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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]
For fiscal year ended December 31, 1998.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
Commission file number 1-12175
THE SABRE GROUP HOLDINGS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 75-2662240
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4255 Amon Carter Blvd.
Fort Worth, Texas 76155
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(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code (817) 963-6400
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Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of exchange on which registered
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Class A Common Stock, par value $.01 New York Stock Exchange
per share
Securities registered pursuant to Section 12(g) of the Act:
NONE
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 15, 1999 was approximately $945,351,834. As of March 15,
1999, 22,572,421 shares of the registrant's Class A Common Stock and 107,374,000
shares of the registrant's Class B Common Stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Form 10-K incorporates by reference certain information from
the Proxy Statement for the Annual Meeting of Stockholders to be held May 19,
1999.
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PART I
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ITEM 1. BUSINESS
The Sabre Group Holdings, Inc. is a holding company incorporated in
Delaware on June 25, 1996. Pursuant to a reorganization consummated on July 2,
1996 (the "Reorganization"), the Company became the successor to the businesses
of The Sabre Group which were formerly operated as divisions or subsidiaries of
American Airlines, Inc. ("American") or AMR Corporation ("AMR"). Unless
otherwise indicated, references herein to the "Company" include The Sabre Group
Holdings, Inc. and its consolidated subsidiaries and, for any period prior to
the Reorganization, the business of AMR and American constituting The Sabre
Group. On October 17, 1996, the Company completed an initial public offering
(the "Offering") of 23,230,000 shares of its Class A Common Stock, par value
$.01 per share, constituting approximately 17.8% of the economic interest of the
Company's outstanding common equity. As of March 15, 1999, AMR owned all
107,374,000 shares of the Company's Class B Common Stock, representing
approximately 82.6% of the economic interest and 97.9% of the combined voting
power of all classes of voting stock of the Company.
The Company is the world leader in the electronic distribution of travel
through its SABRE-Registered Trademark-(1) computer reservations system ("the
SABRE system"). In addition, the Company is a leading provider of information
technology solutions to the travel and transportation industries and fulfills
substantially all of the data processing, network and distributed systems
needs of American and AMR's other subsidiaries, Canadian Airlines
International, Ltd., ("Canadian"), US Airways, Inc. ("US Airways") and other
customers.
ELECTRONIC TRAVEL DISTRIBUTION
The SABRE system and other global distribution systems are the principal
means of air travel distribution in the United States and a growing means of
air travel distribution internationally. Through the SABRE system, travel
agencies, corporate travel departments and individual consumers
("subscribers") can access information about and book reservations with
airlines and other providers of travel and travel-related products and
services ("associates"). As of December 31, 1998, travel agencies with
approximately 40,000 locations in over 100 countries on six continents
subscribed to the SABRE system. Subscribers are able to make reservations
with more than 420 airlines, more than 50 car rental companies and more than
200 hotel companies covering approximately 40,000 hotel properties worldwide.
During 1998, more airline bookings in North America were made through
the SABRE system than through any other global distribution system. In 1998,
approximately 57.4% of the Company's revenue was generated by the electronic
distribution of travel, primarily through booking fees paid by associates.
THE SABRE GLOBAL DISTRIBUTION SYSTEM
The SABRE system, like other global distribution systems, creates an
electronic marketplace where travel providers display information about their
products and warehouse and manage inventory. Subscribers -- principally
travel agencies but also corporate travel departments and individual
consumers -- access information and purchase travel products and services. In
1998, over 850 associates displayed information about their products and
services through the SABRE system, and the Company estimates that more than
$70 billion of travel-related products and services were sold through the
SABRE system.
In addition to providing information to subscribers about airlines and
other travel-related vendors, the SABRE system reports to the travel
providers transaction data about subscriber-generated reservations, allowing
vendors to better manage inventory and revenues. The SABRE system also allows
travel agency subscribers to print airline tickets, boarding passes and
itineraries. Additionally, the SABRE system provides subscribers with travel
information on matters such as currency, medical and visa requirements,
weather and sightseeing. By accessing the SABRE system, a subscriber can,
from a single source, obtain schedule, availability and pricing information
from multiple travel providers for complex travel itineraries.
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(1) All marks are trademarks and/or service marks of their respective owners.
Sabre is a registered trademark of a subsidiary of the Sabre Group Holdings,
Inc.
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ASSOCIATE PARTICIPATION
The Company derives its electronic travel distribution revenues
primarily from booking fees paid by associates for reservations made through
the SABRE system for their products and services. In addition to airlines,
associates include car rental companies, hotel companies, railroads, tour
operators, ferry companies and cruise lines.
Airlines and other associates can display, warehouse, manage and sell
their inventory in the SABRE system. The booking fee paid by an associate
depends upon several factors, including the associate's level of
participation in the SABRE system and the type of products or services
provided by the associate. Airlines are offered a wide range of participation
levels. The lowest level of participation for airlines, SABRE BASIC BOOKING
REQUEST-SM- participation level, provides schedules and electronic booking
functionality only. Higher levels of participation for airlines, such as
SABRE DIRECT CONNECT AVAILABILITY-SM- participation level, provide greater
levels of communication with the SABRE system, giving subscribers more
detailed information and associates improved inventory management. For an
associate selecting one of the higher levels of participation, the SABRE
system provides subscribers with a direct connection to the associate's
internal reservation system, allowing the SABRE system to provide real-time
information and allowing the associate to optimize revenue for each flight.
Car rental companies and hotel operators are provided with similar levels of
participation from which to select. The Company also provides associates,
upon request, marketing data derived from the SABRE system bookings for fees
that vary depending on the amount and type of information provided.
SUBSCRIBER ACCESS
Access to the SABRE system enables subscribers to electronically locate,
price, compare and purchase travel products and services provided by
associates. The Company tailors the interface and functionality of the SABRE
system to the needs of its different types of subscribers. Marketing is
targeted to travel agencies, corporations and individual consumers.
TRAVEL AGENTS. The Company provides travel agents with the hardware,
software, technical support and other services needed to use the SABRE
system, in return for fees that typically vary inversely with the travel
agency's productivity, as measured by the number of bookings generated. Such
fees are payable over the term of the travel agent's agreement with the
Company, generally five years in the United States and Latin America, three
years in Canada, and one year in Europe.
Because travel agencies have differing needs, the Company has modified
the SABRE system interface to meet the specific needs of different categories
of travel agents. Travel agents can choose interfaces that range from simple,
text-based systems to feature-laden graphical systems. For example, the
Company developed TURBO SABRE-TM- software, an advanced point-of-sale
interface and application development tool that enables advanced
functionality such as customized screens, automated quality control, database
integration, and eliminates complex commands, reducing keystrokes and
training requirements.
PLANET SABRE-SM- software, which the Company introduced in February
1997, includes a graphical launch pad, which enables the user to move to any
function with one or two clicks of a mouse; a customizer feature, which
allows travel agencies to tailor PLANET SABRE-SM- software to meet their own
specific needs; a tutorial; online help; a place to store notes about
clients, destinations or procedures; and a suggestion system. PLANET
SABRE-SM- software transforms the SABRE system from a complex
command-oriented system to an all-graphic interface with continued access to
the SABRE system and its capabilities.
The SABRE system interfaces are available in English, Spanish,
Portuguese, French, German, Italian and Japanese. In addition, the Company
offers travel agencies back-office accounting systems and further supports
travel agencies by offering a simplified method to develop and place their
own marketing presence on the World Wide Web.
CORPORATIONS. The Company sells COMMERCIAL SABRE-Registered
Trademark-software to corporations and home-based travel agents that are
sponsored by travel agencies. Using COMMERCIAL SABRE-Registered Trademark-
software, a traveler or agent can connect to the SABRE system and make
bookings which are automatically delivered to the sponsoring agency where
travel documents are issued.
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The Company also markets the SABRE system to corporations through the
SABRE BUSINESS TRAVEL SOLUTIONS-TM- system ("the SABRE BTS-TM- system").
Released in October 1996, the SABRE BTS-TM- system is designed for corporate
travelers, travel arrangers and travel managers. It is a fully-integrated
product suite for travel planning and booking, expense reporting and
decision-support. The SABRE BTS-TM- system provides corporations with tools
to better manage travel costs, ensure compliance with corporate travel
policies, automate expense reporting and obtain real-time information on all
aspects of travel.
INDIVIDUAL CONSUMERS. Through the Company's TRAVELOCITY.COM-SM- online
travel site ("the TRAVELOCITY.COM-SM- site") and EASYSABRE-Registered
Trademark-reservations site ("the EASYSABRE-Registered Trademark- site"),
individual consumers can compare prices, make travel reservations and obtain
destination information online. These products are available to individual
consumers free of charge.
The TRAVELOCITY.COM-SM- site is accessible through the Internet and
computer on-line services. It features booking and purchase capability for
all airline, car rental and hotel companies for which booking and purchase
capability is available in the SABRE system. Vacation and cruise packages are
available as well. The TRAVELOCITY.COM-SM- site also offers access to a
database of destination and interest information, articles from travel
correspondents and interactive maps. The TRAVELOCITY.COM-SM- site has over 5
million members and averages approximately 60 million page views per month.
The Internet address for the TRAVELOCITY.COM-SM- site is www.travelocity.com.
The Company has entered into numerous co-branding agreements to provide
access to the TRAVELOCITY.COM-SM- site on complementary Internet Web sites.
These agreements include deals with Netscape Communications Corporation to
launch Netcenter Travel on the TRAVELOCITY.COM-SM- site, accessible through
the Netscape Netcenter free online service and an agreement with Yahoo! Inc.
for the TRAVELOCITY.COM-SM- site to be the exclusive co-branded travel
booking service for Yahoo! and Yahoo! Travel.
The Company receives booking fees and commissions from travel providers for
purchases of their travel products and services pursuant to reservations made
through the TRAVELOCITY.COM-SM- and EASYSABRE-Registered Trademark- sites.
INTERNATIONAL MARKETING
The Company is actively involved in marketing the SABRE system
internationally either directly or through joint venture or distributorship
arrangements. The Company's global marketing partners principally include
foreign airlines that have strong relationships with travel agents in such
airlines' primary markets and entities that operate smaller global
distribution systems or other travel-related network services.
In February 1998, the Company signed long-term agreements with ABACUS
International Holdings Ltd. which created a Singapore-based joint venture
company to manage travel distribution in the Asia/Pacific region. The Company
owns 35 percent of the joint venture company, called ABACUS International Ltd.,
and provides it with transaction processing and product development services on
the SABRE system .
COMPETITION
The Company competes in electronic travel distribution primarily against
other large and well-established global distribution systems. The Company's
principal competitors in marketing to travel agents include Amadeus, Galileo and
Worldspan. Each of these competitors offers many products and services
substantially similar to those of the Company.
The Company markets the SABRE system to corporations through the SABRE
BTS-TM- system. The Company's main competitors in marketing to corporations
include American Express, Internet Travel Network, E-Travel, Inc., Xtra
Online Corporation and Travel Technologies Group.
The Company also distributes travel through the Internet and computer
on-line services to consumers directly through the TRAVELOCITY.COM-SM- site. Its
main competitors include Expedia (owned by Microsoft Corporation), Preview
Travel and Internet Travel Network. Increasingly, many travel suppliers are
developing their own web sites, some of which offer an array of products and
services, that directly target consumers.
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The Company potentially faces many new competitors as new travel
distribution channels develop. Still, significant barriers exist for these new
players including: significant capital investment, development of global network
facilities, development or acquisition of hardware and software systems with
global scales and reach, and ability to connect to disparate travel suppliers'
and travel agents' systems.
The global market to attract and retain agency subscribers is intensely
competitive. Factors affecting competitive success of global distribution
systems include depth and breadth of information, ease of use, reliability,
service and incentives to travel agents and range of products available to
travel providers, travel agents and consumers.
Although distribution through travel agents continues to be the primary
method of travel distribution, new channels of direct distribution to businesses
and consumers, through computer on-line services, the Internet and private
networks, are developing rapidly. The adoption of these tools is currently quite
low, but it is growing quickly. The Company believes that it has positioned its
SABRE BTS-TM- system and TRAVELOCITY.COM-SM- website products and services to
effectively compete in these emerging distribution channels.
CRS INDUSTRY REGULATION
The Company's electronic travel distribution business is subject to
regulation in the United States, the European Union, Canada, Australia and New
Zealand. These regulations address the relationships among computer reservation
systems ("CRSs"), airline associates, and travel agency subscribers. These
regulations do not currently address relationships with non-airline associates,
but the regulations in the European Union were revised effective March 15, 1999
and include rail associates in certain circumstances. In general, these
regulations are directed at ensuring fair competition among travel providers.
Among the principles addressed in the current regulations are: unbiased CRS
displays of airline information, fair treatment of airline associates by CRSs,
equal participation by airlines in non-owned CRSs, and fair competition for
subscribers. The CRS regulations in the United States are currently being
revised. In addition, the Department of Civil Aviation of Brazil is considering
the adoption of comprehensive CRS regulations. The Company does not believe that
the revisions to the European Union code, the possible revisions to the United
States code, or possible adoption of a code in Brazil will materially adversely
affect its operations.
OTHER REGULATION
The Company is subject to regulations affecting issues such as: exports of
technology, telecommunications, data privacy and electronic commerce. Some
portions of the Company's business, such as its Internet-based electronic travel
distribution, may be affected by newly-developed regulations. Regulations
affecting other areas of the Company's business may be revised from time to
time. Regulations also vary among jurisdictions. The Company believes that it is
capable of addressing these regulatory issues as they arise.
INFORMATION TECHNOLOGY SOLUTIONS
The Company is a leading provider of information technology services to the
travel and transportation industries. The Company employs its airline technology
expertise to offer information technology solutions to clients that face similar
complex operations issues, including airport, railroad, trucking and hospitality
companies. The services offered by the Company include software development and
product sales, transactions processing, consulting, as well as comprehensive
information technology outsourcing. The Company provides data processing,
network and distributed systems services to American and AMR's other
subsidiaries, Canadian, US Airways and other customers, fulfilling substantially
all of their information technology requirements. In 1998, approximately 42.6%
of the Company's revenue was generated by the provision of information
technology solutions.
The Company is aggressively pursuing strategic information technology
relationships that add a new dimension to traditional outsourcing agreements by
integrating its airline applications and business processes into customer
operations. Clients enter into strategic agreements with the Company in order to
benefit from its extensive airline industry expertise, experience with complex
operating and transaction environments and its extensive suite of software
products and services.
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The Company offers a comprehensive set of information technology solution
services to the airline industry. These solutions include: (i) information
technology outsourcing; (ii) software development, sales and licensing; and
(iii) consulting, which includes capabilities ranging from reengineering to
functional consulting. Recruiting and retaining capable personnel, particularly
those with expertise in operations research, information technology and
industrial engineering, is vital to the provision of solutions by the Company.
(i) INFORMATION TECHNOLOGY OUTSOURCING: The Company offers information
technology outsourcing to airlines for desktop, data center, network and
application development. The Company extends real-time transaction processing
services by providing access to its hardware and software to airlines for
reservations, flight operations, departure control and other related services.
Local computer terminals at a customer's location are linked to the Company's
mainframes, and the Company maintains and operates the entire system on a secure
and confidential basis. The Company also provides services for establishing
systems security, voice networks, data center connectivity, helpdesk support and
desktop applications. Some of the major clients for the outsourcing business
include American, Canadian, Aerolineas Argentinas, US Airways, Pakistan
International Airlines, and Gulf Air.
(ii) SOFTWARE DEVELOPMENT, SALES AND LICENSING: The Company provides
software and consulting solutions to more than 170 airlines or airline
associations. These solutions have many applications for airlines. For
example, (a) with the SABRE AIRMAX-SM- revenue management system, airlines
can seek to enhance revenue using statistical and database sources that
estimate the economic implications of fare actions before they are
implemented, (b) with the SABRE AIRPRICE-SM- fares management system,
airlines can analyze and manage fares and react to competitors' changes, (c)
with the SABRE AIRFLITE-SM- flight scheduling system, airlines can determine
superior flight schedules and (d) with the SABRE AIRCREWS-SM- crew management
system, airlines can improve crew member scheduling thus reducing staffing
costs. The Company develops ready off the shelf products as well as
customized software for some of its larger clients. Some of the most popular
products support flight scheduling, flight operations, revenue management,
crew scheduling, sales automation, cargo tracking, passenger systems and
frequent flyer programs. The Company's solutions have helped American become
one of the most technologically advanced airlines in the world.
(iii) CONSULTING: The Company's consulting services assist businesses in
the travel and transportation industries in collecting and analyzing operational
and customer data in order to improve internal operations and product
distribution in the market place. These services enable businesses to improve
airport and other operations and optimally distribute their fares, schedules and
inventories through all available channels - with special emphasis on
distribution through computer reservations and global distribution systems.
The Company distributes its solutions and consulting services through a
sales and marketing organization with offices in ten cities on four continents
(Boston, Chicago, Dallas, Vancouver, London, Paris, Kuwait City, Hong Kong,
Sydney and Auckland). The Company also maintains agency relationships to support
sales efforts in key markets, including India, China and the Middle East. To
date, the Company has provided business solutions to nearly 550 clients located
in more than 85 countries.
In 1996, the Company executed an information technology services agreement
with American for a term of ten years for most services (three and five years
for others). Under this agreement, the Company provides data processing,
network, distributed systems, and applications development services to American
and AMR's other subsidiaries. The Company fulfills substantially all of
American's data processing requirements and manages all voice and data
communication services for American and AMR's other subsidiaries, including data
networks, voice networks and radio services. The Company also provides American
with the services required to design, install, operate and maintain its range of
local area networks, desktop, mobile computing and peripheral devices. The
Company completes nearly all of the applications development for American, as
well as manages the AMR Year 2000 project office and completes most of AMR
system's Year 2000 testing and compliance enhancements.
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In January 1998, the Company completed the execution of a 25-year,
multibillion dollar technology agreement with US Airways to provide
substantially all of US Airways' information technology services. As a part of
the agreement, the Company purchased approximately $47 million of US Airways'
information technology assets, hired more than 600 former employees of US
Airways and granted to US Airways two tranches of stock options, each to acquire
3 million shares of the Company's Class A Common Stock. The agreement covers the
management and operation of US Airways' systems and information technology
services. Additionally, the Company agreed to assist US Airways in making its
information systems Year 2000 compliant. For further discussion of the US
Airways transaction, see Note 4 to the Consolidated Financial Statements.
In connection with the US Airways agreement, in December 1998, the Company
successfully managed the largest information technology system migration ever
performed in the airline industry. Within a two-day timeframe more than 200 US
Airways systems were successfully converted or migrated, including all core
systems--Passenger Service System, Flight Operating System and Cargo--and other
systems such as yield management and in-flight dining. The migration included
the conversion of more than 3.5 million passenger name records and more than two
million electronic tickets to the SABRE system.
In February 1998, the Company executed a 10-year information technology
services agreement with Gulf Air. Under the terms of the agreement, the Company
will be responsible for all of Gulf Air's information technology infrastructure,
including application development and maintenance, as well as data center and
network management.
In November 1998, the Company executed a 10-year agreement with Aerolineas
Argentinas that calls for the airline to outsource the management and provision
of its information technology functions to the Company. The contract also calls
for the Company to provide specialized information technology services to
Aerolineas Argentinas' affiliate, Austral Lineas Aereas-Cielos Del Sur.
In December 1998, the Company executed a 15-year agreement with Pakistan
International Airlines in which the airline will outsource all information
technology functions to the Company. This agreement followed a three-year
consulting agreement signed between the two companies in March 1998.
COMPETITION
In information technology solutions, the Company competes both against
solutions companies and full-service providers of technology outsourcing, some
of which have considerably greater financial resources than the Company, and
against smaller companies that offer a limited range of products. Among the
Company's full-service competitors are Electronic Data Systems, IBM Global
Services, Unisys, Andersen Consulting and Lufthansa Systems. The Company
believes that its competitive position in the travel and transportation
industries is enhanced by its experience in developing systems for American and
other airlines and by its ability to offer not only software applications but
also systems development, integration and maintenance and transaction processing
services.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development costs approximated $39 million for 1998 and $24
million for 1997. Prior to 1997, research and development costs were not
material.
SEGMENT INFORMATION
Financial information for the Company's operating segments and geographical
revenues and assets are included in Note 12 to the Consolidated Financial
Statements.
