).
"INDEMNIFICATION RESPONSE PERIOD": The 30 days after an Indemnification Claim
Notice is given during which the Indemnifying Party may investigate and
determine its responsibility or liability for an Indemnification Claim and
Notify the Indemnified Party of the Indemnifying Party's election to defend a
Third-Party Claim.
"INDEMNIFIED PARTY": A Party entitled to or seeking indemnification, on its
own behalf or on behalf of one or more of its other Indemnitees, under Article
XX -- Indemnification.
"INDEMNIFYING PARTY": A Party that has or is alleged to have an obligation to
indemnify the other Party's Indemnitees under XX -- Indemnification in response
to an Indemnification Claim.
"INDEMNITEES": The Airline Group Indemnitees or the TSG Indemnitees, or both.
"INDEPENDENT CONTRACTOR": An individual who is an independent contractor and
not an employee.
"INFORMATION SERVICES": Services that are based on TSG's providing to the
Airline Group information that is proprietary to a member of the Airline Group.
"JOINTLY OWNED SOFTWARE": Software developed after the Effective Date in which
the Airline Group and TSG possess an undivided one-half interest as tenants in
common without any obligation of accounting or contribution, except as
expressly provided for in the Agreement.
"KEY EMPLOYEE": A full-time employee of TSG designated by the Airline Group to
be subject to certain restrictions and conditions described in Article XVI --
Key Employees and Related Provisions.
"KEY EMPLOYEE LIST": The group who are Key Employees. The TSG employees named
in Exhibit I: Key Employees are deemed to be Key Employees.
Exhibit A to Information Technology Services Agreement page 12
<PAGE> 86
"LEVEL 5": A Party's employee-pay-grade Level 5 as of the Effective Date or,
after the Effective Date, an employee level having substantially the same level
of authority or responsibility.
"LEVEL 6": A Party's employee-pay-grade Level 6 as of the Effective Date or,
after the Effective Date, an employee level having substantially the same level
of authority or responsibility.
"MAINTENANCE": Providing Error Corrections, Work-arounds, Updates, and
services known as "SDT help desk services."
"MALFUNCTION": Any way in which the TSG Operated Software fails to perform in
accordance with the TSG Operated Software's specifications.
"MATERIAL ADVERSE IMPACT": The occurrence of one or more of the following:
A. An increase in the Fees;
B. A more than de minimis increase in an expense incurred by the
Airline Group;
C. A material adverse effect on TSG's performance in accordance with
TSG's actual, typical performance of the TSG Services; or
D. An increase in the Taxes payable by the Airline Group.
"MESSAGE": A processor instruction in a Real Time Application.
"MULTIHOSTING SERVICES": Providing one or more Real Time Applications to
another carrier in a separate software partition.
"NEW BILLING SYSTEM": The billing system that TSG is to design, develop, and
implement to replace the billing system in place upon the Effective Date.
"NEW HISTORICAL SLA STANDARD": The actual performance level of a TSG Service
after the Effective Date, except for such periods of time when the performance
levels may be reasonably construed as unacceptable.
"NEW/OUT-OF-SCOPE SERVICE": One or more of the services defined in the
following Subparagraphs:
(1) Services that are not described in Exhibit B: TSG Services
Description and do not have a price specified in Exhibit C: Rate and
Reset Schedule.
Exhibit A to Information Technology Services Agreement page 13
<PAGE> 87
(2) Services that are not within the scope of the TSG Services; and
(3) New/Out-of-scope Services include, but are not limited to,
services related to smart cards and intelligent voice response
systems.
"NON-EXCLUSIVE SERVICES": Any services other than those specified in Section
"3.10. EXCLUSIVITY." The Non-exclusive Services include those services
described in Section "3.11 NON-EXCLUSIVE SERVICES."
"NOTICE": Prior, written notice or other communication complying with Article
XXVIII -- Notices and Other Communications. Whenever a period of time is
stated for Notice, such period of time is the minimum period and nothing in
this Agreement shall be construed as prohibiting a greater period of time.
("Notify" has the correlative meaning.)
"ODD-NUMBERED YEAR": 1997 and every second year thereafter.
"OFF-THE-SHELF SOFTWARE": Software that can be implemented in production
without any, or with only minimal, customization or modification.
"OPERATIONS MIXED SERVICES": Services provided by the Airline Group to AG
Customers at or around airports and include ramp handling, passenger handling,
training services, fueling, weight and balance determinations, weather
forecasting, baggage handling, Admirals Club related services, ground handling,
maintenance operations, and in-flight magazines.
"ORDINARY MISTAKE": Any action or omission of TSG, in the ordinary course of
its business and in connection with rendering or providing TSG Services under
the Agreement, constituting a mistake or error of a kind that is not uncommon,
unusual, or atypical in the information technology business, such as a routine
programming or operator error.
"OTHER MIXED SERVICES": All services provided by the Airline Group to AG
Customers that include TSG Operated Software and/or TSG Services, other than
Operations Mixed Services and Alliance Mixed Services.
"OTHER SERVICES": The following TSG Services:
(1) Data Network Services; and
(2) Voice Network Services.
"OTHER THIRD PARTY SOFTWARE": Software used by TSG to provide TSG Services
that is not the property of TSG and not the Transferred Third Party Software.
Exhibit A to Information Technology Services Agreement page 14
<PAGE> 88
"OUTAGE": When a TSG Service is unavailable for productive use.
"PARTY": Each of the signatories to the Agreement, and their successors and
assigns as permitted by the Agreement. ("Parties" has the correlative
meaning.)
"PERFORMANCE DECREASE": A decrease of the Fees in the event of Inadequate
Performance.
"PERFORMANCE INCREASE": An increase of the Fees in the event of Exceptional
Performance.
"PERSON": An individual; a corporation, partnership, trust, association, or
entity of any kind or nature; or a Governmental Authority.
"PROJECTED ANNUAL NEGOTIATED FEES": The Fees projected to apply to the TSG
Services for the next Even-numbered Year, as negotiated and agreed upon by the
Parties corresponding to the Projected Negotiated Rates.