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INTELLECTUAL PROPERTY
In connection with the Reorganization, American transferred to the Company
the software used in the operation of the business of The Sabre Group. This
software, along with other software, proprietary information, patents,
copyrights, trade secrets, trademarks and intellectual property rights, are
significant assets of the Company. The Company relies on a combination of
patent, copyright, trade secret and trademark laws, confidentiality procedures
and contractual provisions to protect these assets. The Company's software and
related documentation are protected principally under trade secret and copyright
laws, which afford only limited protection. In addition, the laws of some
foreign jurisdictions may provide less protection than the laws of the United
States for the Company's proprietary rights. Unauthorized use of the Company's
intellectual property could have a material adverse effect on the Company, and
there can be no assurance that the Company's legal remedies would adequately
compensate it for the damages to its business caused by such use.
EMPLOYEES
As of December 31, 1998 the Company had approximately 10,800 employees. A
central part of the Company's philosophy is to attract and maintain a highly
capable staff. The Company considers its current employee relations to be good.
None of the Company's employees based in the United States are represented by a
labor union.
ITEM 2. PROPERTIES
The Company's principal executive offices are located in Fort Worth, Texas,
primarily in three buildings, two of which are owned by the Company and one of
which is leased from the Dallas/Fort Worth International Airport Board under a
lease that expires in 2019, subject to four renewal options of five years each,
exercisable at the option of the Company. The Company leases a fourth office
building in Southlake, Texas, under a lease that expires in 2006, subject to two
renewal options of five years each, exercisable at the option of the Company.
Additionally, the Company leases office facilities in Westlake, Texas under
leases expiring in 2003, subject to a three-month or a three-year option,
exercisable at the option of the Company. The Company also leases office
facilities in approximately 70 other locations worldwide.
The Company's principal data center is located in an underground
facility in Tulsa, Oklahoma (the "Data Center"). The land on which the Data
Center is located is leased from the Tulsa Airport Improvements Trust, a
public trust organized under the laws of the State of Oklahoma, pursuant to a
lease that expires in 2038. The SABRE system and the Company's data
processing services are dependent on the Company's central computer
operations and information processing facility located in the Data Center.
The Company also utilizes a computer center located in one of its office
buildings in Fort Worth (the "Fort Worth Center"). At the Fort Worth Center,
the Company operates and manages a wide variety of server based and
client/server distributed systems.
The Company's travel agency and corporate subscribers connect to the
SABRE system through leased access circuits. These leased access circuits, in
turn, connect to the domestic and international data networks leased by the
Company, such as those leased from Societe Internationale de
Telecommunications Aeronautiques ("SITA"), which is owned by a consortium of
Airlines, including American.
The Company believes that its office facilities, Data Center and Fort Worth
Center will be adequate for its immediate needs and that additional or
substitute space is available if needed to accommodate expansion. The Company
also believes that its network access will be adequate for its immediate and
foreseeable needs. The Company, however, continuously invests to upgrade these
facilities to meet changing technological needs.
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ITEM 3. LEGAL PROCEEDINGS
BOOKING FEE DISPUTES
In connection with the Reorganization, the Company was the successor in
interest to American in the following two civil proceedings concerning disputed
booking fees.
In 1995, America West Airlines, Inc. ("America West") began withholding
SABRE system booking fees that it claims were assessed in contravention of
America West's SABRE system participation agreement. In 1996, American and
Sabre Associates, Inc. filed a lawsuit against America West in the District
Court of Tarrant County, Texas, 153rd Judicial District, to recover the
unpaid booking fees from America West. On April 10, 1997, the District Court
granted the Company's motion of summary judgment as to the proper
interpretation of the contract, upholding the Company's position. On April
21, 1997, America West paid the Company $2.9 million in past due booking
fees, with a stipulation that preserved its rights in the lawsuit. In
December 1998, the parties settled the remaining issues in the lawsuit.
In June 1996, American Trans Air, Inc. ("ATA") filed a lawsuit against
American in the U.S. District Court for the Southern District of Indiana,
Indianapolis Division seeking a refund of over $400,000 in booking fees
charged by the Company on similar grounds to America West's claims. In
addition, since June 1996, ATA has withheld payment of approximately $250,000
in SABRE system booking fees. The Company filed a motion for summary judgment
in the ATA lawsuit which is similar to the one granted in the America West
lawsuit. ATA filed a cross-motion for summary judgment similar to the one
filed by America West claiming its interpretation of the contract is the
correct one. On August 12, 1998, the District Court denied ATA's motion in
its entirety and granted the Company's motion as to the definition of a
"booking" and the validity of the charges under the participation agreement.
In January 1999, the Company filed additional motions seeking to dismiss the
remaining issues in the case, which involve interpretation of the Department
of Transportation's CRS regulations.
WORLDSPAN DISPUTE
On January 9, 1998, Worldspan LP ("Worldspan"), the former provider of
computer reservation system services to ABACUS International Holdings
("ABACUS"), filed a lawsuit against the Company in the United States District
Court for the Northern District of Georgia, Atlanta Division, seeking damages
and an injunction, and alleging, among other things, that the Company interfered
with Worldspan's relationship with ABACUS, violated the U.S. antitrust laws, and
misappropriated Worldspan's confidential information. The same day, Worldspan
filed a parallel lawsuit in the same court against ABACUS. On February 26, 1998,
the court denied Worldspan's motion for a preliminary injunction against ABACUS.
Thereafter, the court stayed the ABACUS case pending arbitration between ABACUS
and Worldspan, which is scheduled to begin in May 1999. On September 16, 1998,
the court denied motions by the Company to dismiss Worldspan's lawsuit against
the Company or to stay the case pending arbitration between ABACUS and
Worldspan. The Company believes that Worldspan's claims are without merit and is
vigorously defending itself. No trial date has been set.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
during the fourth quarter of the fiscal year ended December 31, 1998.
PART II
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ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's Class A Common Stock is traded on the New York Stock Exchange
(symbol TSG). The approximate number of record holders of the Company's Class A
Common Stock at March 15, 1999 was 355. All of the 107,374,000 shares of the
Company's Class B Common Stock are owned by AMR and there is no public trading
market for such shares.
The range of the high and low sales prices for the Company's Class A Common
Stock on the New York Stock Exchange for the two most recent fiscal years was:
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
Quarter Ended:
March 31, 1998 36.50 26.062
June 30, 1998 38.625 32.50
September 30, 1998 43.125 29.312
December 31, 1998 44.875 23.00
Quarter Ended:
March 31, 1997 30.00 25.25
June 30, 1997 28.875 23.25
September 30, 1997 37.00 26.438
December 31, 1997 35.875 24.50
</TABLE>
No cash dividends on Class A Common Stock or Class B Common Stock were
declared or paid during 1998 and 1997.
10
<PAGE>
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
1998 1997 1996 1995 1994
------------- ------------- ------------- ------------ ------------
(IN MILLIONS, EXCEPT PER SHARE DATA AND OTHER DATA WHERE INDICATED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA (1):
Revenues $ 2,306.4 $ 1,788.4 $ 1,625.1 $ 1,530.7 $ 1,404.6
Operating expenses 1,956.0 1,475.8 1,295.2 1,149.2 1,056.5
------------- ------------- ------------- ------------ ------------
Operating income 350.4 312.6 329.9 381.5 348.1
Other income (expense), net 21.1 11.0 (24.0) (11.4) (24.0)
------------- ------------- ------------- ------------ ------------
Income before income taxes 371.5 323.6 305.9 370.1 324.1
Income taxes 139.6 123.7 119.3 144.2 126.9
------------- ------------- ------------- ------------ ------------
Net earnings $ 231.9 $ 199.9 $ 186.6 $ 225.9 $ 197.2
------------- ------------- ------------- ------------ ------------
------------- ------------- ------------- ------------ ------------
Earnings per common share, basic and
diluted $ 1.78 $ 1.53 $ 1.43 --- ---
------------- ------------- ------------- ------------ ------------
------------- ------------- ------------- ------------ ------------
BALANCE SHEET DATA
(AT END OF PERIOD) (1):
Current assets $ 944.4 $ 877.6 $ 694.5 $ 271.2 $ 404.3
Total assets 1,926.8 1,504.0 1,287.1 729.4 873.5
Current liabilities 400.8 311.5 289.8 218.6 503.2
Debenture payable to AMR 317.9 317.9 317.9 --- ---
Stockholder's net investment --- --- --- 432.1 289.5
Stockholders' equity 953.7 757.3 569.6 --- ---
OTHER DATA (1):
Operating margin 15.2% 17.5% 20.3% 24.9% 24.8%
Percentage of revenue from
unaffiliated customers 75.1% 70.6% 69.2% 64.2% 58.0%
Direct reservations booked using the
SABRE system (2) 356.5 359.3 348.8 322.8 311.6
Total reservations processed using
the SABRE system (3) 408.6 370.9 356.0 327.5 314.1
Cash flows from operating activities $ 450.8 $ 372.8 $ 415.8 $ 395.9 $ 265.3
Capital expenditures $ 320.0 $ 218.1 $ 184.3 $ 166.8 $ 168.9
</TABLE>
- --------------------------------------------------------------------------------
(1) The Company has significant transactions with AMR and American. The terms
of many of the agreements with AMR and its affiliates were revised
effective January 1, 1996 as a result of the plans for the Reorganization.
See Note 5 to the Consolidated Financial Statements.
(2) CRS reservations for which the Company collects a booking fee.
(3) Includes direct reservations plus reservations processed by joint venture
partners using the SABRE system.
11
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SUMMARY
During 1998 the Company generated approximately 57.4% of its revenue from
electronic travel distribution services and approximately 42.6% of its revenue
from information technology solutions services. The following table sets forth
revenues by affiliation and geographic location as a percentage of total
revenues:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Affiliation:
Unaffiliated Customers 75.1% 70.6% 69.2%
Affiliated Customers 24.9 29.4 30.8
----------- ----------- -----------
Total 100.0% 100.0% 100.0%
----------- ----------- -----------
----------- ----------- -----------
Geographic:
United States 74.3% 72.4% 74.8%
International 25.7 27.6 25.2
----------- ----------- -----------
Total 100.0% 100.0% 100.0%
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Total revenues have grown at a compound annual growth rate of 14.6% for the
three years ended December 31, 1998. Revenues from affiliated customers have
declined as a percentage of total revenues because of growth in the Company's
external business. Revenues from unaffiliated customers grew at a compound
annual growth rate of 20.8% during the three years ended December 31, 1998, to
$1,732 million in 1998. The Company expects that the amount and proportion of
revenues from unaffiliated customers will continue to increase. International
revenues grew at a compound annual growth rate of 33.2% for the three years
ended December 31, 1998, to $593 million in 1998. Revenues from the United
States grew at a compound annual rate of 10.2% over the same period, to $1,713
million in 1998.
Total operating expenses have grown at a compound annual growth rate of
19.4% for the three years ended December 31, 1998. The Company's primary
expenses consist of salaries, benefits and other employee related costs,
depreciation and amortization, communication costs and subscriber incentives,
representing approximately 76.5%, 75.1% and 74.0% of total operating expenses in
1998, 1997 and 1996, respectively. Those expenses grew at a compound annual
growth rate of 19.7% for the three years ended December 31, 1998 primarily due
to the Company's growth, the incremental costs of the Company's Year 2000
efforts, expenses associated with the US Airways agreement and other expenses
incurred to support growth in information technology outsourcing. As a result,
operating margin decreased from 20.3% in 1996 to 15.2% in 1998.
12
<PAGE>
SEASONALITY
The following table sets forth quarterly financial data for the Company (in
millions except per share data):
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1998
- ----
Revenues $ 554.1 $ 576.6 $ 604.3 $ 571.4
Operating income 114.5 109.3 98.4 28.2
Net earnings 71.8 68.5 71.4 20.2
Operating margin 20.7% 19.0% 16.3% 4.9%
Direct reservations booked using the
SABRE system 96.5 91.5 90.6 77.9
Total reservations booked using the
SABRE system 104.4 106.6 105.6 92.0
Earnings per common share, basic $ .55 $ .53 $ .55 $ .16
Earnings per common share, diluted $ .55 $ .52 $ .55 $ .16
1997
- ----
Revenues $ 440.3 $ 448.9 $ 457.5 $ 441.8
Operating income 108.5 94.6 89.5 20.1
Net earnings 66.7 58.5 56.2 18.4
Operating margin 24.6% 21.1% 19.6% 4.5%
Direct reservations booked using the
SABRE system 94.9 93.6 91.4 79.4
Total reservations booked using the
SABRE system 97.5 96.7 94.5 82.2
Earnings per common share, basic and
diluted $ .51 $ .45 $ .43 $ .14
</TABLE>
The travel industry is seasonal in nature. Bookings, and thus booking
fees charged for the use of the SABRE system, decrease significantly each
year in the fourth quarter, primarily in December, due to early bookings by
customers for travel during the holiday season and a decline in business
travel during the holiday season.
AFFILIATE AGREEMENTS WITH AMR AND AMERICAN
The Company, AMR and American have entered into various agreements,
including an agreement for the provision of information technology services to
American by the Company (the "Technology Services Agreement"), an agreement for
the provision of marketing support by American for the Company's travel agency
products and the SABRE BTS-TM- system, the TRAVELOCITY.COM-SM- site and the
EASYSABRE-Registered Trademark- site (the "Marketing Cooperation Agreement"), an
agreement for the provision of management services by American to the Company
(the "Management Services Agreement") and agreements for the provision of travel
services by American to the Company and its employees (the "Corporate Travel
Agreement" and the "Travel Privileges Agreement"). These agreements are
collectively referred to as the "Affiliate Agreements". See Note 5 to the
Consolidated Financial Statements for a description of each agreement. The rates
under the agreements are adjusted or renegotiated from time to time, and current
rates may represent an increase or decrease over previous rates. The financial
terms of the Affiliate Agreements were applied to the Company's operations
commencing January 1, 1996.
The base term of the Technology Services Agreement expires June 30, 2006.
The terms of the services to be provided by the Company to American, however,
vary. For 1998, revenues from services provided under the Technology Services
Agreement with a remaining service term of (i) three years represented
approximately 1.2% of total revenues, (ii) four years represented approximately
3.5% of total revenues and (iii) eight years represented approximately 12.5% of
total revenues.
13
<PAGE>
The Affiliate Agreements generally establish pricing and service terms, and
certain agreements, including the Technology Services Agreement, provide for
periodic price adjustments that may take into account the market for similar
services. Beginning in 1998, the formulas for annually adjusting certain rates
under the Technology Services Agreement are adjusted every two years through
negotiations of the parties which are to be guided by benchmarking procedures
set forth in the agreement.
The Company entered into a Tax-Sharing Agreement with AMR dated July 1,
1996 (the "Tax-Sharing Agreement"), which in most respects formalizes the
Company's previous arrangements with AMR. See Note 2 to the Consolidated
Financial Statements for a description of the agreement.
The Company entered into a Non-Competition Agreement dated July 1, 1996
(the "Non-Competition Agreement"), pursuant to which AMR and American, on behalf
of themselves and certain of their subsidiaries, have agreed to limit their
competition with the Company's businesses under the circumstances described in
Note 5 to the Consolidated Financial Statements.
RESULTS OF OPERATIONS
1998 COMPARED TO 1997
ELECTRONIC TRAVEL DISTRIBUTION. Electronic travel distribution revenues for the
year ended December 31, 1998 increased approximately $120 million, 10.0%,
compared to the year ended December 31, 1997, from $1,205 million to $1,325
million. This increase was primarily due to growth in booking fees from
associates from $1,081 million to $1,174 million. The growth in booking fees was
primarily driven by an overall increase in the average price per booking charged
to associates. Other revenues increased $16 million due to services provided and
equity income related to the Company's ABACUS joint venture and $11 million
related to revenues from sales of miscellaneous products and services.
Cost of revenues for electronic travel distribution increased approximately
$63 million, 7.4%, from $853 million to $916 million. This increase was
primarily attributable to increases in subscriber incentives, depreciation and
amortization, salaries and benefits and other operating expenses. Subscriber
incentive expenses increased in order to maintain and expand the Company's
travel agency subscriber base. Depreciation and amortization expense increased
primarily due to depreciating recently purchased subscriber equipment over
shorter estimated useful lives to reflect an increased rate of technological
changes coupled with an increase in capitalized software and other long-term
assets. These increases were offset by a reduction in a reserve for obsolete
computer equipment. Salaries and benefits increased primarily due to annual
salary increases. Other operating expenses increased primarily due to equipment
maintenance costs and other software development expenses related to the
Company's Year 2000 compliance program. These increases were offset by the
effect of the prior year write-off of a capitalized software development
project.
INFORMATION TECHNOLOGY SOLUTIONS. Revenues from information technology solutions
for the year ended December 31, 1998 increased approximately $399 million,
68.4%, compared to the year ended December 31, 1997, from $583 million to $982
million. Revenues from unaffiliated customers increased approximately $360
million primarily due to services performed under the information technology
services agreement with US Airways and Year 2000 testing and compliance
enhancements for Canadian Airlines. Revenues from affiliated customers increased
approximately $39 million, primarily from Year 2000 services performed for AMR.
Cost of revenues for information technology solutions increased
approximately $397 million, 88.2%, from $450 million to $847 million. This
increase was primarily attributable to an increase in salaries, benefits and
employee related costs, depreciation and amortization expenses and other
operating expenses. Salaries, benefits and employee related costs increased due
to an increase in the average number of employees necessary to support the
Company's business growth and annual salary increases. The increase in
depreciation and amortization expense is primarily due to the acquisition of
information technology assets to support the US Airways' contract and other
normal additions and replacements as well as amortization of the deferred asset
associated with the US Airways' agreement. Other operating expenses increased
primarily due to increased data processing costs, other services purchased and
facility costs.
14
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $21 million, 12.2%, from $172 million to $193
million primarily due to an increase in salaries and benefits and legal and
professional fees. Salaries and benefits increased as a result of sales growth
initiatives and increased administrative requirements to support the Company's
growth. Legal and professional fees increased primarily due to the formation of
the ABACUS joint venture and the growth of outsourcing activity.
OPERATING INCOME. Operating income increased $37 million, 11.8%, from $313
million to $350 million. Operating margins decreased from 17.5% in 1997 to 15.2%
in 1998 due to an increase in revenues of 29.0% while operating expenses
increased 32.5%.
INTEREST INCOME. Interest income decreased $4 million due to lower average
balances maintained in the Company's short-term investment accounts.
INTEREST EXPENSE. Interest expense decreased $2 million primarily due to lower
interest rates.
OTHER, NET. Other, net increased $12 million primarily due to a one-time gain
from a favorable court judgment relating to Ticketnet Corporation, an inactive
subsidiary of the Company.
INCOME TAXES. The provision for income taxes was $140 million and $124 million
in 1998 and 1997, respectively. The increase in the provision for income taxes
primarily corresponds with the increase in income before the provision for
income taxes. See Note 7 to the Consolidated Financial Statements for additional
information regarding income taxes.
NET EARNINGS. Net earnings increased $32 million, 16.0%, from $200 million to
$232 million, primarily due to the increase in operating income and the
favorable court judgment regarding Ticketnet Corporation, an inactive subsidiary
of the Company.
1997 COMPARED TO 1996
ELECTRONIC TRAVEL DISTRIBUTION. Electronic travel distribution revenues for the
year ended December 31, 1997 increased approximately $100 million, 9.0%,
compared to the year ended December 31, 1996, from $1,105 million to $1,205
million. This increase was primarily due to growth in booking fees from $1,007
million to $1,081 million. The growth in booking fees was due to an increase in
booking volumes primarily attributable to international expansion in Europe and
Latin America and an overall increase in the price per booking charged to
associates.
Cost of revenues for electronic travel distribution increased approximately
$90 million, 11.8%, from $763 million to $853 million. This increase was
primarily attributable to increases in salaries, benefits and employee related
costs, depreciation and amortization, subscriber incentive and other operating
expenses. Salaries, benefits and employee related costs increased due to an
increase in the average number of employees necessary to support the Company's
revenue growth and annual salary increases. Employee related costs also
increased due to increased travel expenses. Depreciation and amortization
expense increased primarily due to growth in the subscriber equipment base,
shorter depreciable lives on purchased subscriber equipment reflecting increased
technological changes and an increase in capitalized software. Subscriber
incentive expenses increased in order to maintain and expand the Company's
travel agency subscriber base. Other operating expenses increased due to the
write-off of a capitalized software development project that was intended to
create a new order entry and billing system, costs associated with SabreWorld 97
(a global travel technology conference and trade show), increased software
license expenses, increased reserves for bad debt and an increase in fees paid
to American under the Marketing Cooperation Agreement.
15
<PAGE>
INFORMATION TECHNOLOGY SOLUTIONS. Revenues from information technology solutions
for the year ended December 31, 1997 increased approximately $63 million, 12.1%,
compared to the year ended December 31, 1996, from $520 million to $583 million.
Revenues from unaffiliated customers increased approximately $39 million due to
an increase in software development, consulting and software license fee
revenues. Revenues from AMR increased $24 million due to an increase in software
development revenue and data processing volumes offset by a decrease in data
network revenues from the sale, in July 1996, of data network equipment to a
third party which began direct billing certain items to American.
Cost of revenues for information technology solutions increased
approximately $61 million, 15.7%, from $389 million to $450 million. This
increase was primarily attributable to an increase in salaries, benefits and
employee related costs, offset by a decrease in depreciation and amortization
expense. Salaries, benefits and employee related costs increased due to an
increase in the average number of employees necessary to support the Company's
business growth and annual salary increases. The decrease in depreciation and
amortization expense is primarily due to the benefits of lower price and higher
productivity of certain data center equipment and the sale, in July 1996, of
data network equipment with a net book value of approximately $25 million to a
third party.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $29 million, 20.3%, from $143 million to $172
million primarily due to an increase in salaries, benefits and employee related
costs. Salaries, benefits and employee related costs increased as a result of
sales growth initiatives for both the electronic travel distribution and the
information technology solutions lines of business. Employee related costs also
increased due to increased travel expenses.
OPERATING INCOME. Operating income decreased $17 million, 5.2%, from $330
million to $313 million. Operating margins decreased from 20.3% in 1996 to 17.5%
in 1997 due to an increase in revenues of 10.1% while operating expenses
increased 14.0%.
INTEREST INCOME. Interest income increased $17 million due to higher balances
maintained in the Company's short-term investment accounts.
INTEREST EXPENSE. Interest expense decreased $6 million primarily due to a lower
outstanding principal balance on the Debenture (as defined below) issued to
American in July 1996 and lower interest rates.
OTHER, NET. Other, net increased $13 million primarily due to nonrecurring
losses in 1996 related to an inactive subsidiary of the Company.
INCOME TAXES. The provision for income taxes was $124 million and $119 million
in 1997 and 1996, respectively. The increase in the provision for income taxes
corresponds with the increase in income before the provision for income taxes.
See Note 7 to the Consolidated Financial Statements for additional information
regarding income taxes.
NET EARNINGS. Net earnings increased $13 million, 7.0%, from $187 million to
$200 million, primarily due to the increase in interest and other income offset
by the decrease in operating income.
LIQUIDITY AND CAPITAL RESOURCES
The Company had substantial liquidity at December 31, 1998, with
approximately $538 million in cash and short-term investments and $544 million
in working capital. At December 31, 1997, cash and short-term investments and
working capital were $585 million and $566 million, respectively. The Company
invests cash in short-term marketable securities, consisting primarily of
certificates of deposit, bankers' acceptances, commercial paper, corporate notes
and government notes.
The Company has funded its operations through cash generated from
operations. The Company's cash provided by operating activities of $451 million
in 1998 and $373 million in 1997 was primarily attributable to net earnings
before noncash charges.
16
<PAGE>
Capital investments for 1998 and 1997 were $466 million and $232 million,
respectively. For 1998, capital investments include capital expenditures for
property and equipment of $320 million, including $111 million for information
technology assets acquired from and to support the agreement with US Airways,
and $140 million related to the Company's interest in the ABACUS joint venture.
The Company expects that the principal use of funds in the foreseeable
future will be for capital expenditures, software product development,
acquisitions and working capital. Capital expenditures will primarily consist of
purchases of equipment for the Data Center, as well as computer equipment,
printers, fileservers and workstations to support (i) updating subscriber
equipment primarily for travel agencies, (ii) expansion of the subscriber base
and (iii) new product capital requirements. The Company has estimated capital
expenditures of approximately $275 million to $325 million for 1999. The Company
is also considering the development of a new headquarters facility and the
expansion of its data center facilities to support the Company's growth. The
Company believes available balances of cash and short-term investments combined
with cash flows from operations will be sufficient to meet the Company's capital
requirements.
The Company currently intends to retain its earnings to finance future
growth and, therefore, does not anticipate paying any cash dividends on its
common stock in the foreseeable future. Any determination as to the payment of
dividends will depend upon the future results of operations, capital
requirements and financial condition of the Company and its subsidiaries and
such other factors as the Board of Directors of the Company may consider,
including any contractual or statutory restrictions on the Company's ability to
pay dividends.
In 1997, the Company's Board of Directors authorized, subject to certain
business and market conditions, the repurchase of up to 1.5 million shares of
the Company's Class A Common Stock. During 1998, the Company purchased
approximately 1.4 million treasury shares at a cost of approximately $49
million. On March 16, 1999, the Company's Board of Directors authorized, subject
to certain business and market conditions, the repurchase of up to an additional
1 million shares of the Company's Class A Common Stock.
On March 16, 1999, the Company's Board of Directors authorized a loan of
$300 million to American. The loan agreement was executed on March 17, 1999.
The principal amount of the loan will be due June 30, 1999 and will bear
interest at a rate equal to the Company's average portfolio rate for each
month in which the loan is outstanding plus an additional spread based upon
American's credit risk. The Company has the option to call the note with
ten-business day's notice to American. American may repay the principal
amount prior to June 30, 1999 without penalty. As part of this agreement, the
original Credit Agreement (as defined in Note 5 to the Consolidated Financial
Statements) was modified to terminate American's ability to borrow additional
funds under that agreement.
INTEREST IN EQUANT
At December 31, 1998, American owned approximately 3.1 million depository
certificates representing beneficial ownership of common stock of Equant N.V.
("Equant"), a telecommunications company related to Societe Internationale de
Telecommunications Aeronatiques ("SITA"). Approximately 1.7 million of these
depository certificates were held by American for the economic benefit of the
Company.
Equant completed an initial public offering in July 1998. As of December
31, 1998, the estimated value of the 1.7 million depository certificates, held
on behalf of the Company, was approximately $113 million, based upon the market
value of Equant's publicly-traded common stock. The estimated value of the
certificates was not readily determinable as of December 31, 1997. The Company's
carrying value of these depository certificates was nominal as of December 31,
1998 and 1997.
In connection with a secondary offering of Equant, in February 1999
American liquidated approximately 923,000 depository certificates.
Approximately 490,000 of these certificates, representing approximately 30%
of the Company's interest at December 31, 1998, were liquidated for the
Company's benefit. The Company received proceeds of approximately $35 million
from the transaction, resulting in a gain of approximately $35 million.
17
<PAGE>
The remaining amount of depository certificates held by American, including
those held on behalf of the Company, are subject to change based on a final
equity reallocation among the owners of the depository certificates that will
occur during 1999. The Company anticipates the number of depository
certificates held by American for the economic benefit of the Company will
significantly increase based upon this reallocation. Any future disposal of
such depository certificates may result in additional gains to the Company.
YEAR 2000 COMPLIANCE
STATE OF READINESS. In 1995, the Company implemented a project (the
"Year 2000 Project") intended to ensure that hardware and software systems
operated or licensed in the Company's business, including systems provided to
its travel agency subscribers and its outsourcing customers, are designed to
operate and properly manage dates beyond December 31, 1999 ("Year 2000
Compliant"). The Company has assessed (i) its over 1000 information
technology applications and operating systems that will be utilized to
process dates after December 31, 1999 ("IT Systems") and (ii) its
non-information technology systems, including embedded technology, relating
to security, elevator control, HVAC and systems ("Non-IT Systems"). The Year
2000 Project consists of six phases: (i) awareness, (ii) assessment, (iii)
analysis, design and remediation, (iv) testing and validation, (v) quality
assurance review (to ensure consistency throughout the Year 2000 Project) and
(vi) creation of business continuity strategy, including contingency plans in
the event of Year 2000 failures. In developing the Company's proprietary
software analysis, remediation and testing methodology for Year 2000
compliance, it studied the best practices of the Institute of Electrical and
Electronics Engineers and the British Standards Institution.
IT SYSTEMS. The Company has completed the first three phases of the Year
2000 Project for all of its IT Systems. The Company has completed the testing
and validation phase and quality assurance review phase for 94% of its IT
applications, including its computer reservations and flight operating system
applications that perform such "mission critical" functions as passenger
bookings, ticketing, passenger check-in, aircraft weight and balance, flight
planning and baggage and cargo processing. As of February 28, 1999,
approximately 38% of the IT applications (including the computer reservations
systems) are already processing Year 2000 dates correctly.
Using dedicated testing environments and applying rigorous test standards,
the Company is actively testing its other IT Systems to determine if they are
Year 2000 Compliant or further remediation is necessary. The Company estimates
completing the testing and validation phase and quality assurance review phase
for its remaining IT Systems by June 30, 1999. All software developed by the
Company and currently being marketed is Year 2000 Compliant. The Company has
installed Year 2000 Compliant hardware and software at substantially all of its
travel agency subscriber locations worldwide. The Company will continue
upgrading certain hardware and software that support its IT Systems, which it
estimates will be completed by June 30, 1999.
NON-IT SYSTEMS. The Company has completed the first four phases of the Year
2000 Project and expects to complete the quality assurance review phase during
the second quarter of 1999 for substantially all of its Non-IT Systems. The
Company believes that its business, financial condition and results of
operations would not be materially adversely affected, and that it has adequate
contingency plans to ensure business continuity, if any of its Non-IT Systems
are not Year 2000 Compliant. Accordingly, the Company has primarily focused its
Year 2000 Project efforts on its IT Systems.
THIRD PARTY SERVICES. The Company relies on third party providers for many
services, such as telecommunications, utilities, data and credit card
transaction processing. In providing services to the Company, those providers
depend on their hardware and software systems and, in the case of
telecommunications and data service providers, on interfaces with the Company's
IT Systems. The Company received responses from substantially all of its 650
telecommunications and data service providers, other than providers of
discretionary data services that would not materially adversely affect the
Company's business, financial condition and results of operations. A majority of
the responding providers assured the Company that their software and hardware is
Year 2000 Compliant or will be before June 30, 1999. To the extent practical,
the Company intends to replace third party telecommunications and data service
providers that are not Year 2000 Compliant by June 30, 1999.
18
<PAGE>
The Company's business is particularly dependent on its ability to transmit
data on a worldwide basis through telecommunications networks. For
telecommunications network services, the Company relies on third party service
providers throughout the world, including AT&T, SITA and MCI Worldcom. Many of
those service providers rely on other communications service providers that are
located in less developed countries and may have allocated limited resources to
Year 2000 compliance. The failure of a segment of the telecommunications network
could disrupt the Company's ability to provide services to its customers.
Depending on its severity, a disruption could have a material adverse affect on
the Company's business, financial condition, and results of operations. The
Company does not expect the Year 2000 issues it might encounter with third
parties to be materially different from those encountered by other information
technology companies, including the Company's competitors.
COSTS OF YEAR 2000 PROJECT. The Company expects to incur significant
hardware, software and labor costs, as well as consulting and other expenses, in
its Year 2000 Project. The Company's total estimated cost of the project is
approximately $95 to $105 million, of which approximately $78 million,
cumulatively, was incurred as of December 31, 1998. The total costs include
approximately $25 million for the installation of Year 2000 Compliant hardware
and software at travel agency subscriber locations, approximately $28 million
for the Company's software applications, approximately $18 million related to
the Company's hardware and software infrastructure and approximately $7 million
for project management and other labor costs. Future costs of the Year 2000
Project will primarily result from the redeployment of information technology
resources, although no significant internal IT Systems projects are being
deferred to further the Year 2000 Project. The remaining costs primarily relate
to the ongoing upgrade of certain hardware and software that support the
Company's IT Systems; the analysis, testing and verification of the Year 2000
readiness of third party service providers; and the refinement of the Company's
business continuity plans. Costs associated with the Year 2000 project will be
expensed as incurred and will be paid from operating cash flows.
RISKS OF YEAR 2000 NON-COMPLIANCE. The economy in general, and the travel
and transportation industries in particular, may be adversely affected by risks
associated with the Year 2000. The Company's business, financial condition, and
results of operations could be materially adversely affected if IT Systems that
it operates or licenses to third parties, or systems that are operated by other
parties with which the Company's IT Systems interface, are not Year 2000
Compliant in time. There can be no assurance that these systems will continue to
properly function and interface and will otherwise be Year 2000 Compliant.
Management believes that its most likely Year 2000 risks relate to the failure
of third parties with whom it has material relationships, particularly
telecommunications network providers, to be Year 2000 Compliant.
Although the Company is not aware of any threatened claims related to the
Year 2000, the Company may be subject to litigation arising from such claims
and, depending on the outcome, such litigation could have a material adverse
affect on the Company. There can be no assurance that the Company's insurance
coverage would be adequate to offset these and other business risks related to
the Year 2000 issue.
BUSINESS CONTINUITY PLANS. To the extent practical, the Company is
identifying the most likely Year 2000 failures in an effort to develop and
refine plans to continue its business in the event of failures of the Company's
or third parties' systems to be Year 2000 Compliant. These plans include
performing certain processes manually; maintaining dedicated staff to be
available at crucial dates to remedy unforeseen problems; installing defensive
code to protect real-time systems from improperly formatted date data supplied
by third parties; repairing or obtaining replacement systems; and reducing or
suspending certain non-critical aspects of the Company's services or operations.
Because of the pervasiveness and complexity of the Year 2000 issue, and in
particular the uncertainty concerning the efforts and success of third parties
to be Year 2000 Compliant, the Company will continue to refine its contingency
plans during 1999.
19
<PAGE>
NEW EUROPEAN CURRENCY
In January 1999, certain European countries established fixed conversion
rates between their currencies and a new common currency unit called the "euro".
The Company conducts business in European countries. The transition period for
the introduction of the euro is between January 1, 1999 and June 30, 2002. In
1997, the Company implemented a project intended to ensure that hardware and
software systems operated or licensed in the Company's business, including
systems provided to its travel agency subscribers and its outsourcing customers,
were designed to properly handle the euro. The Company completed the project in
1998. The Company estimates that the conversion to and use of the euro,
including the total cost for the euro project, will not have a material effect
on the Company's business, financial condition, and results of operations.
INFLATION
The Company believes that inflation has not had a material effect on its
results of operations.
OUTLOOK FOR 1999
The Company expects continued profitability and revenue growth in 1999.
Revenues from the Company's existing outsourcing customers, including US
Airways, American and Canadian, are expected to be the same as or less than 1998
revenues because the Company has completed Year 2000 efforts for American and
Canadian and most of the migration services for US Airways. The Company,
however, expects strong revenue growth from outsourcing contracts signed in
1998, from new contracts expected in 1999 and from software development and
real-time transaction processing services. As a result, the Company expects that
the amount and proportion of revenues from information technology solutions
activities to increase.
Additionally, the Company expects overall revenue growth from electronic
travel distribution activities to be consistent with prior years. The Company
anticipates a slight decline in domestic airline bookings in 1999; however, the
Company expects to compensate for the decline with growth in international
bookings, market share gains worldwide, price increases and revenues from new
promotional and marketing products.
The Company expects an improved operating margin in 1999 due to a reduction
in expenses associated with the Company's Year 2000 compliance program because
the project is nearing completion. In addition, the Company expects improved
margins on the US Airways contract as the conversion/migration services will be
completed in early 1999 and the contract will be moving to steady state. The
Company expects that selling, general and administrative expenses will increase
in 1999 as a result of sales growth initiatives and increased administrative
requirements to support the Company's growth.
20
<PAGE>
PRO FORMA STATEMENT OF INCOME DATA
The pro forma statement of income data in the table below is based upon the
historical financial statements of the Company and assumes the Reorganization
and the Offering were consummated on January 1, 1996. The pro forma information
is presented for illustrative purposes only and is not necessarily indicative of
the operating results that would have occurred if such transactions had been
consummated on January 1, 1996, nor is it necessarily indicative of future
results of operations.
The pro forma statement of income data should be read in conjunction with
the Consolidated Financial Statements and related notes thereto of the Company
included elsewhere herein. Pro forma adjustments include the impact of the
Affiliate Agreements and the Debenture as well as other adjustments associated
with the Reorganization and the Offering. See Note 5 to the Consolidated
Financial Statements. Amounts shown below are in thousands, with the exception
of per share amounts.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------
1998 1997 1996
Actual Actual Pro Forma
--------------- --------------- ---------------
<S> <C> <C> <C>
Revenues
Electronic Travel Distribution $ 1,324,795 $ 1,205,192 $ 1,104,885
Information Technology Solutions 981,592 583,271 514,148
--------------- --------------- --------------
Total revenues 2,306,387 1,788,463 1,619,033
Operating expenses
Cost of revenues
Electronic Travel Distribution 915,805 853,221 764,536
Information Technology Solutions 847,212 450,296 382,387
Selling, general and administrative 192,998 172,321 142,618
--------------- --------------- --------------
Total operating expenses 1,956,015 1,475,838 1,289,541
--------------- --------------- --------------
Operating income 350,372 312,625 329,492
Other income (expense)
Interest income 26,034 29,980 13,282
Interest expense (19,493) (21,692) (25,107)
Other, net 14,541 2,736 (9,970)
--------------- --------------- --------------
Total other income (expense) 21,082 11,024 (21,795)
--------------- --------------- --------------
Income before provision for income taxes 371,454 323,649 307,697
Provision for income taxes 139,513 123,796 120,000
--------------- --------------- --------------
Net earnings $ 231,941 $ 199,853 $ 187,697
--------------- --------------- --------------
--------------- --------------- --------------
Earnings per common share, basic and diluted $ 1.78 $ 1.53
--------------- ---------------
--------------- ---------------
Pro forma earnings per common share, basic
and diluted $ 1.44
--------------
--------------
</TABLE>
ACTUAL 1997 COMPARED TO PRO FORMA 1996
ELECTRONIC TRAVEL DISTRIBUTION. Electronic travel distribution actual revenues
for the year ended December 31, 1997 increased approximately $100 million, 9.0%,
compared to pro forma revenues for the year ended December 31, 1996, from $1,105
million to $1,205 million. The increase was primarily due to growth in booking
fees from $1,007 million to $1,081 million. The growth in booking fees was due
to an increase in booking volumes primarily attributable to international
expansion in Europe and Latin America and an overall increase in the price per
booking charged to associates.
21
<PAGE>
Actual cost of revenues for electronic travel distribution for the year
ended December 31, 1997 increased approximately $88 million, 11.5%, compared to
pro forma for the year ended December 31, 1996 from $765 million to $853
million. This increase was primarily attributable to an increase in salaries,
benefits and employee related costs, depreciation and amortization, subscriber
incentive and other operating expenses. Salaries, benefits and employee related
costs increased due to an increase in the average number of employees necessary
to support the Company's revenue growth and annual salary increases.
Depreciation and amortization expense increased primarily due to growth in the
subscriber equipment base, shorter depreciable lives on purchased subscriber
equipment reflecting increased technological changes and an increase in
capitalized software. Subscriber incentive expenses increased in order to
maintain and expand the Company's travel agency subscriber base. Other operating
expenses increased due to the write-off of a capitalized software development
project that was intended to create a new order entry and billing system, costs
associated with SabreWorld 97 (a global travel technology conference and trade
show), increased reserves for bad debt and an increase in fees paid to American
under the Marketing Cooperation Agreement.
INFORMATION TECHNOLOGY SOLUTIONS. Actual revenues from information technology
solutions for the year ended December 31, 1997 increased approximately $69
million, 13.4%, compared to pro forma revenues for the year ended December 31,
1996, from $514 million to $583 million. Revenues from unaffiliated customers
increased approximately $39 million due to an increase in software development,
consulting and software license fee revenues. Revenues from AMR increased $30
million due to an increase in software development revenue and data processing
volumes.
Actual cost of revenues for information technology solutions for the year
ended December 31, 1997 increased approximately $68 million, 17.8%, compared to
pro forma cost of revenues for the year ended December 31, 1996, from $382
million to $450 million. This increase was primarily attributable to an increase
in salaries, benefits and employee related costs and communication expenses,
offset by a decrease in depreciation and amortization expense. Salaries,
benefits and employee related costs increased due to an increase in the average
number of employees necessary to support the Company's business growth and
annual salary increases. The increase in communication expense is primarily due
to the lease of the domestic data network from a third party. This data network
was owned by the Company until July 1996. The decrease in depreciation and
amortization expense is primarily due to the benefits of lower price and higher
productivity of certain data center equipment and the sale, in July 1996, of
data network equipment with a net book value of approximately $25 million to a
third party.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Actual selling, general and
administrative expenses increased $29 million, 20.3%, compared to pro forma
selling, general and administrative expenses, from $143 million to $172 million
primarily due to an increase in salaries, benefits and employee related costs.