"PROJECTED ANNUAL RESET FEES": The Fees projected to apply to the TSG Services
for the next calendar year, calculated using the Reset Formulas then in effect,
as described in Section "7.4. PROJECTED ANNUAL RESET FEES."
"PROJECTED ANNUAL VOLUME": The volume, scope, or extent of the TSG Services
anticipated to be used or received by the Airline Group in the next calendar
year, as agreed upon by the Parties.
"PROJECTED NEGOTIATED RATES": Those Rates anticipated to apply to the TSG
Services for the next Even-numbered Year, as negotiated and agreed upon by the
Parties in an Odd-numbered Year, for use in the Parties' determining the Rates
that will actually apply for the next Even-numbered Year.
"PSS/FPC": The Real Time Services consisting of Passenger Services System
(PSS), including OCP and Fare Pricing Complex (FPC), as described in Exhibit B:
TSG Services Description.
"RADIO SERVICES": Radio Services as described in Exhibit B: TSG Services
Description.
"RATE": A rate charged to the Airline Group for any TSG Service, or for a unit
of service or another increment of use or receipt of any TSG Service, as
specified in the Rate and Reset Schedule.
"RATE AND RESET SCHEDULE": Exhibit C: Rate and Reset Schedule.
"REAL TIME APPLICATION": One of the following software applications described
in Exhibit B: TSG Services Description:
(1) PSS/FPC;
Exhibit A to Information Technology Services Agreement page 15
<PAGE> 89
(2) Flight Operating System (FOS) described in Exhibit B: TSG
Services Description; and
(3) Virtual Machine Test System (VM Test) described in Exhibit B:
TSG Services Description.
"RED TOLERANCE LEVEL": An unacceptable level of performance for a TSG Service
that is specified in Exhibit E: Agreed SLAs that results in a Performance
Decrease.
"RE-RUN": TSG Services used in the re-performing and/or correcting of
previously performed Data Center Services by TSG for the Airline Group.
"RESERVATIONS 800 SERVICES": Domestic Reservations Inbound Services (including
800 Decision Tree Support) as described in Exhibit B: TSG Services
Description.
"RESET FORMULA": A formula agreed by the Parties by which a Current Rate may
be adjusted or reset for use in the next calendar year.
"RETAINED RIGHTS": Defined in the Bill of Contribution, Assignment and
Assumption Agreement between AMERICAN and SABRE Properties, Inc. dated July 1,
1996.
"RFP": Request for proposal.
"RFQ": Request for quotation.
"SHARED HOST ENHANCEMENT/DEVELOPMENT": Enhancement of or Development for a
Real Time Application.
"SIGNIFICANT SERVICES": Design, programming, and related services for
customization and systems integration greater than twenty-five percent of the
total fees incurred by the Airline Group in the acquisition of such software.
"SITA": Societe Internationale de Telecommunications Aeronautiques, a Belgian
cooperative corporation.
"SITA AGREEMENTS": Agreements between AMERICAN and one or more members of the
SITA Group as described in Exhibit H: SITA Relationship.
"SITA GROUP": SITA and/or its affiliates or subsidiaries.
"SITA SABRENET SERVICES": Those SITA Services that are provided by SITA under
the SABREnet Services Agreement dated as of July 1, 1996.
Exhibit A to Information Technology Services Agreement page 16
<PAGE> 90
"SITA SERVICES": Services provided by the SITA Group that AMERICAN may
purchase under the SITA Agreements.
"SLA": Each of the written statements of performance levels for services
specified in Exhibit D: Services Subject to SLA.
"SLA DATABASE": A database containing the information from which the
Historical SLA Standards were derived and to which TSG shall add the actual
performance data used to compare the performance of services to the SLA
Standards.
"SLA SERVICE TERMINATION EVENT": An event described in an SLA that gives the
Airline Group the right to terminate a specific TSG Service.
"SLA STANDARD": For a specific service, the acceptable level of performance
for such service specified in the applicable SLA.
"SLA TERMINATION EVENT": The occurrence of one or more of the following
events:
[TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED]
Exhibit A to Information Technology Services Agreement page 17
<PAGE> 91
[TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED]
"SPIN-OFF COMPANY": An entity that was a member of the Airline Group, but was
divested to the extent that less than 50% of the voting power attributable to
the equity interests in such entity is owned by the Airline Group or its
Affiliates, or an entity resulting from the divestiture of a business unit or
division of a member of the Airline Group of which less than 50% of the voting
power attributable to the equity interests in such entity is owned by the
Airline Group or its Affiliates.
"STOCK AGREEMENT": Stock Transfer and Rights Agreement by and between AMERICAN
and TSG dated as of July 1, 1996, regarding inter alia, the Depository
Certificates.
"SUCCESSOR PROVIDER": The Airline Group's designee to provide services similar
to the TSG Services.
"TAXES": Foreign, federal, state and local sales, use, excise, value added, or
similar transfer taxes (including any related penalties, additions to tax, and
interest), however designated or imposed, which are in the nature of a
transaction tax.
"TEN-YEAR SERVICES": Those categories of the TSG Services that TSG shall
provide to the Airline Group for a period of ten years commencing upon the
Effective Date. The Ten-year Services consist of the following TSG Services:
Exhibit A to Information Technology Services Agreement page 18
<PAGE> 92
(1) Data Center Services, except for the operation of External Client
Server Development;
(2) Data Network Services;
(3) TSG Development;
(4) Existing Application Maintenance; and
(5) Existing Application Enhancement.
"TERMINATION DATE": The date on which termination of this Agreement is
effective without regard to the duration of the Transition Period.
"TERMINATION FOR CAUSE": Termination of this Agreement pursuant to Section
"24.1. TERMINATION FOR BREACH" or "24.2. TERMINATION FOR INADEQUATE
PERFORMANCE."
"TERMINATION LIQUIDATED DAMAGES": The amount calculated in accordance with
Exhibit K: Termination Liquidated Damages Calculation.
"THIRD-PARTY CLAIM": A claim of liability asserted against a Party by a Person
other than the other Party or either Party's Affiliates.
"THIRD-PARTY PASS-THROUGH CHARGES": Charges to TSG for certain services or
products that it acquires from third party vendors to enable it (in part) to
provide TSG Services, which charges TSG passes through as Fees charged to the
Airline Group for the following TSG Services:
(1) Reservation 800 Services;
(2) Corporate Inbound;
(3) ICS Services;
(4) Radio Services;
(5) telecommunications services under the telecommunications
agreements that were assigned by AMERICAN to TSG on the Effective
Date, as part of the Procurement Agreements, under the Bill of
Contribution, Assignment and Assumption Agreement dated as of the
Effective Date between AMERICAN and SABRE Properties, Inc. (a
predecessor by merger to TSG); and
(6) SITA Services.
"THIRD PARTY STANDARD SUPPORT": For hardware, Third Party Standard Support is
the preventive and remedial maintenance that the third party vendor of such
hardware offers its
Exhibit A to Information Technology Services Agreement page 19
<PAGE> 93
customers on a fixed fee basis. For software, Third Party Standard Support is
such combination of Telephone Support, Error Corrections, Updates, and
Enhancements that the third party vendor of such software offers its customers
on a fixed fee basis.
"THIRD PARTY SUPPORTED PRODUCT": Any hardware or software provided by a third
party vendor and used by TSG to provide the TSG Services except for hardware
and software that comprise the Commercial Systems, Real Time Applications, and
Connectivity Systems.
"THREE-YEAR SERVICES": Those categories of the TSG Services that TSG shall
provide to the Airline Group for a period of three years commencing upon the
Effective Date. The Three-year Services consist of the following TSG Services:
(1) Distributed Systems Service;
(2) Voice Network Services; and
(3) Radio Services.
"TORT DAMAGES": Bodily or personal injury or death or damage to real or
tangible personal property.
"TRANSFERRED SOFTWARE": Defined in the Bill of Contribution, Assignment and
Assumption Agreement by and between American Airlines, Inc. and SABRE
Properties, Inc. dated July 1, 1996.
"TRANSFERRED THIRD PARTY SOFTWARE": Defined in the Bill of Contribution,
Assignment and Assumption Agreement by and between American Airlines, Inc. and
SABRE Properties, Inc. dated July 1, 1996.
"TRANSITION ASSISTANCE": The services provided by TSG to the Airline Group, in
addition to the TSG Services and in accordance with Article XXIV -- Transition
Assistance; Survival, to enable the Airline Group to obtain services to replace
the TSG Services.
"TRANSITION PERIOD": The following periods of time during which TSG shall
provide Transition Assistance to the Airline Group:
A. The period commencing upon the date of AMERICAN's Notice of
termination of this Agreement and continuing up to 90 days after the
Termination Date;
B. For Three-year Services, Five-year Services, and Ten-year
Services, the period commencing upon the date of AMERICAN's Notice of
non-renewal and continuing for
Exhibit A to Information Technology Services Agreement page 20
<PAGE> 94
up to 90 days after the Expiration of this Agreement for the
Three-year Services, Five-year Services, or Ten- year Services, as the
case may be; or
C. For Three-year Services, Five-year Services, and Ten-year Services
and when AMERICAN has not given Notice of non-renewal, the period
commencing upon the respective dates of expiration of those Services
or the Expiration Date, as described in Section "2.3. EXTENSIONS OF
THE TERM," for the Three-year Services, Five-year Services, or
Ten-year Services or the Agreement, as the case may be, and continuing
up to 90 days thereafter.
"TRAVEL DISTRIBUTOR": A Person acting as a travel agency (i.e., accredited by
the Airline Reporting Corporation or the International Air Transport
Association to issue travel documents on behalf of third parties), or similar
neutral remarketer of travel or transportation services.
"TSG": The SABRE Group, Inc., a Delaware corporation.
"TSG CUSTOMER": Any customer of TSG, other than the Airline Group, for
services similar to TSG Services.
"TSG DEVELOPMENT": Development performed by TSG.
"TSG HIGHLY CONFIDENTIAL INFORMATION": Source code and technical documentation
(to the extent they constitute trade secrets or information not containing
trade secrets, but from which TSG's trade secrets can be derived), trade
secrets, and other information not containing TSG's trade secrets, but from
which TSG's trade secrets can be derived. For the avoidance of doubt, TSG and
the Airline Group agree that user manuals are generally not TSG Highly
Confidential Information and that file formats for input and/or output are not
TSG Highly Confidential Information. For the avoidance of doubt, decision
support source code and technical documentation are deemed to be TSG Highly
Confidential Information.
"TSG INDEMNITEES": TSG and its directors, officers, employees, and agents and
the heirs, executors, successors, and permitted assigns of any of those
Persons.
"TSG OPERATED SOFTWARE": All software used by TSG to provide the TSG Services,
including TSG Owned Software, Transferred Software, and Transferred Third Party
Software, and Other Third Party Software.
"TSG OWNED SOFTWARE": Software owned by TSG and used by TSG to provide the TSG
Services other than the Transferred Software and the Jointly Owned Software.
"TSG'S PRIMARY RESPONSIBILITIES": Any such responsibilities to which the
Airline Group and TSG agree in writing are TSG's Primary Responsibilities and
the following TSG Services:
A. Management of Reservations 800 Services;
B. Device Support provided in the System Operations Control Center;
Exhibit A to Information Technology Services Agreement page 21
<PAGE> 95
C. Commercial Services;
D. Real Time Services; and
E. Integration Services as defined in Exhibit B: TSG Services
Description.
"TSG SERVICES": Services consisting of the Data Processing Services, the
Enhanced Data Processing Services, and the Other Services and described in
Exhibit B: TSG Services Description or in this Agreement.
"TSG SOFTWARE INCOME": The license fees or equivalent compensation that TSG
receives for granting the right to use the Jointly Owned Software and the
license fees or equivalent compensation that TSG receives for operating the
Jointly Owned Software for the benefit of a TSG Customer.
(1) For the avoidance of doubt, TSG Software Income does not include
the following:
a. Income to TSG for providing maintenance;
b. Income to TSG for modifying software to meet TSG Customer
specifications;
c. Taxes; and
d. Implementation fees, training fees, and consulting fees.