Salaries, benefits and employee related costs increased as a result of sales
growth initiatives for both the electronic travel distribution and the
information technology solutions lines of business. Employee related costs also
increased due to increased travel expenses.
OPERATING INCOME. Actual operating income decreased $16 million, 4.9%, compared
to pro forma operating income, from $329 million to $313 million. Operating
margins decreased from 20.4% to 17.5% due to an increase in actual revenues of
10.5% compared to pro forma revenues, while actual operating expenses increased
14.4% compared to pro forma operating expenses.
INTEREST INCOME. Actual interest income increased $17 million, compared to pro
forma interest income, due to higher balances maintained in the Company's
short-term investment accounts.
INTEREST EXPENSE. Actual interest expense decreased $3 million, compared to pro
forma interest expense, due to a decrease in interest rates on the Debenture (as
defined below) issued to American.
OTHER, NET. Actual other, net increased $13 million, compared to pro forma other
income, primarily due to nonrecurring losses in 1996 related to an inactive
subsidiary of the Company.
22
<PAGE>
INCOME TAXES. The actual provision for income taxes was $124 million and the pro
forma provision for income taxes was $120 million for the years ended December
31, 1997 and 1996, respectively. The increase in the provision for income taxes
corresponds with the increase in income before the provision for income taxes.
See Note 7 to the Consolidated Financial Statements for additional information
regarding income taxes.
NET EARNINGS. Actual net earnings increased $12 million, 6.4%, compared to pro
forma net earnings, from $188 million to $200 million, primarily due to the
increase in interest and other income offset by the decrease in operating
income.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement No.
133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, which is
required to be adopted in years beginning after June 15, 1999. Because the
Company does not currently use derivatives to a significant extent, management
does not anticipate that the adoption of Statement 133 will have a significant
effect on the earnings or the financial position of the Company. The Company
will adopt the statement effective January 1, 2000.
Effective January 1, 1999, the Company will be required to adopt the
provisions of SOP 98-1, ACCOUNTING FOR COMPUTER SOFTWARE DEVELOPED OR OBTAINED
FOR INTERNAL USE. SOP 98-1 requires the capitalization of certain costs incurred
during an internal-use software development project. Capitalizable costs consist
of (a) certain external direct costs of materials and services incurred in
developing or obtaining internal-use computer software, (b) payroll and
payroll-related costs for employees who are directly associated with and who
devote time to the project and (c) interest costs incurred. Costs that are
considered to be related to research and development activities, data conversion
activities, and training, maintenance and general and administrative or overhead
costs will continue to be expensed as incurred. Because of the Company's
existing capitalization policies, management does not anticipate that the
adoption of SOP 98-1 will have a significant effect on the earnings or the
financial position of the Company.
CAUTIONARY STATEMENT
Statements in this report which are not purely historical facts, including
statements regarding the Company's anticipations, beliefs, expectations, hopes,
intentions or strategies for the future, may be forward looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. All forward looking statements in this report are based upon
information available to the Company on the date of this report. The Company
undertakes no obligation to publicly update or revise any forward looking
statements, whether as a result of new information, future events or otherwise.
Any forward looking statements involve risks and uncertainties that could cause
actual events or results to differ materially from the events or results
described in the forward looking statements. Readers are cautioned not to place
undue reliance on these forward looking statements.
Risks associated with the Company's forward looking statements include, but
are not limited to: risks related to the Company's relationships with American
and US Airways and their affiliates, including risks that they may terminate any
of the agreements with the Company, or fail or otherwise become unable to
fulfill their principal obligations thereunder, or determine not to renew
certain of the agreements; risks associated with competition, and technological
innovation by competitors, which could require the Company to reduce prices, to
change billing practices, to increase spending or marketing or product
development or otherwise to take actions that might adversely affect its
operations or earnings; risks related to the Company's technology, such as a
failure to timely achieve Year 2000 or euro currency compliance, a failure of
third party suppliers to become Year 2000 Compliant and the outcome of possible
Year 2000 litigation involving the Company; risks related to seasonality of the
travel industry and booking revenues; risks of the Company's sensitivity to
general economic conditions and events that affect airline travel and the
airlines that participate in the SABRE system; risks of a natural disaster or
other calamity that may cause significant damage to the Company's data center
facilities; risks associated with the Company's international operations,
such as currency fluctuations, governmental approvals, tariffs and trade
barriers; risks of new or different legal and regulatory requirements; and
risks associated with the Company's growth strategy, including investments in
emerging markets and the ability to successfully conclude alliances.
23
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK
The Company's exposure to interest rates relates primarily to its investment
portfolio and to its debenture payable to AMR. The Company does not currently
use financial derivative instruments to manage interest rate risk; however, it
does closely monitor the relationship between interest rate-sensitive assets and
liabilities.
The objectives of the Company's short-term investments are safety of principal,
liquidity maintenance, yield maximization and full investment of all available
funds. As such, the Company's investment portfolio consists primarily of high
credit quality certificates of deposit, bankers' acceptances, commercial paper
and corporate and government notes. If short-term interest rates average 10%
lower in 1999 than they were during 1998, the Company's interest income from
short-term investments would change by approximately $0.9 million. This amount
was determined by applying the hypothetical interest rate change to the
Company's short-term investments balance as of December 31, 1998.
In addition, the Company has a floating rate debenture payable to AMR (the
"Debenture") due September 30, 2004 with a principal balance of approximately
$318 million at December 31, 1998. Interest expense on the Debenture is accrued
based on the six month London Interbank Offered Rate (LIBOR rate) plus a margin
derived from the Company's senior unsecured long-term debt rating, or if such
debt rating is not available, upon the Company's ratio of net debt-to-total
capital. The average interest rate on the Debenture for 1998 was 6.1%.
Consequently, if short-term interest rates average 10% higher in 1999 than they
were during 1998, the Company's interest expenses would increase by
approximately $2.0 million. This amount was determined by applying the
hypothetical interest rate change to the Company's Debenture balance as of
December 31, 1998. If the Company's mix of interest rate-sensitive assets and
liabilities changes significantly, the Company may enter into derivative
transactions to manage its net interest exposure.
FOREIGN CURRENCY RISK
The Company has various foreign operations, primarily in North America, South
America, Europe, and Asia. As a result of these business activities, the Company
is exposed to foreign currency risk. However, these exposures have historically
related to a small portion of the Company's overall operations as a substantial
majority of the Company's business is transacted in the United States dollar.
The Company had no open derivative transactions as of December 31, 1998;
however, it may enter into derivative transactions from time-to-time as foreign
currency exposures arise.
24
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
Page
-------------
<S> <C>
Report of Ernst & Young LLP, Independent Auditors 26
Consolidated Balance Sheets 27
Consolidated Statements of Income 28
Consolidated Statements of Cash Flows 29
Consolidated Statements of Stockholders' Equity 30
Notes to Consolidated Financial Statements 31
</TABLE>
25
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
The Sabre Group Holdings, Inc.
We have audited the accompanying consolidated balance sheets of The Sabre
Group Holdings, Inc. and subsidiary as of December 31, 1998 and 1997, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three years in the period ended December 31, 1998. Our audits
also included the financial statement schedule listed under Item 14(a). These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
The Sabre Group Holdings, Inc. and subsidiary at December 31, 1998 and 1997, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1998, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
Dallas, Texas
January 18, 1999,
except for Note 14, as to which
the date is March 16, 1999
26
<PAGE>
THE SABRE GROUP HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
December 31,
-------------------------------------------
1998 1997
------------------- --------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 8,008 $ 11,286
Short-term investments 529,735 573,620
Accounts receivable, net 337,703 239,626
Receivable from affiliates, net 21,609 10,829
Prepaid expenses 21,559 21,148
Deferred income taxes 25,790 21,093
------------------- --------------------
Total current assets 944,404 877,602
PROPERTY AND EQUIPMENT
Buildings and leasehold improvements 329,497 321,987
Furniture, fixtures and equipment 40,286 36,904
Service contract equipment 550,951 548,706
Computer equipment 460,530 395,887
------------------- --------------------
1,381,264 1,303,484
Less accumulated depreciation and amortization (737,488) (721,917)
------------------- --------------------
Total property and equipment 643,776 581,567
Investments in joint ventures 148,683 8,198
Other assets, net 189,954 36,591
------------------- --------------------
TOTAL ASSETS $ 1,926,817 $ 1,503,958
------------------- --------------------
------------------- --------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 157,044 $ 96,041
Accrued compensation and related benefits 93,708 69,694
Other accrued liabilities 150,058 145,785
------------------- --------------------
Total current liabilities 400,810 311,520
Deferred income taxes 13,068 12,354
Pensions and other postretirement benefits 104,574 89,573
Other liabilities 136,749 15,350
Debenture payable to AMR 317,873 317,873
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock: $0.01 par value; 20,000 shares authorized; no shares issued --- ---
Common stock:
Class A: $0.01 par value; 250,000 shares authorized; 23,706 and 23,480
shares issued, respectively 237 235
Class B: $0.01 par value; 107,374 shares authorized; 107,374 shares
issued and outstanding 1998 and 1997 1,074 1,074
Additional paid-in capital 599,087 593,939
Retained earnings 395,800 164,004
Less treasury stock at cost; 1,240 shares and 72 shares, respectively (42,455) (1,964)
------------------- --------------------
Total stockholders' equity 953,743 757,288
------------------- --------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,926,817 $ 1,503,958
------------------- --------------------
------------------- --------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
THE SABRE GROUP HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------
1998 1997 1996
-------------- --------------- ---------------
<S> <C> <C> <C>
REVENUES
Electronic Travel Distribution $ 1,324,795 $ 1,205,192 $ 1,104,885
Information Technology Solutions 981,592 583,271 520,246
-------------- --------------- ---------------
Total revenues 2,306,387 1,788,463 1,625,131
OPERATING EXPENSES
Cost of revenues
Electronic Travel Distribution 915,805 853,221 763,261
Information Technology Solutions 847,212 450,296 389,352
Selling, general and administrative 192,998 172,321 142,573
-------------- --------------- ---------------
Total operating expenses 1,956,015 1,475,838 1,295,186
-------------- --------------- ---------------
OPERATING INCOME 350,372 312,625 329,945
OTHER INCOME (EXPENSE)
Interest income 26,034 29,980 13,282
Interest expense (19,493) (21,692) (27,401)
Other - net 14,541 2,736 (9,970)
-------------- --------------- ---------------
Total other income (expense) 21,082 11,024 (24,089)
-------------- --------------- ---------------
INCOME BEFORE PROVISION FOR INCOME
TAXES 371,454 323,649 305,856
Provision for income taxes 139,513 123,796 119,282
-------------- --------------- ---------------
NET EARNINGS $ 231,941 $ 199,853 $ 186,574
-------------- --------------- ---------------
-------------- --------------- ---------------
EARNINGS PER COMMON SHARE
Basic $ 1.78 $ 1.53 $ 1.43
-------------- --------------- ---------------
-------------- --------------- ---------------
Diluted $ 1.78 $ 1.53 $ 1.43
-------------- --------------- ---------------
-------------- --------------- ---------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
THE SABRE GROUP HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------
1998 1997 1996
----------------- ----------------- -----------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 231,941 $ 199,853 $ 186,574
Adjustments to reconcile net earnings to cash
provided by operating activities
Depreciation and amortization 247,734 185,175 165,064
Deferred income taxes (1,021) (2,945) (28,346)
Other 1,940 6,378 6,475
Changes in operating assets and liabilities
Accounts receivable (103,237) (42,611) (58,043)
Prepaid expenses (9,744) (6,781) (7,779)
Other assets (437) (514) 15,428
Accrued compensation and related benefits 24,014 14,147 21,851
Accounts payable and other accrued liabilities 53,288 40,259 76,226
Receivable from and payable to affiliates (10,780) (38,096) 27,267
Pensions and other postretirement benefits 15,001 19,183 4,310
Other liabilities 2,104 (1,245) 6,814
----------------- ----------------- -----------------
Cash provided by operating activities 450,803 372,803 415,841
INVESTING ACTIVITIES
Additions to property and equipment (320,031) (218,124) (184,261)
Net decrease (increase) in short-term investments 43,373 (144,716) (425,458)
Net investment in joint ventures (134,759) (203) (1,555)
Other investing activities, net (41,691) (18,485) 25,784
Proceeds from sale of equipment 30,276 4,551 33,582
----------------- ----------------- -----------------
Cash used for investing activities (422,832) (376,977) (551,908)
FINANCING ACTIVITIES
Proceeds from issuance of common stock 1,498 771 589,089
Proceeds from exercise of stock options 9,499 661 236
Acquisition of treasury stock (49,321) (1,964) ---
Other financing activities, net 7,075 --- ---
Payments on Debenture payable to AMR --- --- (532,127)
----------------- ----------------- -----------------
Cash provided by (used for) financing activities (31,249) (532) 57,198
----------------- ----------------- -----------------
Decrease in cash and cash equivalents (3,278) (4,706) (78,869)
Cash and cash equivalents at beginning of the
period 11,286 15,992 94,861
----------------- ----------------- -----------------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 8,008 $ 11,286 $ 15,992
----------------- ----------------- -----------------
----------------- ----------------- -----------------
SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments to affiliates for income taxes $ 141,784 $ 121,456 $ 128,932
----------------- ----------------- -----------------
----------------- ----------------- -----------------
Cash payments to affiliates for interest $ 19,818 $ 24,628 $ 15,524
----------------- ----------------- -----------------
----------------- ----------------- -----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
THE SABRE GROUP HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Class B Additional Retained Stockholder's
Common Common Paid-in Earnings Net Treasury
Stock Stock Capital (Deficit) Investment Stock Total
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 $ --- $ --- $ --- $ --- $ 432,137 $ --- $ 432,137
Net earnings prior to the
Reorganization --- --- --- --- 119,050 --- 119,050
Capitalization of the Company
in connection with the
Reorganization
Reclassification
of stockholder's
net investment --- --- --- 551,187 (551,187) --- ---
Issuance of Debenture
payable to AMR --- --- --- (850,000) --- --- (850,000)
Transfer of fixed assets --- --- --- 159,451 --- --- 159,451
Other --- --- --- 48,254 --- --- 48,254
Issuance of 23,230 shares of
Class A Common Stock in
initial public offering 232 --- 588,857 --- --- --- 589,089
Reclassification of shares of
common stock held by AMR
into 107,374 shares of
Class B Common Stock --- 1,074 (1,074) --- --- --- ---
Issuance of 166 shares of
Class A Common Stock
pursuant to stock option
and restricted stock
incentive plans 2 --- 4,102 --- --- --- 4,104
Net earnings subsequent to
Reorganization --- --- --- 67,524 --- --- 67,524
Unrealized gain on investments --- --- --- 32 --- --- 32
-------------------------------------------------------------------------------------------
Balance at December 31, 1996 234 1,074 591,885 (23,552) --- --- 569,641
Net earnings --- --- --- 199,853 --- --- 199,853
Assumption of net pension
liability from AMR --- --- --- (12,395) --- --- (12,395)
Issuance of 83 shares of Class
A Common Stock pursuant
to stock option, stock
purchase and restricted
stock incentive plans 1 --- 2,054 --- --- --- 2,055
Repurchase of Company stock --- --- --- --- --- (1,964) (1,964)
Unrealized gain on investments --- --- --- 98 --- --- 98
-------------------------------------------------------------------------------------------
Balance at December 31, 1997 235 1,074 593,939 164,004 --- (1,964) 757,288
Net earnings --- --- --- 231,941 --- --- 231,941
Repurchase of Company stock --- --- --- --- --- (49,321) (49,321)
Issuance of 486 shares of
Class A Common Stock
pursuant to stock option,
restricted stock incentive
and stock purchase plans 2 --- 2,278 --- --- 8,830 11,110
Tax benefit from exercise of
employee stock options --- --- 2,870 --- --- --- 2,870
Unrealized loss on investments --- --- --- (145) --- --- (145)
-------------------------------------------------------------------------------------------
Balance at December 31, 1998 $ 237 $1,074 $ 599,087 $ 395,800 $ --- $ (42,455) $ 953,743
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
THE SABRE GROUP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. GENERAL INFORMATION
The Sabre Group Holdings, Inc. is a holding company. Its sole direct
subsidiary is The Sabre Group, Inc., which, pursuant to the Reorganization
(as defined below), is the successor to the businesses of The Sabre Group
which were previously operated as subsidiaries or divisions of American
Airlines, Inc. ("American") or AMR Corporation ("AMR"). The Sabre Group was
formed by AMR to capitalize on synergies of combining AMR's information
technology businesses under common management. Unless otherwise indicated,
references herein to the "Company" include The Sabre Group Holdings, Inc.
and its consolidated subsidiaries and, for the period prior to the
Reorganization, the businesses of American and AMR constituting The Sabre
Group, an operating unit of AMR.
On July 2, 1996, AMR reorganized the businesses of The Sabre Group (the
"Reorganization"). As part of the Reorganization, the Company was
incorporated as a Delaware Corporation and a direct wholly-owned subsidiary
of American, the businesses of The Sabre Group formerly operated as
divisions and subsidiaries of American or AMR were combined under the
Company and the Company and its subsidiaries were dividended by American to
AMR.
In connection with the Reorganization on July 2, 1996, the Company issued
1,000 shares of common stock, par value $.01 per share, to American. These
shares were subsequently dividended to AMR. The Company completed its
initial public offering (the "Offering") of 23,230,000 shares of Class A
Common Stock, par value $.01 per share, on October 17, 1996. The offering
price of $27.00 per share resulted in net proceeds to the Company of
approximately $589 million, after deducting underwriting discounts and
commissions and other expenses payable by the Company. The Company used
approximately $532 million of the net proceeds to repay a portion of a
debenture payable to AMR. See Note 5.
Concurrently with the Offering, the 1,000 shares of common stock held by
AMR were reclassified into 107,374,000 shares of Class B Common Stock of
the Company. See Note 9.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - The consolidated financial statements for periods
prior to the Reorganization have been prepared using AMR's historical basis
in the assets and liabilities of the Company. The consolidated financial
statements reflect the results of operations, financial condition and cash
flows of the Company as a component and, subsequent to the Offering, a
majority owned subsidiary of AMR and may not be indicative of actual
results of operations and financial position of the Company under other
ownership. Management believes the consolidated income statements include a
reasonable allocation of administrative costs, which are described in Note
5, incurred by AMR on behalf of the Company. Certain reclassifications have
been made to the 1997 and 1996 financial statements to conform to the 1998
presentation.
CONSOLIDATION - All significant accounts and transactions among the
consolidated entities have been eliminated. For financial reporting
purposes for periods prior to the Reorganization, the equity accounts of
the previous divisions of American and subsidiaries of AMR have been
accumulated into a single disclosure caption entitled Stockholder's Net
Investment.
CASH AND CASH EQUIVALENTS - Prior to the Reorganization, the Company's cash
and cash equivalents were held for the Company by American. Cash and cash
equivalents were immediately charged or credited to the Company upon
recording certain transactions, including transactions with American for
airline booking fees and purchases of goods and services. Cash equivalents
are carried at cost plus accrued interest, which approximates fair value.
Effective with the Reorganization, the Company began maintaining its own
cash management system with separate cash and investment accounts from
American. Subsequent to the Reorganization, the Company does not maintain
cash equivalents.
31
<PAGE>
THE SABRE GROUP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- -----------------------------------------------------------------------------
STATEMENT OF CASH FLOWS - Short-term investments, without regard to
remaining maturity at acquisition, are not considered cash equivalents for
purposes of the statement of cash flows.