(2) For the avoidance of doubt, TSG Software Income includes the
following:
a. Compensation TSG receives in kind as some or all of
license fees; and
b. The present value of license fees to be paid in
installments.
"UNAPPLIED CAPPED ADJUSTMENT": The excess of the Unrealized Aggregate
Adjustment over the Capped Adjustment.
"UNREALIZED AGGREGATE ADJUSTMENT": The excess of the difference (expressed as
an absolute value) between the Projected Annual Reset Fees and the Projected
Annual Negotiated Fees over the Adjustment Amount.
"UNSUPPORTED PRODUCT": A Third Party Supported Product that is no longer
supported by a third party vendor.
Exhibit A to Information Technology Services Agreement page 22
<PAGE> 96
"UNUSUAL RE-RUN": A Re-run in all the following circumstances:
[TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED]
"UPDATE": Any modification to the TSG Operated Software for one or more of the
following reasons:
(1) A modification of the TSG Operated Software because of a change
made to the operating system environment in which the TSG Operated
Software executes;
(2) Periodic installation of a collection of such Error Corrections
that have been provided to any user or licensee of the TSG Operated
Software since the last Update;
(3) A modification of the TSG Operated Software because of a change
in the law or regulations applicable to the TSG Operated Software;
(4) A modification to Third Party Software that TSG chooses to
install;
(5) A modification of the TSG Operated Software to remove a
Work-around and install an Error Correction; and
(6) A modification of the TSG Operated Software because of a change
to the hardware environment in which the TSG Operated Software
executes.
"VOICE MAIL": Voice Mail as described in Exhibit B: TSG Services Description.
"VOICE NETWORK SERVICES": The following services:
(1) Reservation 800 Services;
(2) Corporate Inbound described in Exhibit B: TSG Services
Description;
(3) ICS (Inter City System) described in Exhibit B: TSG Services
Description;
(4) Domestic/International Telephone Support described in Exhibit B:
TSG Services Description;
Exhibit A to Information Technology Services Agreement page 23
<PAGE> 97
(5) Voice Mail described in Exhibit B: TSG Services Description; and
(6) Video Conferencing described in Exhibit B: TSG Services
Description.
"WAIVED RE-RUN FEES": Any Fees not charged to the Airline Group pursuant to
Section "7.10. PAYMENT FOR RE-RUNS."
"WIND-DOWN COSTS": Costs that TSG would be forced to absorb and be unable to
efficiently reallocate to another customer or service as a result of AMERICAN's
termination of this Agreement pursuant to Sections "24.4. TERMINATION FOR
CONVENIENCE" OR "3.13 EFFECT OF DIVESTITURES, MERGERS, AND ACQUISITIONS," if
applicable. [TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED]
"WORK-AROUND": A modification to the TSG Operated Software to disable a
function in the TSG Operated Software in order to bypass a Malfunction
temporarily.
II. Interpretive Matters.
The Agreement is the result of the Parties' negotiations, and no provision of
this Agreement shall be construed for or against either Party because of the
authorship of that provision. In the interpretation of the Agreement, except
where the context otherwise requires:
1. "including" or "include" does not denote or apply any
limitation;
2. "or" has the inclusive meaning "and/or";
3. "and/or" means "or" and is used for emphasis only;
4. "$" refers to United States dollars;
5. the singular includes the plural, and vice versa, and each
gender includes each of the others;
6. captions or headings are only for reference and are not to be
considered in interpreting the Agreement;
7. "Article," "Section," and "Subsection" refer to an Article,
Section and Subsection, respectively, of the Agreement, unless
otherwise stated in the Agreement;
Exhibit A to Information Technology Services Agreement page 24
<PAGE> 98
8. if an ambiguity arises in a Subsection's, Section's, or
Article's cross-reference to another Section or Article, the
cross-referenced heading controls over the cross-referenced
Section or Article number.
Exhibit A to Information Technology Services Agreement page 25
<PAGE> 99
Exhibit H: SITA Relationship
SITA AGREEMENTS
The "SITA Agreements" consist of the following:
1. SABREnet Services Agreement between SITA and AMERICAN dated July 1,
1996.
2. Each of the Agreements listed below between SITA and AMERICAN, each as
amended by that certain Master Amendment, dated June 20, 1996, between
those two parties:
AA CONTRACT # AGREEMENT TITLE DATE
------------- --------------- ----
SVC-AE926-0051 Agreement for Aircom Service 9/1/88
SVC-AE926-0635 Telecommunications Services Agreement 1/1/93
SVC-AE926-0635A Amendment to Telecommunications Services 4/13/95
Agreement
Agreement for CUTE Service at Frankfurt Airport 3/14/85
Amendment No 1 to the Agreement for CUTE 2/12/86
Service at Frankfurt Airport
** Amendment No 2 to the Agreement for CUTE
Service at Frankfurt Airport
** Amendment No 3 to the Agreement for CUTE
Service at Frankfurt Airport
Amendment No 4 to the Agreement for Cute 6/88
Service at Frankfurt Airport
SVC-AE926-0151 Amendment No 5 to the Service Guarantee
Agreement for CUTE Service at Frankfurt Airport
SVC-AE926-0151 Amendment No 6 to the Service Guarantee 3/12/91
Agreement for CUTE Service at Frankfurt Airport
SVC-AE926-0151 Amendment No 7 to the Service Guarantee 5/24/91
Agreement for CUTE Service at Frankfurt Airport
SVC-AE926-0424** Master Service Guarantee Agreement for CUTE2 1/17/92
Service
SVC-AE926-0424 Exhibit 1 - Connection and Configuration Request 1/17/92
Form - PHL Airport
SVC-AE926-0424 Exhibit 1 - Connection and Configuration Request 1/17/92
<PAGE> 100
Form - GRU Airport
SVC-AE926-0424 Exhibit 1 - Connection and Configuration Request 5/13/92
Form - MUC Airport
Exhibit 1 - Connection and Configuration Request 3/26/96
Form - Manchester
Exhibit 1 - Connection and Configuration Request 4/20/96
Form - Dusseldorf Airport
<PAGE> 101
AA CONTRACT # AGREEMENT TITLE DATE
------------- --------------- ----
SVC-AE926-0217 Service Guarantee Agreement for CUTE Service at 1/23/90
Stockholm - Arlanda Airport
SVC-AE926-0217-01 Amendment No. 1 to the Service Guarantee 1/17/92
Agreement for CUTE Service at Stockholm - Arlanda
Airport