DEPRECIATION AND AMORTIZATION - The Company's depreciation and amortization
policies are as follows:
<TABLE>
<S> <C>
Property and Equipment:
Buildings 30 years
Service contract equipment 3 to 5 years
Computer equipment 3 to 5 years
Furniture and fixtures 5 to 15 years
Leasehold improvements Lesser of lease term or useful life
Capitalized software 3 to 5 years
Other Assets:
Internally developed software 3 to 5 years
Intangible assets 3 to 20 years
</TABLE>
Property and equipment are stated at cost less accumulated depreciation and
amortization, which is calculated on the straight-line basis. Service
contract equipment consists of hardware provided primarily
to subscribers of the SABRE computer reservations system ("the SABRE
system"). Depreciation of property and equipment totaled approximately
$224 million, $178 million and $157 million in 1998, 1997 and 1996,
respectively. Amortization of other assets approximated $24 million in
1998 and $8 million in 1997 and 1996. Other assets are amortized on the
straight-line basis over the periods indicated. Accumulated amortization
of other assets approximated $43 million at December 31, 1998 and
$15 million at December 31, 1997.
REVENUE RECOGNITION - The Company provides electronic travel distribution
services using the SABRE system. As compensation for electronic travel
distribution services provided, fees are collected from airline, car
rental and hotel vendors and other providers of travel-related
products and services ("associates") for reservations booked through the
SABRE system. The fee per booking charged to associates is dependent upon
the level of functionality within the SABRE system at which the associate
participates. Revenue for airline travel reservations is recognized at
the time of the booking of the reservation, net of estimated future
cancellations. At December 31, 1998 and 1997, the Company had recorded
booking fee cancellation reserves of approximately $18 million and
$15 million, respectively. Revenue for car rental and hotel bookings and
other travel providers is recognized at the time the reservation is used
by the customer. The Company also enters into service contracts with
subscribers (primarily travel agencies) to provide access to the SABRE
system, hardware, software, hardware maintenance and other support
services. Fees billed on service contracts are recognized as revenue in
the month earned.
The Company also provides information technology solutions to AMR and
companies in the travel industry and other industries worldwide. Revenue
from data processing services is recognized in the period earned. Revenue
from software license fees for standard software products is recognized
when the software is delivered, fees are fixed and determinable, no
undelivered elements are essential to the functionality of delivered
software and collection is probable. The Company recognizes revenue on
long-term software development and consulting contracts under the
percentage of completion method of accounting. Losses, if any, on long-term
contracts are recognized when the current estimate of total contract costs
indicates a loss on a contract is probable. Fixed fees for software
maintenance are recognized ratably over the life of the contract. As a
result of contractual billing terms, at December 31, 1998 and 1997 the
Company had recorded accounts receivable of approximately $74 million and
$52 million, respectively, that had not been billed to customers. In
addition, the Company had deferred revenues of approximately $26 million
and $37 million at December 31, 1998 and 1997, respectively, related to
advance payments from customers and contractual restrictions.
ADVERTISING COSTS - The Company expenses advertising costs as incurred.
Advertising costs expensed in 1998, 1997 and 1996, including amounts paid
to American under the terms of the Marketing Cooperation Agreement (See
Note 5), totaled approximately $37 million, $44 million and $37 million,
respectively.
32
<PAGE>
INCOME TAXES - The entities comprising the Company are included in the
consolidated federal income tax return of AMR. Prior to July 1, 1996, under
the terms of a tax sharing agreement, the Company paid AMR an amount equal
to the income tax payments calculated as if the Company had filed separate
income tax returns.
The Company and AMR entered into a tax sharing agreement effective July 1,
1996 (the "Tax Sharing Agreement"), which provides for the allocation of
tax liabilities during the tax periods the Company is included in the
consolidated federal, state and local income tax returns filed by AMR. The
Tax Sharing Agreement generally requires the Company to pay to AMR the
amount of federal, state and local income taxes that the Company would have
paid had it ceased to be a member of the AMR consolidated tax group for
periods after the Reorganization. The Company is jointly and severally
liable for the federal income tax of AMR and the other companies included
in the consolidated return for all periods in which the Company is included
in the AMR consolidated group. AMR has agreed, however, to indemnify the
Company for any liability for taxes reported or required to be reported on
a consolidated return arising from operations of subsidiaries of AMR other
than the Company.
Except for certain items specified in the Tax Sharing Agreement, AMR
generally retains any potential tax benefit carryforwards, and remains
obligated to pay all taxes attributable to periods before the
Reorganization. The Tax Sharing Agreement also grants the Company certain
limited participation rights in any disputes with tax authorities.
The Company computes its provision for deferred income taxes using the
liability method as if it were a separate taxpayer. Under the liability
method, deferred income tax assets and liabilities are determined based on
differences between financial reporting and income tax bases of assets and
liabilities and are measured using the enacted tax rates and laws. The
measurement of deferred tax assets is adjusted by a valuation allowance, if
necessary, to recognize the extent to which, based on available evidence,
the future tax benefits more likely than not will be realized. At December
31, 1998 and 1997, no valuation allowance was necessary.
RESEARCH AND DEVELOPMENT COSTS - All costs in the software development
process which are classified as research and development costs are expensed
as incurred until technological feasibility has been established. Once
technological feasibility has been established, such costs are capitalized
until the product is ready for service. The Company defines technological
feasibility in accordance with Statement of Financial Accounting Standards
No. 86, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED,
OR OTHERWISE MARKETED. Technological feasibility is achieved upon
completion of all planning, designing, coding and testing activities that
are necessary to establish that a product can be produced according to its
design specifications. The Company amortizes capitalized development costs
using the straight-line method over the estimated economic life of the
software. Research and development costs incurred prior to establishment of
technological feasibility approximated $39 million for 1998 and $24 million
for 1997. Prior to 1997, research and development costs were not material.
CONCENTRATION OF CREDIT RISK - The Company's customers are primarily
located in the United States, Europe, Canada and Latin America, and are
concentrated in the travel industry. Approximately 25%, 29% and 31% of
revenues in 1998, 1997 and 1996, respectively, were related to American and
other subsidiaries of AMR. Approximately 16% of revenues in 1998 were
related to US Airways, Inc. ("US Airways"). The Company generally does not
require security or collateral from its customers as a condition of sale.
The Company maintained an allowance for losses of approximately $12 million
and $9 million at December 31, 1998 and 1997, respectively, based upon the
amount of accounts receivable expected to prove uncollectible.
USE OF ESTIMATES - The preparation of these financial statements in
conformity with generally accepted accounting principles requires that
certain amounts be recorded based on estimates and assumptions made by
management. Actual results could differ from these estimates and
assumptions.
33
<PAGE>
STOCK AWARDS AND OPTIONS - The Company accounts for stock awards and
options (including awards of AMR stock and stock options granted to
employees prior to the Reorganization) in accordance with Accounting
Principles Board Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES.
No compensation expense is recognized for stock option grants if the
exercise price is at or above the fair market value of the underlying stock
on the date of grant. Compensation expense relating to other stock awards
is recognized over the period during which the employee renders service to
the Company necessary to earn the award.
COMPREHENSIVE INCOME - As of January 1, 1998, the Company adopted Financial
Accounting Standards Board Statement No. 130, REPORTING COMPREHENSIVE
INCOME. Comprehensive income is defined as the change in equity of a
business enterprise during a period from transactions and other events and
circumstances from non-owner sources. Statement 130 establishes rules for
the reporting and display of comprehensive income and its components. For
1998, 1997 and 1996, the differences between net earnings and total
comprehensive income were not material.
EARNINGS PER COMMON SHARE - The earnings per common share data for 1996 is
calculated as though the 130,604,000 shares issued in the Reorganization
and Offering were outstanding the entire year, adjusted for the weighted
average additional shares of Class A Common Stock issued subsequent to the
Offering.
Basic earnings per share excludes any dilutive effect of options, warrants
and convertible securities. The number of shares used in the diluted
earnings per share calculations includes the dilutive effect of stock
options, restricted and career equity shares. The net earnings used in the
diluted earnings per share calculations have been adjusted for the
incremental amortization expense that would have been recognized had
options issued to US Airways qualified as equity instruments for accounting
purposes during the period.
FINANCIAL INSTRUMENTS - The carrying value of the Company's financial
instruments (excluding the Equant depository certificates discussed below),
including cash, short-term investments, accounts receivable, and the
debenture payable to AMR approximate their respective fair values at
December 31, 1998 and 1997.
At December 31, 1998, American owned approximately 3.1 million depository
certificates representing beneficial ownership of common stock of Equant
N.V. ("Equant"), a telecommunications company related to Societe
Internationale de Telecommunications Aeronatiques ("SITA"). Approximately
1.7 million of these depository certificates were held by American for the
economic benefit of the Company.
Equant completed an initial public offering in July 1998. As of December
31, 1998, the estimated value of the 1.7 million depository certificates,
held on behalf of the Company, was approximately $113 million, based upon
the market value of Equant's publicly-traded common stock. The estimated
value of the certificates was not readily determinable as of December 31,
1997. The Company's carrying value of these depository certificates was
nominal as of December 31, 1998 and 1997.
RISK MANAGEMENT - To reduce its exposure to future exchange rate
fluctuations, the Company may enter into foreign currency derivative
agreements. At December 31, 1998 and 1997 no such agreements were
outstanding.
TREASURY STOCK - The Company accounts for the purchase of treasury stock at
cost. Upon reissuance of shares of treasury stock, the Company records any
difference between the weighted-average cost of such shares and any
proceeds received as an adjustment to additional paid-in capital.
NEW ACCOUNTING PRONOUNCEMENTS - In June 1998, the Financial Accounting
Standards Board issued Statement No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES, which is required to be adopted in
years beginning after June 15, 1999. Because the Company does not currently
use derivatives to a significant extent, management does not anticipate
that the adoption of Statement 133 will have a significant effect on the
earnings or the financial position of the Company. The Company will adopt
the statement effective January 1, 2000.
34
<PAGE>
Effective January 1, 1999, the Company will be required to adopt the
provisions of SOP 98-1, ACCOUNTING FOR COMPUTER SOFTWARE DEVELOPED OR
OBTAINED FOR INTERNAL USE. SOP 98-1 requires the capitalization of certain
costs incurred during an internal-use software development project.
Capitalizable costs consist of (a) certain external direct costs of
materials and services incurred in developing or obtaining internal-use
computer software, (b) payroll and payroll-related costs for employees who
are directly associated with and who devote time to the project and (c)
interest costs incurred. Costs that are considered to be related to
research and development activities, data conversion activities, and
training, maintenance and general and administrative or overhead costs will
continue to be expensed as incurred. Because of the Company's existing
capitalization policies, management does not anticipate that the adoption
of SOP 98-1 will have a significant effect on the earnings or the financial
position of the Company.
3. SHORT-TERM INVESTMENTS
Short-term investments consist of (in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
Overnight investment and time deposits $ 53,541 $ 119,303
Corporate notes 410,100 242,847
Mortgages 66,094 181,353
U.S. Treasuries --- 30,117
-------------- --------------
Total $ 529,735 $ 573,620
-------------- --------------
-------------- --------------
</TABLE>
The following table summarizes short-term investments by contractual
maturity at December 31, 1998 and 1997, (in thousands):
<TABLE>
<CAPTION>
December 31,
------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
Due in one year or less $ 146,205 $ 346,540
Due after one year through three years 383,530 187,316
Due after three years --- 39,764
-------------- --------------
Total $ 529,735 $ 573,620
-------------- --------------
-------------- --------------
</TABLE>
Short-term investments, all of which are classified as available-for-sale
in accordance with Statement of Financial Accounting Standards No. 115,
ACCOUNTING FOR CERTAIN DEBT AND EQUITY SECURITIES, are stated at fair value
based on market quotes. Net unrealized gains and losses, net of deferred
taxes, are reflected as an adjustment to stockholders' equity.
35
<PAGE>
4. SIGNIFICANT TRANSACTIONS
In January 1998, the Company completed the execution of a 25-year
information technology services agreement with US Airways. Under the terms
of the agreement, the Company will provide substantially all of US Airways'
information technology services. Additionally, the Company agreed to assist
US Airways in making its information systems Year 2000 compliant. In
connection with the agreement, the Company purchased substantially all of
US Airways' information technology assets for approximately $47 million,
hired more than 600 former employees of US Airways, and granted to US
Airways two tranches of stock options, each to acquire 3 million shares of
the Company's Class A Common Stock. During certain periods, US Airways may
select an alternative vehicle of substantially equivalent value in place of
receiving stock. The first tranche of options is exercisable during the six
month period ending two years after the transfer of US Airways' information
technology assets, has an exercise price of $27 per share and is subject to
a cap on share price of $90. The second tranche of options is exercisable
during the ten year period beginning on the fifth anniversary of the asset
transfer date, has an exercise price of $27 per share, and is subject to a
cap on share price of $127. The Company has recorded a long-term liability
and a related deferred asset equal to the number of options outstanding
multiplied by the difference between the exercise price of the options and
the market price of the Company's Class A Common Stock. The asset and
liability are adjusted for changes in the market price of the Company's
stock at each month-end. As of December 31, 1998, the Company has recorded
a liability relating to these options of $105 million and a net deferred
asset of $95 million. During 1998, the Company recorded amortization
expense of approximately $10 million related to the options. The deferred
asset is being amortized over the eleven-year non-cancelable portion of the
agreement.
In February 1998, the Company signed long-term agreements with ABACUS
International Holdings Ltd. which created a Singapore-based joint venture
company, called ABACUS International Ltd. ("ABACUS"), to manage travel
distribution in the Asia/Pacific region. The Company paid $139 million in
cash and contributed its assets related to the Company's ongoing travel
distribution activities in Asia/Pacific and other consideration. In
exchange, the Company received 35 percent of the shares of the joint
venture company. The Company accounts for its investment in the joint
venture using the equity method of accounting. The Company provides ABACUS
with transaction processing on the SABRE system. At December 31, 1998,
the Company's net investment in ABACUS totaled approximately $138 million,
which differs from the Company's net equity in the underlying assets of
ABACUS by approximately $116 million. This amount is being amortized
over 20 years.
In August 1998, the Company received a favorable court judgment related to
Ticketnet Corporation, an inactive subsidiary of the Company. As a result,
the Company recognized approximately $14 million of other income related to
the judgment.
5. CERTAIN RELATED PARTY TRANSACTIONS
DISTRIBUTIONS TO AND CONTRIBUTIONS FROM AFFILIATES - Certain of the
entities from which the Company was formed distributed, in their capacity
as divisions of American, $394 million in 1995 to American. Also during
1995, AMR contributed $245 million to the Company and a note payable to AMR
of $66 million was capitalized in order to adequately capitalize certain of
The Sabre Group entities from which the Company was formed. Proceeds from
the contribution were used to reduce cash advances from AMR.
In conjunction with the capital infusion discussed above, amounts payable
to AMR of approximately $54 million were converted to intercompany notes
payable in 1995, upon which the Company was charged interest expense at an
average rate of 9.9%. On July 1, 1996 the note payable to AMR of
approximately $54 million was capitalized.
36
<PAGE>
INTEREST ON CASH EQUIVALENTS - Prior to the Reorganization, American
allocated interest income or expense monthly based on the net balance of
cash equivalents and the payable to AMR at the average rate earned by
American's portfolio of short-term marketable securities. The allocation
may not be representative of what the Company would have earned or paid if
its cash were held externally. Cash payments for interest are equivalent to
net interest expense for periods prior to the Reorganization.
DEBENTURE PAYABLE TO AMR - On July 2, 1996, in connection with the
Reorganization, American transferred to the Company certain divisions and
subsidiaries of American through which AMR previously conducted its
information technology businesses, and in return the Company issued to
American a floating rate subordinated debenture due September 30, 2004 with
a principal amount of $850 million (the "Debenture") and common stock
representing 100% of the equity ownership interest in the Company. American
subsequently prepaid a portion of its note payable to AMR with the
Debenture. Because the assets and liabilities of the divisions and
subsidiaries of American transferred to the Company are included in the
historical financial statements of the Company, issuing the Debenture
resulted in a reduction of stockholders' equity.
The Company used approximately $532 million of the net proceeds from the
Offering to repay a portion of the Debenture held by AMR.
The interest rate on the Debenture is based on the sum of the London
Interbank Offered Rate (LIBOR rate) plus a margin determined based upon the
Company's senior unsecured long-term debt rating or, if such debt rating is
not available, upon the Company's ratio of net debt to total capital. The
interest rate is determined monthly and accrued interest is payable each
September 30 and March 31. The average interest rate on the Debenture was
6.1%, 6.2% and 7.1% for 1998, 1997 and 1996, respectively. The Company may
prepay the principal balance, approximately $318 million at December 31,
1998, in whole or in part at any interest payment date.
PROPERTY AND EQUIPMENT - During 1997, the Company acquired a building from
American for approximately $6 million.
AFFILIATE AGREEMENTS - In connection with the Reorganization, the Company
entered into certain agreements with AMR and its affiliates (the "Affiliate
Agreements"), which are discussed below.
INFORMATION TECHNOLOGY SERVICES AGREEMENT - The Company is party to the
Information Technology Services Agreement with American dated July 1, 1996
(the "Technology Services Agreement"), to provide American with certain
information technology services. The parties agreed to apply the financial
terms of the Technology Services Agreement as of January 1, 1996. The base
term of the Technology Services Agreement expires June 30, 2006. The terms
of the services to be provided by the Company to American, however, vary.
For example, the Company will provide: (i) Data Center services, data
network services, application development and existing application
maintenance enhancement services until June 30, 2006; (ii) services
relating to existing client server operations until June 30, 2001; (iii)
distributed systems services until June 30, 2002; and (iv) voice network
services until June 30, 2001.
The Technology Services Agreement provides for annual price adjustments.
For certain prices, adjustments are made according to formulas which,
commencing in 1998, are reset every two years and which may take into
account the market for similar services provided by other companies. The
resulting rates may reflect an increase or decrease over the previous
rates.
With limited exceptions, under the Technology Services Agreement the
Company will continue to be the exclusive provider of all information
technology services provided by the Company to American immediately prior
to the execution of the Technology Services Agreement. Any new information
technology services, including most new application development services,
requested by American can be outsourced pursuant to competitive bidding by
American or performed by American on its own behalf. With limited
exceptions, the Company has the right to bid on all new services for which
American solicits bids. Additionally, American may continue to perform
development and enhancement work that it is currently performing on its own
behalf.
37
<PAGE>
After July 1, 2000, American may terminate the Technology Services
Agreement for convenience. If it does so, American will be required to pay
a termination fee equal to the sum of all amounts then due under the
Technology Services Agreement, including wind-down costs, net book value of
dedicated assets and a significant percentage of estimated lost profits.
American may also terminate the Technology Services Agreement without
penalty, in whole or in part depending upon circumstances, for egregious
breach by the Company of its obligations or for serious failure to perform
critical or significant services. If the Company is acquired by another
Company (other than AMR or American) with more than $1 billion in annual
airline transportation revenue, then American may terminate the Technology
Services Agreement without paying any termination fee. Additionally, if
American were to dispose of any portion of its businesses or any affiliate
accounting for more than 10% of the Company's fees from American, then
American shall either cause such divested business or affiliate to be
obligated to use the Company's services in accordance with the Technology
Services Agreement or pay a proportionate termination fee.
In addition, Airline Management Services, Incorporated (AMS), a subsidiary
of AMR, and Canadian Airlines International, Ltd. ("Canadian") have entered
into an agreement pursuant to which AMR and American supply to Canadian
various services, including technology services. The Company is a principal
provider of data processing and network distributed systems services to
Canadian under the terms of the Canadian Technical Services Subcontract
(the "Canadian Subcontract") with American which expires in 2006. Under the
terms of the Canadian Subcontract, American guaranteed full payment for
services actually performed by the Company and unrecovered deferred costs
associated with the installation and implementation of certain systems. As
permitted by the terms of the Canadian Subcontract, in December 1996,
American paid the Company approximately $40 million, representing the
unrecovered deferred costs. Approximately $5 million of these deferred
costs were charged to operations in 1996.
MANAGEMENT SERVICES AGREEMENT - The Company and American are parties to a
Management Services Agreement dated July 1, 1996 (the "Management Services
Agreement"), pursuant to which American performs various management
services for the Company that American has historically provided to the
Company. American also manages the Company's cash balances under the terms
of the Management Services Agreement. Transactions with American are
settled through monthly billings, with payment due in 30 days. The
Management Services Agreement will expire on June 30, 1999, unless
terminated earlier if American and the Company are no longer under common
control or if the Technology Services Agreement is terminated early.
Amounts charged to the Company under this agreement approximate American's
cost of providing the services plus a margin. The parties agreed to apply
the financial terms of the Management Services Agreement as of January 1,
1996.