SVC-AE926-0315 Service Guarantee Agreement for CUTE Service at 3/12/91
Dusseldorf Airport
SVC-AE926-0315-2A Amendment No 2 to the Service Guarantee 2/6/92
Agreement for CUTE Service at Dusseldorf Airport
SVC-AE926-0314 Service Guarantee Agreement for CUTE Service at 3/12/91
Hong Kong Kai Tak Airport
SVC-AE926-0313 Service Guarantee Agreement for CUTE Service at 3/12/91
Los Angeles Bradley Terminal Airport
SVC-AE926-1316 Service Guarantee Agreement for CUTE Service at 3/12/91
Rio de Janeiro International Airport
SVC-AE926-0331 Service Guarantee Agreement for CUTE Service at 6/11/92
Munich Airport
SVC-AE926-0331/1 Amendment No. 1 to the Service Guarantee 5/24/91
Agreement for CUTE Service at Munich Airport
SVC-AE926-0373 Service Guarantee Agreement for CUTE Service at 6/11/92
Santiago de Chile Airport
SVC-AE926-0004 Service Guarantee Agreement for CUTE Service at 6/30/92
San Jose Juan Santamaria International Airport
SVC-AE926-0592 Service Guarantee Agreement for CUTE Service at 1/8/93
Berlin-Tegel Airport
** Service Guarantee Agreement for CUTE Service at 7/26/93
Bogota El Dorado International Airport
<PAGE> 102
** Service Guarantee Agreement for CUTE Service at 7/26/93
El Salvador International Airport
** Service Guarantee Agreement for CUTE Service at 7/29/93
Guayaquil - Simon Bolivar Airport
** Service Guarantee Agreement for CUTE Service 7/29/93
at Quito - Mariscal Airport
<PAGE> 103
SITA SABRENET SERVICES FLOW CHART
In order to provide the orderly administration of the SITA SABREnet Services,
the following arrangements shall be effective regarding the provisioning of
SITA SABREnet Services:
Sales of SITA SABREnet
Services
AMERICAN AMERICAN
(For the Airline Group's (For Sale to TSG)
Consumption)
Tax-paid invoice from SITA on the
Airline Group's consumption of
SITA SABREnet Services used in TSG
operations
Tax-free invoicing by SITA to AMERICAN
for resale, without margin, to TSG.
SITA provides tax calculations to ease
administrative burden on resale of
nonmargin sales to TSG.
TSG charges a management fee to AMERICAN
for network management of SITA SABREnet
Services that AMERICAN purchases for the
Airline Group as described below.
<PAGE> 104
Structure permits TSG to provide resale
exemption certificates to AMERICAN to
exclude sales tax from SITA SABREnet
Services to be resold by TSG to third
parties without pyramiding sales tax on
its SITA SABREnet Services costs.
INVOICING REQUIREMENTS
The Airline Group will pay its own taxable usage of SITA SABREnet Services as
specified in the SABREnet Services Agreement plus any applicable sales or
similar taxes thereon. TSG will separately calculate and invoice a management
fee on a per port basis for the SITA SABREnet Services purchased by the Airline
Group. The management fee shall be equal to the excess of (a) the per port
charge for SITA SABREnet Services from TSG to the Airline Group set forth in
the Rate and Reset Schedule over (b) the per port charge (including the related
SITA tax) for the same SITA SABREnet Services from SITA to AMERICAN under the
SABREnet Services Agreement. The per port charge for SITA SABREnet Services
from TSG to the Airline Group may not exceed the amount thereof set forth in
the Rate and Reset Schedule.
<PAGE> 105
Exhibit K: Termination Liquidated Damages Calculation
[TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED]
Exhibit K to Information Technology Services Agreement page 1
<PAGE> 106
[TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED]
Exhibit K to Information Technology Services Agreement page 2
<PAGE> 107
Exhibit L: Transition Assistance Service Descriptions
Part I: General Assistance to Successor Provider.
A. The Transition Assistance Services will include the following:
1. Continuing to perform during the Transition Period any or all of the
TSG Services then being performed by TSG.
2. Providing to Successor Provider the specific services described in
Part II: Specific Assistance to Successor Provider.
3. Assisting Successor Provider in developing a plan for the transition
of all requested operations from TSG. TSG is not responsible for the
creation of the plan.
4. Providing to appropriate personnel of Successor Provider, during a
mutually defined time period, training in the performance of the
specific TSG Services that are to be transferred.
5. Providing Successor Provider with other information regarding TSG
Services that are required to implement the transition plan, and
providing such information regarding TSG Services as is reasonably
prudent or necessary in order for the Successor Provider to assume
responsibility for, and continue the performance of, TSG Services in
an orderly manner, so as to minimize, as much as possible, disruption
in the operations of the Airline Group.
6. With respect to all TSG Operated Software as of the commencement of
the Transition Period, TSG shall provide to Successor Provider source
code (subject to third party consents as necessary), master file and
field descriptions and record layouts, run documentation and job
control listings and other similar information necessary for Successor
Provider to run all TSG Operated Software.
7. Airline Group and TSG agree to negotiate in good faith, a purchase
price for assets that Airline Group wants and TSG will no longer
require.
8. Subject to Section "17.1. NON-SOLICITATION OF EMPLOYEES," TSG will
allow Successor Provider to make employment offers to all TSG
employees (other than key managers) assigned primarily to perform TSG
services. To the extent any TSG employee covered by the preceding
sentence has signed an employment agreement or other arrangement with
TSG precluding or hindering such employee's ability to be recruited or
hired by Successor Provider, TSG agrees that such restriction is null
and void and will not seek to enforce such restriction or to otherwise
preclude or hinder
Exhibit L to Information Technology Services Agreement page 1
<PAGE> 108
such employee from being recruited or hired by Successor Provider.
TSG shall provide Successor Provider reasonable access to such
employees for the purposes of interviews, evaluations, and
recruitment. Upon the written request of the Successor Provider, TSG
will provide Successor Provider with the names, job titles and work
locations of the applicable employees.
9. TSG will make available to Successor Provider any equipment owned or
leased by TSG that is then solely dedicated to the performance of the
TSG services. The Successor Provider may purchase the equipment at
the TSG's then current book value and/or assume TSG's rights and
obligations with respect to any such equipment leased by the TSG.
10. TSG will make available to Successor Provider any third party services
being utilized by TSG in the performance of the TSG Services. Subject
to any necessary consents from third party vendors, TSG will also be
entitled to retain the right to continue utilizing any third party
services as required in connection with the performance of services
for any other TSG customer.
B Access to Systems Information.
In providing the Transition Assistance Services, TSG shall prior to the
Expiration Date or the Termination Date, provide the Successor Provider
reasonable access to information concerning the use of equipment, TSG Operated
Software, personnel, third parties and other resources then being used by TSG.
TSG's obligations in this paragraph are in all cases subject to any prohibition
or restrictions on the use or disclosure of Transferred Third-Party Software
and Other Third-Party Software contained in the license agreements for such
software, provided however that TSG and Successor Provider shall use reasonable
efforts to obtain a waiver of any such prohibition or restriction.
1. Provided there is no charge to TSG, TSG shall use reasonable efforts
to cause third party licensors to assign or grant a license for Other
Third Party Software to the Airline Group with permission for the
Successor Provider to operate and use such software for the benefit of
the Airline Group at no charge and pursuant to terms and conditions
acceptable to the Airline Group for the following Other Third party
Software:
A. Any Other Third Party Software including application and
TPF operating software (including all updates, enhancements,
improvements and modifications).
B. All other operating software that is necessary to operate
application software and to which the Successor Provider
cannot obtain rights on a commercially reasonable basis, along
with the related documentation, data base management
Exhibit L to Information Technology Services Agreement page 2
<PAGE> 109
systems, data and technical information.
2. Before the end of the Transition Period, TSG shall grant the Airline
Group a non-exclusive, royalty-free, irrevocable, non-transferable
license to use, possess, copy, modify, and prepare Derivative Works of
the TSG Owned Software for the Airline Group's and its Affiliates'
internal business purposes, to permit another to exercise these rights
on the Airline Group's behalf for such internal business purposes, and
for the Airline Group's use as authorized by Section "12.5.
MARKETING RIGHTS AFTER EXPIRATION OR TERMINATION."
Before a third party is allowed access to such software or any other
Confidential Information of TSG, the third party must provide
sufficient written assurance to TSG that the third party will maintain
the confidentiality of the software and will not use the software for
any purposes other than for processing the internal work of the
Airline Group and its Affiliates. A third party that has executed an
Agreement substantially in the form of Exhibit N:
Non-disclosure/Non-competition Agreement shall be deemed to have
provided sufficient written assurances to TSG.
3. At the Airline Group's sole option, TSG shall provide Maintenance for
TSG Owned Software at mutually agreed upon terms and conditions and
TSG will offer new releases of TSG Owned Software at reasonable fees.
Exhibit L to Information Technology Services Agreement page 3
<PAGE> 110
Part II - Specific Responsibilities
I. TSG Responsibilities.
A. Provide to Successor Provider copies of documentation used by TSG in
performing the TSG Services.
B. Provide to the Successor Provider copies of other information
regarding the TSG Services that are required to implement the
transition plan, including but not limited to the following:
1. A list of all program and relevant procedure libraries
required by the Airline Group.
2. Copies of all security tables and rules used in the provision
of TSG Services to the Airline Group.
3. Copies of all terminal definition tables.
4. Copies of all relevant system information and other required
documentation.
5. System modifications created on behalf of the Airline Group,
including relevant documentation, run sheets, and job
scheduling.
6. Network access documentation.
7. Premise documentation.
8. Help Desk documentation.
C. Identify, record and provide control release levels of Other Third
Party Software.
D. Review and explain the data center, network and premise documentation
to the Successor Provider operations staff. Data center, network and
premise documentation describes operational and security procedures.
E. Freeze all non-critical software changes, other than modifications
necessary to address processing problems or to implement regulatory
changes upon the Airline Group's Notice to TSG.
F. Notify all outside vendors whose participation is relevant to the
transition of procedures to be followed during the Transition Period.
Exhibit L to Information Technology Services Agreement page 4
<PAGE> 111
G. Review all software libraries (test and production) with Successor
Provider operations staff.
H. Assist the Successor Provider in establishing naming conventions.
I. Assist the Successor Provider in its analysis of the DASD space
required for the databases and software libraries.
J. Provide machine readable current version of the source code, if
available, for TSG Owned Software (or in which the Airline Group holds
Retained Rights) in a form reasonably requested by the Airline Group.
K. Deliver all Documentation for the TSG Owned Software.
L. Provide Successor Provider reasonable access to TSG personnel who were
performing TSG Services.
M. Provide interim tapes of the AG Data, as reasonably requested.
N. Provide to Successor Provider multiple copies of the Airline Group
DASD volumes as requested by Successor Provider in cartridge or tape
medium.
O. Cooperate with Successor Provider in preparing and conducting of
transition testing to facilitate the orderly transfer of services.
P. Copy to cartridge, tape, or such other medium reasonably requested by
AMERICAN, all requested data files and other Confidential Information
of the Airline Group subject to the Airline Group's written
instructions.
Q. Deliver tapes of production data files (with content listings) and
printouts of control file information to Successor Provider.
R. Provide assistance to Successor Provider in the loading of data files
on Successor Provider's systems.
S. Provide assistance to Successor Provider with the turnover to
Successor Provider of the Network Services and in the execution of
parallel testing.
T. Provide assistance to Successor Provider with the Distributed Systems
Services transition.
U. After the Transition Period, TSG shall provide additional assistance
as reasonably
Exhibit L to Information Technology Services Agreement page 5
<PAGE> 112
requested by the Airline Group to facilitate continuity of operations
at market rates.
V. Before the end of the Transition Period, TSG shall return to the
Airline Group, at the Airline Group's request, any remaining property
of the Airline Group in TSG's possession or under its control,
including any remaining reports, data and other Confidential
Information of the Airline Group.