MARKETING COOPERATION AGREEMENT - The Company and American are parties to
the Marketing Cooperation Agreement dated July 1, 1996 (the "Marketing
Cooperation Agreement"), pursuant to which American will provide marketing
support for 10 years for the Company's professional SABRE products
targeted to travel agencies and for five years for the SABRE BUSINESS
TRAVEL SOLUTIONS-TM- system ("the SABRE BTS-TM- system"), the
TRAVELOCITY.COM-SM- online travel site ("the TRAVELOCITY.COM-SM- site")
and the EASYSABRE-Registered Trademark- reservations site ("the
EASYSABRE-Registered Trademark- site"). The parties agreed to apply the
financial terms of the Marketing Cooperation Agreement as of January 1,
1996. The Marketing Cooperation Agreement may be terminated by either party
prior to June 30, 2006 only if the other party fails to perform its
obligations thereunder.
38
<PAGE>
Under the Marketing Cooperation Agreement, American's marketing efforts
include ongoing promotional programs to assist in the sale of those
SABRE products, development with the Company of an annual sales plan,
sponsorship of sales/promotional events and the targeting of potential
customers. Under the terms of the Marketing Cooperation Agreement, the
Company pays American a fee for its marketing support for professional
SABRE products, the amount of which may increase or decrease, depending
on total SABRE booking volumes generated by certain subscribers in the
U.S., the Caribbean and elsewhere and on the Company's market share of
travel agency bookings in those areas. As payment for American's support
of the Company's promotion of the SABRE BTS-TM- system, the
TRAVELOCITY.COM-SM- site and the EASYSABRE-Registered Trademark- site,
the Company pays American a marketing fee based upon booking volume.
The total fee was approximately $17 million, $22 million and $20 million
in 1998, 1997 and 1996, respectively. Additionally, the Company has
guaranteed to American certain cost savings in the fifth year of the
Marketing Cooperation Agreement. If American does not achieve those
savings, the Company will pay American any shortfall, up to a maximum
of $50 million. As of December 31, 1998, the Company has recorded a
liability of approximately $7 million for this guarantee.
NON-COMPETITION AGREEMENT - The Company, AMR and American have entered into
a Non-Competition Agreement dated July 1, 1996 (the "Non-Competition
Agreement"), pursuant to which AMR and American, on behalf of themselves
and certain of their subsidiaries, have agreed to limit their competition
with the Company's businesses of (i) electronic travel distribution; (ii)
development, maintenance, marketing and licensing of software for travel
agency, travel, transportation and logistics management; (iii) computer
system integration; (iv) development, maintenance and operation of a data
processing center providing data processing services to third parties; and
(v) travel industry, transportation and logistics consulting services
relating primarily to computer technology and automation. The
Non-Competition Agreement expires on December 31, 2001. American may
terminate the Non-Competition Agreement, however, as to the activities
described in clauses (ii) though (v) of this paragraph upon 90 days notice
to the Company if the Technology Services Agreement is terminated as a
result of an egregious breach thereof by the Company.
TRAVEL AGREEMENTS - The Company and American are parties to a Travel
Privileges Agreement dated July 1, 1996 (the "Travel Privileges
Agreement"), pursuant to which the Company is entitled to purchase personal
travel for its employees and retirees at reduced fares. The Travel
Privileges Agreement will expire on June 30, 2008. To pay for the provision
of flight privileges to certain of its future retired employees, the
Company makes a lump sum payment to American each year, beginning in 1997,
for each employee retiring in that year. The payment per retiree is based
on the number of years of service with the Company and AMR over the prior
ten years of service. Service years accrue for the Company beginning on
January 1, 1993. AMR will retain the obligation for the portion of benefits
attributable to service years prior to January 1, 1993. The accumulated
benefit obligation for postretirement travel privileges assumed by the
Company at July 1, 1996 of approximately $8 million, net of deferred taxes
of approximately $3 million, was recorded as a reduction to stockholders'
equity. The remaining cost of providing this privilege is being accrued
over the estimated service lives of the employees eligible for the
privilege. See Note 6.
The Company and American are also parties to a Corporate Travel Agreement
dated July 1, 1996 and ending June 30, 1998 (the "Corporate Travel
Agreement"), pursuant to which the Company receives discounts for certain
flights purchased on American. In exchange, the Company must fly a certain
percentage of its travel on American as compared to all other air carriers
combined. If the Company fails to meet the applicable percentage on an
average basis over any calendar quarter, American may terminate the
agreement upon 60 days' notice. In 1998, the Company and American entered
into a new corporate travel agreement (the "Revised Corporate Travel
Agreement") commencing July 1, 1998 and ending June 30, 2001. The terms and
conditions of the Revised Corporate Travel Agreement are substantially the
same as the Corporate Travel Agreement.
The parties agreed to apply the financial terms of the Travel Privileges
Agreement and the Corporate Travel Agreement as of January 1, 1996.
39
<PAGE>
CREDIT AGREEMENT - On July 1, 1996, the Company and American entered into a
Credit Agreement pursuant to which the Company is required to borrow from
American, and American is required to lend to the Company, amounts required
by the Company to fund its daily cash requirements. In addition, American
may, but is not required to, borrow from the Company to fund its daily cash
requirements. The maximum amount the Company may borrow at any time from
American under the Credit Agreement is $300 million. The maximum amount
that American may borrow at any time from the Company under the Credit
Agreement is $100 million. Loans under the Credit Agreement are not
intended as long-term financing. If the Company's credit rating is better
than "B" on the Standard & Poor's Rating Service Scale (or an equivalent
thereof) or American has excess cash, as defined, to lend the Company, the
interest rate to be charged to the Company is the sum of (a) the higher of
(i) American's average rate of return on short-term investments for the
month in which the borrowing occurred or (ii) the actual rate of interest
paid by American to borrow funds to make the loan to the Company under the
Credit Agreement, plus (b) an additional spread based upon the Company's
credit risk. If the Company's credit rating is "B" or below on the Standard
& Poor's Rating Service Scale (or an equivalent thereof) and American does
not have excess cash to lend to the Company, the interest rate to be
charged to the Company is the lower of (a) the sum of (i) the borrowing
cost incurred by American to draw on its revolving credit facility to make
the advance, plus (ii) an additional spread based on the Company's credit
risk, or (b) the sum of (i) the cost at which the Company could borrow
funds from an independent party plus (ii) one-half of the margin American
pays to borrow under its revolving credit facility. The Company believes
that the interest rate it will be charged by American could, at times, be
slightly above the rate at which the Company could borrow externally;
however, no standby fees for the line of credit will be required to be paid
by either party. The interest rate to be charged to American is the
Company's average portfolio rate for the months in which borrowing occurred
plus an additional spread based upon American's credit risk. At the end of
each quarter, American must pay all amounts owing under the Credit
Agreement to the Company. No borrowings have occurred by either the Company
or American under this agreement.
INDEMNIFICATION AGREEMENT - In connection with the Reorganization, the
Company and American entered into an intercompany agreement (the
"Indemnification Agreement") pursuant to which each party indemnified the
other for certain obligations relating to the Reorganization. Pursuant to
the Indemnification Agreement, the Company indemnified American for
liabilities assumed in the Reorganization, against third party claims
asserted against American as a result of American's prior ownership of
assets or operation of businesses contributed to the Company and for losses
arising from or in connection with the Company's lease of property from
American. In exchange, American indemnified the Company for specified
liabilities retained by it in the Reorganization, against third party
claims against the Company relating to American's businesses and asserted
against the Company as a result of the ownership or possession by American
prior to the Reorganization of any asset contributed to the Company in the
Reorganization and for losses arising from or in connection with American's
lease of property from the Company.
SERVICES AGREEMENTS - The Company is party to Services Agreements with AMR
Services Corporation, AMR Combs, Inc. and TeleService Resources, Inc.
("TSR"), each effective as of July 1, 1996 (the "Services Agreements").
Under the Services Agreements, the Company will be the provider to each of
the companies of certain information technology services, including data
center services, connectivity services and network services. The base term
of the Services Agreements have a scheduled expiration date of December 31,
2002.
INFORMATION TECHNOLOGY SERVICES AGREEMENT - The Company is party to an
Information Technology Services Agreement (the "ITS Agreement") with TSR,
effective July 1, 1998. Under the ITS Agreement, the Company will provide
certain information technology services and license certain applications to
TSR with respect to the SPIRIT Multihost System ("SPIRIT") owned by the
Hyatt Corporation and marketed by the Company. The parties also agreed to
jointly market SPIRIT. The ITS Agreement has a stated term of seven years,
however, either party may terminate the ITS Agreement for convenience on or
after January 1, 2003.
REVENUES FROM AFFILIATES - Revenues from American and other subsidiaries of
AMR were $574 million, $526 million and $500 million in 1998, 1997 and
1996, respectively.
40
<PAGE>
OPERATING EXPENSES - Operating expenses are charged to the Company by
American and other subsidiaries of AMR to cover certain employee benefits,
facilities rental, marketing services, management services, legal fees and
certain other administrative costs based on employee headcount or actual
usage of facilities and services. The Company believes amounts charged to
the Company for these expenses approximate the cost of such services
provided by third parties. Travel service costs for travel by the Company's
employees for personal and business travel are charged to the Company based
on rates negotiated with American. If the Company were not affiliated with
American, the personal travel flight privilege would most likely not be
available to employees. The rates negotiated with American for 1998, 1997
and 1996 under the Corporate Travel Agreement approximate corporate travel
rates offered by American to similar companies. Expenses charged to the
Company by affiliates are as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Employee benefits $ 41,348 $ 55,872 $ 85,538
Facilities rental 2,706 3,526 19,120
Marketing cooperation 24,044 21,779 20,436
Management services 10,069 11,276 17,143
Other administrative costs 12,732 6,799 14,767
Travel services 45,433 47,638 42,855
---------- ---------- ----------
Total expenses $ 136,332 $ 146,890 $ 199,859
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
6. EMPLOYEE BENEFIT PLANS
Effective January 1, 1997, the Company established The Sabre Group
Retirement Plan (the "SGRP"), a defined contribution plan qualified under
Section 401(k) of the Internal Revenue Code of 1986. The Company recorded
expenses related to the SGRP of approximately $16 million and $11 million
in 1998 and 1997, respectively.
Additionally, effective January 1, 1997, the Company established The Sabre
Group Legacy Pension Plan (the "LPP"), a tax-qualified defined benefit plan
for employees meeting certain eligibility requirements. Prior to 1997,
substantially all employees of the Company were eligible to participate in
American's tax-qualified defined benefit pension plan (the "American
Plan"). Costs associated with employee participation in this plan were
determined based upon employee headcount and were allocated to the Company
by American. American's annual allocation of costs to the Company for such
benefits, which are included in employee benefits in the table in Note 5,
was approximately $20 million in 1996.
In October 1997, the portion of the American Plan applicable to employees
of the Company was spun-off to the LPP. At the date of spin-off, the net
obligation attributable to the Company's employees participating in the
American Plan, a liability of approximately $20 million, was charged to
stockholders' equity, net of deferred taxes of approximately $8 million.
Substantially all employees of the Company may become eligible for certain
health care and life insurance benefits provided by American to retired
employees of the Company. The amount of health care benefits is limited to
lifetime maximums as outlined in the plan. Certain employee groups make
contributions towards funding a portion of their retiree health care
benefits during their working lives. The Company funds benefits as incurred
and also matches employee prefunding.
41
<PAGE>
Pursuant to the Travel Privileges Agreement, the Company is entitled to
purchase personal travel for certain retirees. To pay for the provision of
flight privileges to certain of its future retired employees, the Company
makes a lump sum payment to American for each employee retiring in that
year. The payment per retiree is based on the number of years of service
with the Company and AMR over the prior ten years of service. Service years
accrue for the Company beginning on January 1, 1993. AMR retains the
obligation for the portion of benefits attributable to service years prior
to January 1, 1993. In connection with the Reorganization, the accumulated
benefit obligation for postretirement travel privileges at July 1, 1996 of
approximately $8 million, net of deferred taxes of approximately $3
million, was recorded as a reduction to stockholders' equity. The remaining
cost of providing this privilege is being accrued over the estimated
service lives of the employees eligible for the privilege. Prior to the
Reorganization, the flight privileges provided to retired employees did not
result in significant incremental costs for the Company and, therefore, the
cost of providing this to the Company's employees was not included in the
postretirement costs for periods prior to the Reorganization.
The following tables provide a reconciliation of the changes in the plan's
benefit obligations and fair value of assets for the years ended December
31, 1998 and 1997, and a statement of funded status as of December 31, 1998
and 1997 (in thousands):
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
------------------------------ ------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at January 1 $ (159,380) $ (120,020) $ (50,983) $ (42,581)
Service cost (11,257) (9,845) (5,261) (3,891)
Interest cost (12,370) (10,056) (4,065) (3,592)
Actuarial gains (losses) (28,496) (19,478) 2,426 (1,183)
Benefits paid 58 19 550 264
-------------- -------------- -------------- --------------
Benefit obligation at December 31 $ (211,445) $ (159,380) $ (57,333) $ (50,983)
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Change in plan assets:
Fair value at January 1 $ 92,318 $ 77,331 $ 6,637 $ 4,440
Actual return on plan assets 7,637 13,877 742 1,087
Company contributions 7,915 --- 2,104 1,374
Transfers from affiliates 2,795 1,129 --- ---
Benefits paid (58) (19) (550) (264)
-------------- -------------- -------------- --------------
Fair value at December 31 $ 110,607 $ 92,318 $ 8,933 $ 6,637
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Funded status of the plan
(underfunded) $ (100,838) $ (67,062) $ (48,400) $ (44,346)
Unrecognized net loss (gain) 57,583 32,866 (11,574) (9,330)
Unrecognized prior service cost 220 242 (1,430) (1,580)
Unrecognized transition asset (135) (363) --- ---
-------------- -------------- -------------- --------------
Accrued benefit cost $ (43,170) $ (34,317) $ (61,404) $ (55,256)
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
42
<PAGE>
The assumptions used in the measurement of the Company's benefit
obligations as of December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
------------------------------ ------------------------------
Weighted-average assumptions: 1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Discount rate 7.00% 7.25% 7.00% 7.25%
Expected return on plan assets 9.50% 9.50% 9.50% 9.50%
Rate of compensation increase 5.25% 4.00% --- ---
</TABLE>
A 5% annual rate of increase in the per capita cost of covered health care
benefits was assumed for 1999 and the rate was assumed to remain at that
level thereafter.
The following table provides the components of net periodic benefit costs
for the two years ended December 31, 1998 for the LPP and for the three
years ended December 31, 1998 for other postretirement benefits (in
thousands). Total costs for other postretirement benefits are included in
employee benefits in the table in Note 5.
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
--------------------------- -----------------------------------------
1998 1997 1998 1997 1996
----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Service cost $ 11,257 $ 9,845 $ 5,261 $ 3,891 $ 4,170
Interest cost 12,370 10,056 4,065 3,592 6,043
Expected return on plan assets (8,336) (7,337) (684) (460) (358)
Amortization of transition asset (228) (228) --- --- ---
Amortization of prior service cost 22 22 (150) (150) ---
Amortization of net loss (gain) 1,690 712 (241) (313) (70)
----------- ------------ ----------- ----------- -----------
Total net periodic benefit cost $16,775 $ 13,070 $ 8,251 $ 6,560 $ 9,785
----------- ------------ ----------- ----------- -----------
----------- ------------ ----------- ----------- -----------
</TABLE>
Assumed health care cost trend rates have a significant effect on the
amounts reported for the postretirement medical benefit plans. A one
percentage point decrease in the assumed health care cost trend rates would
decrease the total service and interest cost components of total net
periodic benefit cost for 1998 and the postretirement benefit obligations
at December 31, 1998 by approximately $2 million and $8 million,
respectively. A one percentage point increase in the assumed health care
cost trend rates would increase the total service and interest cost
components of total net periodic benefit cost for 1998 and the
postretirement benefit obligations at December 31, 1998 by approximately $2
million and $7 million, respectively.
Plan assets for the LPP and for the postretirement health care and life
insurance benefits consist primarily of mutual fund shares managed by a
subsidiary of AMR invested in debt and equity securities.
43
<PAGE>
7. INCOME TAXES
The provision (benefit) for income taxes is as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
Current portion:
Federal $ 120,628 $ 126,805 $ 121,774
State 7,976 3,661 17,888
Foreign 11,930 5,052 2,644
--------------- --------------- ---------------
Total current 140,534 135,518 142,306
Deferred portion:
Federal (7,186) (23,141) (23,438)
State 6,165 11,419 414
--------------- --------------- ---------------
Total deferred (1,021) (11,722) (23,024)
--------------- --------------- ---------------
Total provision for income taxes $ 139,513 $ 123,796 $ 119,282
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
The provision for income taxes differs from amounts computed at the
statutory federal income tax rate as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
Statutory income tax provision $ 130,009 $ 113,278 $ 107,050
State income taxes, net of federal benefit 9,192 9,802 11,896
Foreign tax credit --- --- 241
Other, net 312 716 95
--------------- --------------- ---------------
Total provision for income taxes $ 139,513 $ 123,796 $ 119,282
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
The components of the Company's deferred tax assets and liabilities as of
December 31, 1998 and 1997 were as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997
-------------- --------------
<S> <C> <C>
Deferred tax assets:
Accrued expenses $ 36,883 $ 31,626
Employee benefits other than pensions 26,975 21,201
Deferred revenue 5,151 14,778
Pension obligations 14,956 13,127
State net operating loss carryforwards 564 922
Other 789 4,424
-------------- --------------
Total deferred tax assets 85,318 86,078
Deferred tax liabilities:
Depreciation and amortization (52,578) (58,836)
Other (20,018) (18,503)
-------------- --------------
Total deferred tax liabilities (72,596) (77,339)
-------------- --------------
Net deferred tax asset $ 12,722 $ 8,739
-------------- --------------
-------------- --------------
Current deferred income tax asset $ 25,790 $ 21,093
Noncurrent deferred income tax liability (13,068) (12,354)
-------------- --------------
Net deferred tax asset $ 12,722 $ 8,739
-------------- --------------
-------------- --------------
</TABLE>
44
<PAGE>
8. COMMITMENTS AND CONTINGENCIES
Certain service contracts with significant subscribers contain booking fee
productivity clauses and other provisions which allow subscribers to
receive various amounts of additional equipment and other services from the
Company at no cost to the subscribers. The Company establishes liabilities
for these commitments as the subscribers satisfy the applicable contractual
terms. The service contracts are priced so that the additional airline and
other booking fees generated over the life of the contract will exceed the
cost of the equipment and other services. Accrued subscriber incentives at
December 31, 1998 and 1997 were approximately $38 million and $36 million,
respectively.
On July 1, 1996 the Company entered into an operating lease agreement with
AMR for certain facilities and AMR assigned its rights and obligations
under certain leases to the Company. Also on July 1, 1996 the Company
entered into an operating lease agreement with a third party for the lease
of other facilities. At December 31, 1998, the future minimum lease
payments required under these operating lease agreements, along with
various other operating lease agreements with terms in excess of one year
for facilities, equipment and software licenses were as follows (in
thousands):
<TABLE>
<CAPTION>
Year Ending December 31, Affiliates Third Parties
------------------------ ---------- -------------
<S> <C> <C>
1999 $ 1,389 $ 40,458
2000 761 34,024
2001 115 29,002
2002 106 26,409
2003 15 25,122
Thereafter 90 73,262
</TABLE>
Rental expense, excluding facilities rented from affiliates, was
approximately $43 million, $36 million and $40 million for the years ended
December 31, 1998, 1997 and 1996, respectively.
In October 1998, the Company sold data center mainframe equipment to an
unrelated party for approximately $34 million. The Company recognized a
deferred gain of approximately $1 million on the transaction. The Company
then entered into an agreement to lease back the equipment from the
unrelated party. The agreement has a term of seven years; however, the
Company has the option, at its discretion, to terminate the contract as of
December 31, 2001. Minimum lease payments of approximately $59 million are
included in the schedule above. Under the agreement, the Company may lease
additional equipment at rates specified in the agreement.
The Company is involved in certain disputes arising in the normal course of
business. Although the ultimate resolution of these matters cannot be
reasonably estimated at this time, management does not believe that they
will have a material adverse effect on the financial condition or results
of operations of the Company.
45
<PAGE>
9. CAPITAL STOCK
The authorized capital stock of the Company consists of 250,000,000 shares
of Class A Common Stock, par value $.01 per share, 107,374,000 shares of
Class B Common Stock, par value $.01 per share, and 20,000,000 shares of
preferred stock, par value $.01 per share. As of December 31, 1998, no
shares of preferred stock have been issued.