W. Certify to the Airline Group in writing that all the Airline Group
data and files have been removed from TSG's systems.
II. The Airline Group Responsibilities.
During the Transition Period, the Airline Group shall provide to TSG the
transition assistance described below:
A. Identify an individual to be the central point of contact between the
Airline Group and TSG during the Transition Period.
B. Make available to TSG, as reasonably requested by TSG, management
decisions, personnel information, approvals and acceptances necessary
for TSG to properly assist in the transition.
C. Cooperate with TSG in establishing appropriate testing criteria and
procedures for, and in the testing and conversion of applications and
systems.
D. Freeze all non-critical maintenance and enhancement requests during
the Transition Period, to ensure the integrity of the AG Data and
application programs being transferred from TSG to the Successor
Provider.
E. Schedule transition review meetings with the Successor Provider and
TSG to review status of transition according to the Successor
Provider's transition plan.
F. The Airline Group is responsible for managing the transition.
Exhibit L to Information Technology Services Agreement page 6
<PAGE> 113
Exhibit M: Dispute Resolution Appendix
Information Technology Services Agreement
A. Defined Terms. Various terms used in this Dispute Resolution
Appendix, which begin with a capital letter, are defined in the
Definitional Appendix to Information Technology Services Agreement.
In addition, the following terms used only in this Dispute Resolution
Appendix have the corresponding meanings:
"COMPLEX DISPUTE LIST": The "Complex Dispute List," or if
that list is not then maintained by the American Arbitration
Association, another list of individuals having similar
qualifications maintained by the American Arbitration
Association.
"INITIAL EXECUTIVE REVIEW COMMITTEE": A committee consisting
of the Airline Group's CIO and the TSG division president
designated by TSG's Account Manager.
"SECOND EXECUTIVE REVIEW COMMITTEE": A committee consisting
of American's President and TSG's President.
"QUALIFICATIONS": Inclusion in the Complex Dispute List or
having extensive knowledge or experience, or both, regarding
information technology services similar to the TSG Service or
TSG Services that are the subject of the Dispute.
The interpretative matters set forth in the Definitional Appendix also
apply to this Dispute Resolution Appendix.
B. Dispute Resolution Procedure.
1. General Procedure. Except as otherwise stated in the
Agreement, the Parties shall resolve all Disputes in
accordance with this procedure:
(a) Each Party shall instruct its Account Manager to
promptly negotiate in good faith with the other
Party's Account Manager to resolve the Dispute.
(b) If the Account Managers do not resolve the Dispute
within ten Business Days (or such longer period as
the Account Managers may agree) after the date of
referral of the Dispute to them, the Dispute shall be
referred (by either or both of the Account Managers)
to the Initial Executive Review Committee for
resolution.
Exhibit M to Information Technology Services Agreement page 1
<PAGE> 114
(c) If the Initial Executive Review Committee does not
resolve the Dispute within ten Business Days (or such
longer period as that Committee may agree) from the
date of referral to it, the Dispute shall be referred
(by that Committee or any of its members) to the
Second Executive Review Committee for resolution.
(d) If the Second Executive Review Committee does not
resolve the Dispute within ten Business Days (or such
longer period as that Committee may agree) after the
date of referral to it, either Party may submit the
Dispute to non-binding mediation in accordance with
Section B.2 of this Dispute Resolution Appendix.
(e) If the Dispute is not resolved by any of the
preceding steps and is not submitted to or is not
resolved by mediation, then either Party may submit
the Dispute to binding arbitration in accordance with
Section B.3 of this Dispute Resolution Appendix.
A referral under any of Sections B.1(a), B.1(b), and B.1(c) of this
Dispute Resolution Appendix shall be made by written notice to the
Persons designated in the applicable Section or Sections. That notice
shall be in a form described in the Agreement or an electronic mail
message and addressed to each Person at his office address or
electronic mail address; each notice shall be given and effective as
described in the Agreement or, in the case of electronic mail, upon
actual receipt. The date of referral is the last date that notice is
given to all of the Persons to whom the Dispute must have been
referred.
2. Mediation. The mediation of an unresolved Dispute shall be
conducted in this manner:
(a) Either Party may submit the Dispute to mediation by
giving notice of mediation to the other Party. The
Parties shall attempt to agree upon and appoint a
sole mediator who has the Qualifications promptly
after that notice is given.
(b) If the Parties are unable to agree upon a mediator
within ten days after the date the Dispute is
submitted to mediation, either Party may request the
Dallas office of the American Arbitration Association
to appoint a mediator who has the Qualifications.
The mediator so appointed shall be deemed to have the
Qualifications and to be accepted by the Parties.
Exhibit M to Information Technology Services Agreement page 2
<PAGE> 115
(c) The mediation shall be conducted in the Dallas-Fort
Worth metropolitan area at a place and a time agreed
by the Parties with the mediator, or if the Parties
cannot agree, as designated by the mediator. The
mediation shall be held within 20 days after the
mediator is appointed.
(d) If either Party has substantial need for information
from the other Party (in addition to information
obtained under Section 23.2 of the Agreement) in
order to prepare for the mediation, the Parties shall
attempt to agree on procedures for the formal
exchange of information; if the Parties cannot agree,
the mediator's determination shall be effective.
(e) Each Party shall be represented in the mediation by
at least its Account Manager or another natural
Person with authority to settle the Dispute on behalf
of that Party and, if desired by that Party, by
counsel for that Party. The Parties' representatives
in the mediation shall continue with the mediation as
long as the mediator requests.
(f) The mediation shall be subject to Chapter 154 of
Title 7 of the Texas Civil Practice and Remedies
Code.
(g) Unless otherwise agreed by the Parties, each Party
shall pay one-half of the mediator's fees and
expenses and shall bear all of its own expenses in
connection with the mediation. Neither Party may
employ or use the mediator as a witness, consultant,
expert, or counsel regarding the Dispute or any
related matters.