The holders of Class A Common Stock and Class B Common Stock generally have
identical rights, except that the holders of Class A Common Stock are
entitled to one vote per share while holders of Class B Common Stock are
entitled to 10 votes per share on all matters to be voted on by
stockholders. Holders of shares of Class A Common Stock and Class B Common
Stock are not entitled to cumulate their votes in the election of
directors. Generally, all matters to be voted on by stockholders must be
approved by a majority (or in the case of election of directors, by a
plurality) of the votes entitled to be cast by all shares of Class A Common
Stock and Class B Common Stock present in person or represented by proxy,
voting together as a single class, subject to any voting rights granted to
holders of any preferred stock. Except as otherwise provided by law, and
subject to any voting rights granted to holders of any outstanding
preferred stock, amendments to the Company's Certificate of Incorporation
generally must be approved by a majority of the combined voting power of
all Class A Common Stock and Class B Common Stock voting together as a
single class. However, amendments to the Company's Certificate of
Incorporation that would alter or change the powers, preferences or special
rights of the Class A Common Stock or the Class B Common Stock so as to
affect them adversely also must be approved by a majority of the votes
entitled to be cast by the holders of the shares affected by the amendment
voting as a separate class. Notwithstanding the foregoing, any amendment to
the Company's Certificate of Incorporation to increase the authorized
shares of any class or authorize the creation, authorization or issuance of
any securities convertible into, or warrants or options to acquire, shares
of any such class or classes of stock must be approved by the affirmative
vote of the holders of a majority of the common stock, voting together as a
single class.
Effective as of the first time at which AMR ceases to be the beneficial
owner of an aggregate of at least a majority of the voting power of the
Voting Stock (as defined) of the Company then outstanding, amendments to
certain provisions of the Certificate of Incorporation will require the
approval of 80% of the combined voting power of all Class A Common Stock
and Class B Common Stock, voting together as a single class.
Holders of Class A Common Stock and Class B Common Stock will share in an
equal amount per share in any dividend declared by the Board of Directors,
subject to any preferential rights of any outstanding preferred stock.
Except as provided below, any shares of Class B Common Stock transferred to
a person other than AMR or any of its subsidiaries or the Class B
Transferee (as defined below) shall automatically convert to Class A Common
Stock upon such disposition. Shares of Class B Common Stock representing
more than 50% economic interest in the Company transferred by AMR or any of
its subsidiaries in a single transaction to one unrelated person (the
"Class B Transferee") or any subsidiary of the Class B Transferee shall not
automatically convert to shares of Class A Common Stock upon such
disposition. Any shares of Class B Common Stock retained by AMR or its
subsidiaries following any such transfer of shares of Class B Common Stock
to the Class B Transferee shall automatically convert into shares of Class
A Common Stock upon such transfer. Shares of Class B Common Stock
transferred to stockholders of AMR or stockholders of the Class B
Transferee in a transaction intended to be on a tax-free basis (a "Tax-Free
Spin-Off") under the Internal Revenue Code shall not convert to shares of
Class A Common Stock upon the occurrence of such Tax-Free Spin-Off.
46
<PAGE>
Following a Tax-Free Spin-Off, shares of Class B Common Stock shall be
transferred as Class B Common Stock, subject to applicable laws; provided,
however that shares of Class B Common Stock shall automatically convert
into shares of Class A Common Stock on the fifth anniversary of the
Tax-Free Spin-Off, unless prior to such Tax-Free Spin-Off, AMR, or the
Class B Transferee, as the case may be, delivers to the Company an opinion
of counsel reasonably satisfactory to the Company to the effect that such
conversion could adversely affect the ability of AMR, or the Class B
Transferee, as the case may be, to obtain a favorable ruling from the
Internal Revenue Service that such transfer would be a Tax-Free Spin-Off.
If such an opinion is received, approval of such conversion shall be
submitted to a vote of holders of the common stock as soon as practicable
after the fifth anniversary of the Tax-Free Spin-Off, unless AMR or the
Class B Transferee, as the case may be, delivers to the Company an opinion
of counsel reasonably satisfactory to the Company prior to such anniversary
that such vote could adversely affect the status of the Tax-Free Spin-Off,
including the ability to obtain a favorable ruling from the Internal
Revenue Service; if such opinion is so delivered, such vote shall not be
held. Approval of such conversion will require the affirmative vote of the
holders of a majority of the shares of both Class A Common Stock and Class
B Common Stock present and voting, voting together as a single class, with
each share entitled to one vote for such purposes.
On liquidation, dissolution or winding up of the Company, after payment in
full of the amounts required to be paid to holders of preferred stock, if
any, all holders of common stock, regardless of class, are entitled to
share ratably in any assets available for distribution to holders of shares
of common stock.
No shares of either class of common stock are subject to redemption or have
preemptive rights to purchase additional shares of common stock.
In 1997, the Board of Directors authorized, subject to certain business and
market conditions, the purchase of up to 1.5 million shares of the
Company's Class A Common Stock. The number of treasury shares purchased was
1,428,200 and 71,800 in 1998 and 1997, respectively.
10. STOCK AWARDS AND OPTIONS
Prior to the Offering, officers and key employees of the Company were
eligible, under AMR's 1988 Long-Term Incentive Plan (the "AMR LTIP"), to be
granted deferred stock, restricted stock, stock options, stock appreciation
rights, stock purchase rights and/or other stock based awards in common
stock, par value $1 per share, of AMR ("AMR Common Stock").
In conjunction with the AMR LTIP, certain officers and key employees of the
Company were awarded 217,000 shares of deferred AMR Common Stock ("AMR
Career Equity Shares") at no cost to the officers and employees, to be
issued upon the individuals' retirement from AMR. In connection with the
Offering, the AMR Career Equity Shares awarded to certain officers and key
employees of the Company were exchanged for 142,690 restricted shares of
Class A Common Stock, options to purchase 847,550 shares of Class A Common
Stock and 75,600 deferred shares of Class A Common Shares ("Company Career
Equity Shares"). The number of restricted shares, stock options and
deferred shares issued was dependent on, among other things, election by
the individuals as to the mix of restricted shares, stock options and
deferred shares to be received, the previous day's closing price of AMR
Common Stock at the date of the Offering and the initial public offering
price of Class A Common Stock. The Company Career Equity Shares will be
issued upon the individual's retirement from the Company. All of the
Company Career Equity Shares issued in connection with the Offering were
outstanding at December 31, 1998, 1997 and 1996.
Effective with the Offering, the Company also established the 1996
Long-Term Incentive Plan (the "1996 Plan"). Under the 1996 Plan, officers
and other key employees of the Company may be granted restricted stock,
deferred stock, stock options, stock appreciation rights, stock purchase
rights, other stock based awards and /or performance related awards. The
1996 Plan will terminate no later than October 2006. 13 million shares of
Class A Common Stock were authorized to be issued under the 1996 Plan. At
December 31, 1998, approximately 8 million shares were available for future
grants of stock-based awards under the 1996 Plan.
47
<PAGE>
The total charge for stock compensation expense included in wages, salaries
and benefits expense was $13 million, $6 million and $7 million for 1998,
1997 and 1996, respectively. No compensation expense was recognized for
stock option grants under the 1996 Plan since the exercise price of the
Company's stock option grants was equal to the fair market value of the
underlying stock on the date of grant.
Shares of restricted stock are awarded at no cost to employees under the
1996 plan. Restricted shares generally vest three years following the date
of grant. Restricted stock activity follows:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Outstanding at January 1 166,940 151,550 ---
Issued upon conversion of AMR Career Equity
and Restricted Shares --- --- 149,330
Granted 12,390 24,910 2,220
Issued (10,280) --- ---
Canceled (13,460) (9,520) ---
-------------- -------------- --------------
Outstanding at December 31 155,590 166,940 151,550
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
The weighted-average grant date fair values of restricted stock granted
during 1998, 1997 and 1996 were $38.49, $26.03 and $27.00, respectively.
The grant date fair values are based on the Company's stock price on the
date of grant.
In conjunction with the AMR LTIP, certain officers and key employees of the
Company were also awarded, at no cost to the officers and employees,
deferred AMR Common Stock performance shares ("AMR Performance Shares").
The AMR Performance Shares vest over a three-year performance period based
on performance metrics of AMR and the Company, as defined in the plan. In
connection with the Offering, certain AMR Performance Shares awarded to
officers and key employees of the Company were converted into 272,160
deferred Class A Common Stock performance shares ("Company Performance
Shares") based on the initial public offering price of shares of Class A
Common Stock and the previous day's closing price of the AMR Common Stock
on the date of the Offering.
Company Performance Shares are also awarded at no cost to officers and key
employees of the Company based on performance metrics of the Company as
defined in the 1996 Plan. The Company Performance Shares vest over a
three-year performance period and are settled in cash. The Company's
Performance Share activity was as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
Outstanding at January 1 612,100 433,860 ---
Issued upon conversion of AMR Performance
Shares --- --- 272,160
Granted 206,970 205,370 162,450
Awards settled in cash (263,040) --- ---
Canceled (51,157) (27,130) (750)
------------- ------------- -------------
Outstanding at December 31 504,873 612,100 433,860
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
The weighted-average grant date fair values of Company Performance Shares
granted during 1998, 1997 and 1996 were $36.42, $26.02 and $27.00,
respectively. The grant date fair values are based on the Company's stock
price on the date of grant.
48
<PAGE>
In conjunction with the AMR LTIP, options to purchase shares of AMR Common
Stock ("AMR Options") were granted to officers and key employees of the
Company. Options granted were exercisable at the market value upon grant,
generally becoming exercisable over one to five years following the date of
grant and expiring ten years from the date of grant. In connection with the
Offering, the AMR Options were exchanged for options to purchase 728,740
shares of Class A Common Stock of the Company. The exercise prices of the
options to purchase Class A Common Stock were computed by multiplying the
initial public offering price of Class A Common Stock by the ratio of the
exercise prices of the AMR Options to the previous day's closing price of
AMR Common Stock at the date of the Offering. The number of options was
increased to maintain the aggregate intrinsic value of each holder's
options. These options will continue to vest in equal annual installments
over the original vesting period.
Options granted under the 1996 Plan are granted at the market value of
Class A Common Stock on the date of grant, except as otherwise determined
by a committee appointed by the Board of Directors, generally vest over
five years and are not exercisable more than ten years after the date of
grant. Stock option activity follows:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------------------------
1998 1997 1996
------------------------- -------------------------- ----------------------------
Weighted-Average Weighted-Average Weighted-Average
Exercise Exercise Exercise
Options Price Options Price Options Price
------------------------- ------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January 1 2,874,070 $ 25.43 2,384,670 $ 24.89 --- ---
Issued upon exchange of AMR
Options --- --- --- --- 728,740 $ 19.87
Issued upon exchange of AMR
Career Equity Shares --- --- --- --- 847,550 27.00
Granted 1,245,600 34.94 711,010 27.11 822,900 27.00
Exercised (433,270) 21.97 (34,540) 19.14 (14,520) 16.27
Canceled (291,010) 28.41 (187,070) 26.10 --- ---
-------------- ------------- -------------
Outstanding at December 31 3,395,390 29.10 2,874,070 25.43 2,384,670 24.89
-------------- ------------- -------------
-------------- ------------- -------------
Exercisable options outstanding
at December 31 870,670 $24.82 808,110 $ 22.64 422,920 $ 19.80
-------------- ------------- -------------
-------------- ------------- -------------
</TABLE>
The weighted-average grant date fair value of stock options granted during
1998, 1997 and 1996 were $12.55, $9.71 and $9.24, respectively. The grant
date fair values were estimated at the date of grant using the
Black-Scholes option pricing model.
The following table summarizes information about the stock options
outstanding at December 31, 1998:
<TABLE>
<CAPTION>
Number of Weighted-Average Number of
Range of Exercise Options Remaining Weighted-Average Options Weighted-Average
Prices Outstanding Life (years) Exercise Price Exercisable Exercise Price
--------------------- ---------------- ---------------- ------------------ ---------------- ------------------
<S> <C> <C> <C> <C> <C>
$12.95 - $19.49 100,080 7.80 $ 16.93 69,980 $ 16.88
$19.50 - $24.49 239,590 7.80 20.99 203,070 20.92
$24.50 - $35.49 2,086,620 8.10 27.14 597,220 27.07
$35.50 - $43.60 969,100 9.30 36.61 400 35.67
---------------- ----------------
Total 3,395,390 8.40 $ 29.10 870,670 $ 24.82
---------------- ----------------
---------------- ----------------
</TABLE>
49
<PAGE>
For other stock-based awards, a committee established by the Board of
Directors determines the eligible persons to whom awards will be made, the
times at which the awards will be made, the number of shares to be awarded,
the price, if any, to be paid by the recipient and all other terms and
conditions of the award under the terms of the 1996 Plan at the time of
grant.
Stock appreciation rights may be granted in conjunction with all or part of
any stock option granted under the 1996 Plan. All appreciation rights will
terminate upon termination or exercise of the related option and will be
exercisable only during the time that the related option is exercisable. If
an appreciation right is exercised, the related stock option will be deemed
to have been exercised.
The Company has a Directors' Stock Incentive Plan which provides for an
annual award of options to purchase 3,000 shares of the Company's Class A
Common Stock to each non-employee director. The plan also provides for a
one time award of options to purchase 10,000 shares of the Company's Class
A Common Stock to a new non-employee director upon his or her initial
election to the Board of Directors. The options have an exercise price
equal to the market price of the Class A Common Stock on the date of grant
and vest pro rata over a five-year period. Each option expires on the
earlier of (i) the date the non-employee director ceases to be a director
of the Company, if for any reason other than due to death, disability or
retirement or (ii) three years from the date the non-employee director
ceases to be a director of the Company due to death, disability or
retirement. 350,000 shares of Class A Common Stock are reserved for
issuance under the Directors' Stock Incentive Plan. In 1997, 78,000 options
were granted to directors at a weighted-average exercise price of $26.88.
In 1998, 18,000 options were granted to directors at a weighted-average
exercise price of $36.16. No options were exercised during 1998 and 1997.
At December 31, 1998, 254,000 shares were available for future grants under
the Directors' Stock Incentive Plan.
Effective January 1, 1997, the Company established The Sabre Group
Holdings, Inc. Employee Stock Purchase Plan (the "ESPP"). The ESPP allows
eligible employees the right to purchase Class A Common Stock on a monthly
basis at the lower of 85% of the market price at the beginning or the end
of each monthly offering period. The ESPP allows each employee to acquire
Class A Common Stock with an aggregate maximum purchase price equal to
either 1% or 2% of that employee's annual base pay, subject to limitations
under the Internal Revenue Code of 1986. Upon establishment of the ESPP,
1,000,000 shares of Class A Common Stock were reserved for issuance under
the plan. Approximately 54,000 and 34,000 shares were issued to the plan
during 1998 and 1997, respectively. Approximately 912,000 shares remain
available for future purchases under the ESPP at December 31, 1998.
During 1998, the Company granted two tranches of stock options, each to
acquire 3 million shares of the Company's Class A Common Stock, to US
Airways. See Note 4.
As required by Statement of Financial Accounting Standards No. 123,
ACCOUNTING FOR STOCK-BASED COMPENSATION, pro forma information regarding
net income and earnings per share have been determined as if the Company
had accounted for its employee stock options and stock-based awards under
the fair value method set forth in Statement No. 123. The fair value for
the stock options granted by the Company to officers and key employees of
the Company after January 1, 1995 was estimated at the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions: risk-free interest rate of 6.07% for 1996, 6.20% to 6.70% for
1997 and 5.45% to 5.67% for 1998; a dividend yield of 0%; a volatility
factor of the expected market price of the Company's Class A Common Stock
of .28 for 1996, .29 for 1997 and .32 for 1998; and a weighted-average
expected life of the options granted of 4.5 years.
50
<PAGE>
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions including the
expected stock price volatility. Because the Company's employee stock
options have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the
fair value of its employee stock options. In addition, because Statement
No. 123 is applicable only to options and stock-based awards granted
subsequent to December 31, 1994, the pro forma impact does not reflect the
pro forma effect of all previous stock based awards to the Company's
employees.
For purposes of the pro forma disclosures, the estimated fair value of the
options and stock-based awards is amortized to expense over the vesting
period. The Company's pro forma information is as follows (in thousands,
except per share amounts):
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------
1998 1997 1996
--------------- -------------- ---------------
<S> <C> <C> <C>
Net earnings:
As reported $ 231,941 $ 199,853 $ 186,574
--------------- -------------- ---------------
--------------- -------------- ---------------
Pro forma $ 228,672 $ 198,404 $ 184,981
--------------- -------------- ---------------
--------------- -------------- ---------------
Earnings per common share, as reported
Basic and diluted $ 1.78 $ 1.53 $ 1.43
--------------- -------------- ---------------
--------------- -------------- ---------------
Earnings per common share, pro forma
Basic $ 1.76 $ 1.52 $ 1.42
--------------- -------------- ---------------
--------------- -------------- ---------------
Diluted $ 1.75 $ 1.51 $ 1.42
--------------- -------------- ---------------
--------------- -------------- ---------------
</TABLE>
11. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per common share (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------
1998 1997 1996
----------- ------------ -----------
<S> <C> <C> <C>
Numerator:
Numerator for basic earnings per common share - net
earnings $231,941 $199,853 $186,574
Incremental amortization of deferred asset related
to options issued to US Airways (255) --- ---
----------- ------------ -----------
Numerator for diluted earnings per common share -
adjusted net earnings $231,686 $199,853 $186,574
----------- ------------ -----------
----------- ------------ -----------
Denominator:
Denominator for basic earnings per common share -
weighted-average shares 129,943 130,649 130,606
Dilutive effect of stock awards and options 578 339 80
----------- ------------ -----------
Denominator for diluted earnings per common share -
adjusted weighted-average shares 130,521 130,988 130,686
----------- ------------ -----------
----------- ------------ -----------
Basic and diluted earnings per common share $ 1.78 $ 1.53 $ 1.43
----------- ------------ -----------
----------- ------------ -----------
</TABLE>
For additional information regarding stock awards and options, see Note 10.
51
<PAGE>
Options to purchase approximately 2,470,000 and 544,000 weighted average
shares of common stock were outstanding during 1998 and 1997, respectively,
but were excluded from the computation of diluted earnings per share
because the effect would be antidilutive. In addition, options granted to
US Airways to purchase 3,000,000 shares of common stock were excluded from
the computation of diluted earnings per share in 1998 because the Company
intends to settle those options with a cash payment.
12. SEGMENT REPORTING
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE
AND RELATED INFORMATION. Statement No. 131 establishes standards for
reporting information about operating segments and related disclosures
about products and services, geographical areas and major customers.
The Company has two reportable segments: electronic travel distribution and
information technology solutions. The electronic travel distribution
segment distributes travel services to travel agencies, corporate travel
departments and individual consumers ("subscribers"). Through the Company's
global distribution system, subscribers can access information about and
book reservations with airlines and other providers of travel and
travel-related products and services. The information technology solutions
segment provides information technology services including software
development and consulting, transaction processing and comprehensive
information technology outsourcing to the travel and transportation
industries. The Company's reportable segments are strategic business units
that offer different products and services and are managed separately
because each business requires different market strategies.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company evaluates
performance based upon business segment operating income, which is defined
as income before interest and non-operating income and expenses. The
Company accounts for intersegment transactions as if the transactions were
to third parties, that is, at current market prices. Intersegment
transactions are recorded as expense offsets and are not included in
segment revenues.
Personnel and related costs for the Corporate Headquarters, certain legal
and professional fees and other corporate charges are allocated to the
segments through a management fee based primarily on usage. Depreciation
expense on the Corporate Headquarters buildings and related facilities
costs are allocated to the segments through a facility fee based on
headcount. The related assets are not allocated to the segments. Benefits
expense, including pension expense, postretirement benefits, medical
insurance and workers' compensation, are allocated to the segments based on
headcount. Unallocated Corporate Headquarters operating income includes
depreciation expense and other costs associated with the Corporate
Headquarters buildings, net of facility fees allocated to the reportable
segments and affiliated companies, and certain other corporate charges
maintained at the corporate level. Other assets not allocated to the
segments include cash and short-term investments and deferred tax assets.