3. Arbitration. The arbitration of an unresolved Dispute shall
be conducted in this manner:
(a) Either Party may begin arbitration by filing a demand
for arbitration in accordance with the Arbitration
Rules. The Parties shall attempt to agree upon and
appoint a panel of three arbitrators promptly after
that demand is filed. Each of those arbitrators must
have the Qualifications, and at least one of those
arbitrators must be included in the Complex Dispute
List (unless no list of that kind is then
maintained).
(b) If the Parties are unable to agree upon any or all of
the arbitrators within ten days after the demand for
arbitration was filed (and do not agree to an
extension of that ten-day period), either Party may
request the Dallas office of the American Arbitration
Association to appoint the arbitrator or
Exhibit M to Information Technology Services Agreement page 3
<PAGE> 116
arbitrators, who have the Qualifications (and at
least one of whom must be included in the Complex
Dispute List, unless no list of that kind is then
maintained), necessary to complete the panel in
accordance with the Arbitration Rules. Each
arbitrator so appointed shall be deemed to have the
Qualifications and to be accepted by the Parties as
part of the panel.
(c) The arbitration shall be conducted in the Dallas-Fort
Worth metropolitan area at a place and a time agreed
by the Parties with the panel, or if the Parties
cannot agree, as designated by the panel. The panel
may, however, call and conduct hearings and meetings
at such other places as the Parties may agree or as
the panel may, on the motion of one Party, determine
to be necessary to obtain significant testimony or
evidence.
(d) The Parties shall attempt to agree upon the scope and
nature of any discovery for the arbitration in
addition to the information available under Section
23.2 of the Agreement. If the Parties do not agree,
the panel may authorize any and all forms of
discovery, including depositions, interrogatories,
and document production, upon a showing of
particularized need that the requested discovery is
likely to lead to material evidence needed to resolve
the Dispute and is not excessive in scope, timing, or
cost.
(e) The arbitration shall be subject to the Federal
Arbitration Act and conducted in accordance with the
Arbitration Rules to the extent they do not conflict
with this Section B.3 of this Dispute Resolution
Appendix. The Parties and the panel may, however,
agree to vary the provisions of this Section B.3 of
this Dispute Resolution Appendix or the matters
otherwise governed by the Arbitration Rules.
(f) The panel has no power to:
(i) rule upon or grant any extension, renewal, or
continuance of the Agreement;
(ii) award remedies or relief either expressly
prohibited by the Agreement or under
circumstances not permitted by the Agreement;
or
(iii) grant provisional or temporary injunctive
relief before rendering the final decision or
award.
Exhibit M to Information Technology Services Agreement page 4
<PAGE> 117
(g) Unless the Parties otherwise agree, all Disputes
regarding or related to the same topic or event that
are subject to arbitration at one time shall be
consolidated in a single arbitration proceeding.
(h) A Party or other Person involved in an arbitration
under this Section B.3 may join in that arbitration
any Person other than a Party if
(i) the Person to be joined agrees to resolve the
particular dispute or controversy in
accordance with this Section B.3 and the
other provisions of this Dispute Resolution
Appendix applicable to arbitration; and
(ii) the panel determines, upon application of the
Person seeking joinder, that the joinder of
that other Person will promote the
efficiency, expedition, and consistency of
the result of the arbitration and will not
unfairly prejudice any other party to the
arbitration.
(i) The arbitration hearing shall be held within 30 days
after the appointment of the panel. Upon request of
either Party, the panel shall arrange for a
transcribed record of the arbitration hearing, to be
made available to both Parties.
(j) The panel's final decision or award shall be made
within 30 days after the hearing. That final
decision or award shall be made by unanimous or
majority vote or consent of the arbitrators
constituting the panel, and shall be deemed issued at
the place of arbitration. The panel shall issue a
reasoned written final decision or award based on the
Agreement and Texas law; the panel may not act
according to equity and conscience or as an amicable
compounder or apply the law merchant.
(k) The panel's final decision or award may include:
(i) recovery of Damages to the extent permitted
by the Agreement; or
(ii) injunctive relief in response to any actual
or threatened breach of the Agreement or any
other actual or threatened action or omission
of a Party under or in connection with the
Agreement.
(l) The panel's final decision or award shall be final
and binding upon the Parties, and judgment upon that
decision or award may be entered in any
Exhibit M to Information Technology Services Agreement page 5
<PAGE> 118
court having jurisdiction over either or both of the
Parties or their respective assets. The Parties
specifically waive any right they may have to apply
or appeal to any court for relief from the preceding
sentence or from any decision of the panel made, or
any question of law arising, before the final
decision or award. If any decision by the panel is
vacated for any reason, the Parties shall submit that
Dispute to a new arbitration in accordance with this
Section B.3.
(m) Each Party shall pay one-half of the arbitrators'
fees and expenses, and shall bear all of its own
expenses in connection with the arbitration. The
panel has the authority, however, to award recovery
of all costs and fees (including attorneys' fees,
administrative fees and the panel's fees and
expenses) to the prevailing Party in the arbitration.
4. Recourse to Courts. Nothing in the Dispute Resolution
Procedure limits the right of either Party to apply to a court
or other tribunal having jurisdiction to:
(a) enforce the Dispute Resolution Procedure, including
the agreement to arbitrate in this Dispute Resolution
Appendix;
(b) seek provisional or temporary injunctive relief, in
response to an actual or impending breach of Article
XIV of the Agreement or otherwise so as to avoid
irreparable damage or maintain the status quo, until
a final arbitration decision or award is rendered or
the Dispute is otherwise resolved; or
(c) challenge or vacate any final arbitration decision or
award that does not comport with Section B.3 of this
Dispute Resolution Appendix.
5. Submission to Jurisdiction. Each Party irrevocably submits to
the jurisdiction of the federal courts of the United States
and the state courts of Texas located in Tarrant County,
Texas. Each Party waives any defense or challenge to that
jurisdiction based on lack of personal jurisdiction, improper
venue, or inconvenience of forum.
6. Confidentiality. The proceedings of all negotiations,
mediations, and arbitrations as part of the Dispute Resolution
Procedure shall be privately conducted. The Parties shall
keep confidential all conduct, negotiations, documents,
decisions, and awards in connection with those proceedings
under the Dispute Resolution Procedure.
Exhibit M to Information Technology Services Agreement page 6