52
<PAGE>
<TABLE>
<CAPTION>
Electronic Information
Travel Technology
Distribution Solutions Total
--------------- --------------- ---------------
(in thousands)
<S> <C> <C> <C>
December 31, 1998:
Revenues from external customers $ 1,315,908 $ 981,592 $ 2,297,500
Equity in net income of equity method
investees 8,887 --- 8,887
--------------- --------------- ---------------
Total revenues 1,324,795 981,592 2,306,387
--------------- --------------- ---------------
--------------- --------------- ---------------
Segment operating income 283,359 64,133 347,492
Intersegment expense transfers 10,340 373,848 384,188
Depreciation and amortization 132,697 94,782 227,479
Segment assets 616,869 501,882 1,118,751
Capital expenditures for segment assets 99,339 186,475 285,814
Investments in equity method investees 148,084 599 148,683
December 31, 1997:
Revenues from external customers $ 1,200,276 $ 583,271 $ 1,783,547
Equity in net income of equity method
investees 4,916 --- 4,916
--------------- --------------- ---------------
Total revenues 1,205,192 583,271 1,788,463
--------------- --------------- ---------------
--------------- --------------- ---------------
Segment operating income 229,888 77,288 307,176
Intersegment expense transfers 22,281 393,633 415,914
Depreciation and amortization 117,151 50,253 167,404
Segment assets 409,250 258,225 667,475
Capital expenditures for segment assets 109,295 67,195 176,490
Investments in equity method investees 6,659 1,539 8,198
December 31, 1996:
Revenues from external customers $ 1,101,791 $ 520,196 $ 1,621,987
Equity in net income of equity method
investees 3,094 50 3,144
--------------- --------------- ---------------
Total revenues 1,104,885 520,246 1,625,131
--------------- --------------- ---------------
--------------- --------------- ---------------
Segment operating income 237,675 100,034 337,709
Intersegment expense transfers --- 377,992 377,992
Depreciation and amortization 94,416 63,705 158,121
Segment assets 394,373 194,016 588,389
Capital expenditures for segment assets 117,566 47,804 165,370
Investments in equity method investees 6,031 448 6,479
</TABLE>
53
<PAGE>
A reconciliation of the totals reported for the operating segments to the
applicable line items in the consolidated financial statements is as
follows (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Operating income:
Total operating income for reportable
segments $ 347,492 $ 307,176 $ 337,709
Net Corporate allocations 2,880 5,449 (7,764)
-------------- -------------- --------------
Total consolidated operating income $ 350,372 $ 312,625 $ 329,945
-------------- -------------- --------------
-------------- -------------- --------------
Assets:
Total assets for reportable segments $ 1,118,751 $ 667,475 $ 588,389
Unallocated amounts:
Cash and short-term investments 537,710 584,875 442,937
Corporate Headquarters and other 270,356 251,608 255,757
-------------- -------------- --------------
Total consolidated assets $ 1,926,817 $ 1,503,958 $ 1,287,083
-------------- -------------- --------------
-------------- -------------- --------------
Other significant items:
Depreciation and amortization for
reportable segments $ 227,479 $ 167,404 $ 158,121
Other depreciation and amortization 20,255 17,771 6,943
-------------- -------------- --------------
Total depreciation and amortization $ 247,734 $ 185,175 $ 165,064
-------------- -------------- --------------
-------------- -------------- --------------
Capital expenditures for reportable
segments $ 285,814 $ 176,490 $ 165,370
Other capital expenditures 34,217 41,634 18,891
-------------- -------------- --------------
Total capital expenditures $ 320,031 $ 218,124 $ 184,261
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
The Company's revenues and long-lived assets by geographic region are
summarized below (in thousands). Revenues are attributed to countries based
on the location of the customer.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
1998 1997 1996
------------- ------------ ------------
<S> <C> <C> <C>
Revenues by geographic region:
United States $ 1,713,195 $ 1,295,606 $ 1,214,992
Foreign 593,192 492,857 410,139
------------- ------------ ------------
Total $ 2,306,387 $ 1,788,463 $ 1,625,131
------------- ------------ ------------
------------- ------------ ------------
Long-lived assets by geographic region:
United States $ 758,224 $ 552,869 $ 531,188
Cayman Islands 143,496 --- ---
Other foreign 80,693 73,487 61,367
------------- ------------ ------------
Total $ 982,413 $ 626,356 $ 592,555
------------- ------------ ------------
------------- ------------ ------------
</TABLE>
Revenues from US Airways during 1998 were approximately $369 million which
represents approximately 16% of the Company's consolidated revenues. Revenues
from American and other subsidiaries of AMR were approximately $574 million
which represents approximately 25% of the Company's consolidated revenues.
54
<PAGE>
13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following is a summary of the unaudited quarterly financial information
for the years ended December 31, 1998 and 1997 (in thousands except per
share data):
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
--------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
1998
----
Revenues $ 554,099 $ 576,574 $ 604,315 $ 571,399
Operating income 114,467 109,251 98,445 28,209
Net earnings 71,788 68,523 71,424 20,206
Earnings per common share,
Basic $ .55 $ .53 $ .55 $ .16
Earnings per common share,
Diluted $ .55 $ .52 $ .55 $ .16
1997
----
Revenues $ 440,310 $ 448,914 $ 457,428 $ 441,811
Operating income 108,467 94,637 89,468 20,053
Net earnings 66,685 58,536 56,199 18,433
Earnings per common share,
basic and diluted $ .51 $ .45 $ .43 $ .14
</TABLE>
The travel industry is seasonal in nature. Bookings, and thus booking fees
charged for the use of the SABRE system, decrease significantly each year
in the fourth quarter, primarily in December.
During the third quarter of 1998, the Company recorded income of
approximately $14 million due to a one-time gain from a favorable court
judgment relating to Ticketnet Corporation, an inactive subsidiary of the
Company.
During the fourth quarter of 1998, the Company recorded amortization
expense of approximately $7 million related to options granted to US
Airways under the information technology services agreement due to changes
in the market price of the Company's stock. Additionally, a reduction was
recorded in a reserve for obsolete computer equipment at travel agency
locations of approximately $7 million.
During the fourth quarter of 1997, the Company recorded a loss of
approximately $11 million related to the write-off of a capitalized
software development project that was intended to create a new order entry
and billing system.
14. SUBSEQUENT EVENTS
At December 31, 1998, American owned approximately 3.1 million depository
certificates representing beneficial ownership of common stock of Equant, a
telecommunications company related to SITA. Approximately 1.7 million of
these depository certificates were held by American for the economic
benefit of the Company.
In connection with a secondary offering of Equant, in February 1999
American liquidated approximately 923,000 depository certificates.
Approximately 490,000 of these certificates, representing approximately
30% of the Company's interest at December 31, 1998, were liquidated for
the Company's benefit. The Company received proceeds of approximately
$35 million from the transaction, resulting in a gain of approximately
$35 million.
55
<PAGE>
On March 16, 1999, the Company's Board of Directors authorized a loan of
$300 million to American. The loan agreement was executed on March 17,
1999. The principal amount of the loan will be due June 30, 1999 and
will bear interest at a rate equal to the Company's average portfolio
rate for each month in which the loan is outstanding plus an additional
spread based upon American's credit risk. The Company has the option to
call the note with ten-business day's notice to American. American may
repay the principal amount prior to June 30, 1999 without penalty. As
part of this agreement, the original Credit Agreement (as defined in
Note 5) was modified to terminate American's ability to borrow additional
funds under that agreement.
Additionally, on March 16, 1999, the Company's Board of Directors
authorized, subject to certain business and market conditions, the
repurchase of up to an additional 1 million shares of the Company's Class A
Common Stock.
56
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
- --------------------------------------------------------------------------------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated herein by reference is the information set forth under the
headings "Nominees for Election as Directors" and "Continuing Directors" in the
Company's definitive proxy statement for the annual meeting of stockholders to
be held on May 19, 1999.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company, their positions and ages as of
December 31, 1998 are as follows:
<TABLE>
<S> <C>
Michael J. Durham...................... Director, President and Chief Executive Officer since July 1996. President of
The Sabre Group division of AMR from 1995 to 1996; Senior Vice President and
Chief Financial Officer of American Airlines from 1989 to 1995; Vice President
and Treasurer of American Airlines in 1989. Age 47.
Bradford J. Boston..................... Senior Vice President and Executive Vice President--Sabre Technology Solutions
since July 1997; Senior Vice President and President--Sabre Computer Services
from June 1996 to July 1997; Senior Vice President for American Express Travel
Related Services from 1994 to 1996; Senior Vice President for Visa
International from 1993 to 1994; and Vice President for United Airlines/Covia
Partnership from 1991 to 1993. Age 44.
Thomas M. Cook......................... Senior Vice President and President--Sabre Technology Solutions since June
1997. President--Sabre Decision Technologies, a division of The Sabre Group,
from 1994 to 1996; President--American Airlines Decision Technologies from 1988
to 1994. Age 58.
Jeffery M. Jackson..................... Senior Vice President, Chief Financial Officer and Treasurer since August 1998;
Vice President and Controller for American Airlines from January 1998 to August
1998; Vice President--Corporate Development and Treasurer for American Airlines
from 1995 to 1998; Vice President and Treasurer for American Airlines from 1992
to 1995. Age 42.
Terrell B. Jones....................... Senior Vice President--Sabre Interactive and Chief Information Officer since
July 1996. President--Sabre Computer Services from 1993 to 1996; Division Vice
President--SCS Systems Planning & Development for American from 1991 to 1993;
Managing Director & Vice President--STIN Product Development for American from
1987 to 1991. Age 50.
Eric J. Speck.......................... Senior Vice President--Sabre Travel Information Network since April 1997. Vice
President--Sabre Europe from August 1995 to March 1997; Vice
President--Marketing of Sabre Travel Information Network from October 1994 to
August 1995. Age 42.
Andrew B. Steinberg.................... Senior Vice President, General Counsel and Corporate Secretary since October
1996. Associate General Counsel for American from 1994 to 1996; Senior Attorney
for American from 1991 to 1994. Age 40.
</TABLE>
All officers serve at the discretion of the Board of Directors.
57
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference is the information set forth under the
heading "Executive Compensation" in the Company's definitive proxy statement for
the annual meeting of stockholders to be held on May 19, 1999.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference is the information set forth under the
heading "Ownership of Securities" from the Company's definitive proxy statement
for the annual meeting of stockholders to be held on May 19, 1999.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference is the information set forth under the
heading "Relationships with AMR Corporation and Affiliates" in the Company's
definitive proxy statement for the annual meeting of stockholders to be held on
May 19, 1999 and under Note 5 to the Consolidated Financial Statements in Item 8
of this report.
PART IV
- --------------------------------------------------------------------------------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) The financial statements listed in the accompanying index to financial
statements and the schedules are filed as part of this report.
(2) The schedules listed in the accompanying index to financial statements
and schedules are filed as part of this report.
(3) Exhibits required to be filed by Item 601 of Regulation S-K.
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
-------------- ----------------------
<S> <C>
3.1 Restated Certificate of Incorporation of Registrant.
(1)
3.2 Restated Bylaws of Registrant. (1)
4.1 Registration Rights Agreement between Registrant and
AMR Corporation. (1)
4.2 Specimen Certificate representing Class A Common Stock.
(1)
10.1 Registration Rights Agreement between Registrant and
AMR Corporation (See Exhibit 4.1).
10.2 Intercompany Agreement, dated as of July 2, 1996, among
Registrant, The Sabre Group, Inc., TSGL Holding, Inc.,
TSGL-SCS, Inc., TSGL, Inc., Sabre International, Inc.,
Sabre Servicios Colombia, LTDA and American Airlines,
Inc. (1)
10.3 Management Services Agreement, dated as of July 1,
1996, between The Sabre Group, Inc. and American
Airlines, Inc. (1) (4)
10.4 Credit Agreement, dated as of July 1, 1996, between
Registrant, The Sabre Group, Inc., AMR Corporation and
American Airlines, Inc. (1)
10.5 $850,000,000 Subordinated Debenture, dated July 2,
1996, executed by Registrant and payable to AMR
Corporation. (1)
10.6 Information Technology Services Agreement, dated July
1, 1996, between The Sabre Group, Inc. and American
Airlines, Inc. (1) (4)
10.7 Non-competition Agreement, dated July 1, 1996, among
Registrant, The Sabre Group, Inc., AMR Corporation and
American Airlines, Inc. (1)
10.8 Marketing Cooperation Agreement, dated as of July 1,
1996, between The Sabre Group, Inc. and American
Airlines, Inc. (1) (4)
10.9 Tax Sharing Agreement, dated July 1, 1996, between The
Sabre Group, Inc. and American Airlines, Inc. (1)
10.10 Travel Privileges Agreement, dated as of July 1, 1996,
between The Sabre Group, Inc. and American Airlines,
Inc. (1) (4)
10.11 Corporate Travel Agreement, dated July 25, 1996,
between The Sabre Group,
</TABLE>
58
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
-------------- ----------------------
<S> <C>
Inc. and American Airlines, Inc. (1) (4)
10.12 Software Marketing Agreement, dated September 10, 1996,
among Registrant, The Sabre Group, Inc. and AMR
Corporation. (1) (4)
10.13 Canadian Technical Services Subcontract, dated as of
July 1, 1996, between The Sabre Group, Inc. and
American Airlines, Inc. (1) (4)
10.14 Form of Participating Carrier Agreement between The
Sabre Group, Inc. and American Airlines, Inc. (1)
10.15 Investment Agreement, dated September 11, 1996, between
The Sabre Group, Inc. and AMR Investment Services, Inc.
(1) (4)
10.16 Assignment and Amendment Agreement, dated as of July 1,
1996, among The Sabre Group, Inc., American Airlines,
Inc. and the Dallas-Fort Worth International Airport
Board. (1)
10.17 American Airlines Special Facilities Lease Agreement,
dated October 1, 1972, between American Airlines, Inc.
and the Dallas-Fort Worth Regional Airport Board, as
amended by Supplemental Agreements Nos. 1-5. (1)
10.18 Assignment Agreement, dated as of July 1, 1996, between
The Sabre Group, Inc. and American Airlines, Inc. (1)
10.19 Sublease, dated June 1, 1958, between American
Airlines, Inc. and the Trustees of the Tulsa Municipal
Airport Trust, as amended by Amendments Nos. 1-12. (1)
10.20 Assignment Agreement, dated as of July 1, 1996, between
The Sabre Group, Inc. and American Airlines, Inc. (1)
10.21 Amended and Restated Sublease Agreement, dated May,
1996, between American Airlines, Inc. and the Tulsa
Airports Improvement Trust. (1)
10.22 Assignment Agreement, dated as of July 1, 1996, between
The Sabre Group, Inc. and American Airlines, Inc. (1)
10.23 Office Lease Agreement, dated as of January 19, 1996,
between American Airlines, Inc. and Maguire/Thomas
Partners - Westlake/Southlake Partnership. (1)
10.24 American Airlines, Inc. Supplemental Executive
Retirement Plan dated November 16, 1994. (2)
10.25 The Sabre Group Holdings, Inc. Long-Term Incentive
Plan. (1)
10.26 The Sabre Group Holdings, Inc. Directors Stock
Incentive Plan. (1)
10.27 Form of Executive Termination Benefits Agreement. (1)
10.28 Employment Agreement, dated August 30, 1996, between
The Sabre Group, Inc. and Michael J. Durham. (1)
10.29 Employment Agreement, dated September 7, 1995, between
American Airlines, Inc. and Thomas M. Cook. (1)
10.30 Employment Agreement, dated May 7, 1996, between
American Airlines, Inc. and Terrell B. Jones. (1)
10.31 Letter Agreement, dated July 15, 1996, between
Registrant and Thomas M. Cook. (1)
10.32 Letter Agreement, dated July 15, 1996, between
Registrant and Terrell B. Jones. (1)
10.33 The Sabre Group Holdings, Inc. Employee Stock Purchase
Plan. (3)
10.34 Option Issuance Agreement, dated January 1, 1998
between Registrant and US Airways, Inc.(5)
10.35 The Sabre Group Holdings, Inc. Deferred Compensation
Plan. (6)
10.36 Services Agreement, dated as of July 1, 1996, between
The Sabre Group, Inc. and AMR COMBS, Inc. (7)
10.37 Services Agreement, dated as of July 1, 1996, between
The Sabre Group, Inc. and TELESERVICE RESOURCES, Inc.
(7)
</TABLE>
59
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
-------------- ----------------------
<S> <C>
10.38 Services Agreement, dated as of July 1, 1996, between
The Sabre Group, Inc. and AMR SERVICES CORPORATION (7)
10.39 Information Technology Services Agreement, dated as of
July 1, 1998, between The Sabre Group, Inc. and
TELESERVICE RESOURCES, Inc. (7)
10.40 Program Lease Agreement, dated September 30, 1998,
between The Sabre Group, Inc. and Comdisco, Inc. (7)
10.41 Corporate Travel Agreement, dated June 24, 1998,
between The Sabre Group, Inc. and American Airlines.
(7)
21.1 Subsidiaries of Registrant.
23.1 Consent of Ernst & Young LLP.
27.1 Financial Data Schedule as of December 31, 1998.
27.2 Restated Financial Data Schedule as of December 31,
1997.
27.3 Restated Financial Data Schedule as of December 31,
1996.
</TABLE>
(1) Incorporated by reference to exhibits 3.1 through 10.32 to the
Company's Registration Statement on Form S-1 (Registration No.
333-09747).
(2) Incorporated by reference to Exhibit 10(mmm) to AMR's report on
Form 10-K for the year ended December 31, 1994, (File No.
1-8400).
(3) Incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-8 (Registration No. 333-18851).
(4) Confidential treatment was granted as to a portion of this
document.
(5) Incorporated by reference to Exhibit 10.34 to the Company's
report on Form 10-K for the year ended December 31, 1997, (File
No. 1-12175).
(6) Incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-8 (Registration No. 333-51291).
(7) Confidential treatment has been requested as to a portion of this
document.
(b) Reports on Form 8-K:
None.
60
<PAGE>
THE SABRE GROUP HOLDINGS, INC.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
COVERED BY REPORT OF INDEPENDENT AUDITORS
[ITEM 14(a)]
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Auditors 26
Consolidated Balance Sheets at December 31, 1998 and 1997 27
Consolidated Statements of Income for the Years Ended 28
December 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows for the Years Ended 29
December 31, 1998, 1997 and 1996
Consolidated Statements of Stockholders' Equity for the Years 30
Ended December 31, 1998, 1997 and 1996
Notes to Consolidated Financial Statements 31
Schedule II - Valuation and Qualifying Accounts for the Years
Ended December 31, 1998, 1997, and 1996 62
</TABLE>
All other schedules are omitted because the required information is included in
the financial statements or notes thereto, or because the required information
is either not present or not present in sufficient amounts.
61
<PAGE>
CONSOLIDATED SCHEDULES FOR THE YEARS ENDED
DECEMBER 31, 1998, 1997 AND 1996
THE SABRE GROUP HOLDINGS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- --------------------------------------- ------------ ---------- ---------- ---------- -----------
ADDITIONS
------------------------
BALANCE AT CHARGED TO CHARGED TO
BEGINNING OF COSTS AND OTHER BALANCE AT
CLASSIFICATION YEAR EXPENSES ACCOUNTS DEDUCTIONS END OF YEAR
- --------------------------------------- ------------ ---------- ---------- ---------- -----------
(1) (2)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1998
Allowance for uncollectible accounts $ 8,905 $ 12,199 $ --- $ (8,701) $ 12,403
Booking fee cancellation reserve 15,242 --- 2,480 --- 17,722
Associate reserves 4,686 3,629 --- (4,604) 3,711
YEAR ENDED DECEMBER 31, 1997
Allowance for uncollectible accounts 4,094 11,799 --- (6,988) 8,905
Booking fee cancellation reserve 14,342 --- 937 (37) 15,242
Associate reserves 6,884 2,090 --- (4,288) 4,686
YEAR ENDED DECEMBER 31, 1996
Allowance for uncollectible accounts 4,822 6,051 --- (6,779) 4,094
Booking fee cancellation reserve 12,596 --- 1,746 --- 14,342
Associate reserves 2,218 666 4,291 (291) 6,884
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Amounts charged against revenue.
(2) Includes write-offs for uncollectible accounts and payments to associates.
62
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE SABRE GROUP HOLDINGS, INC.
/s/ Michael J. Durham
------------------------------------------------
Michael J. Durham
President, Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Jeffery M. Jackson
------------------------------------------------
Jeffery M. Jackson
Senior Vice President, Chief Financial Officer
and Treasurer
(Principal Financial and Accounting Officer)
Date: March 19, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates noted:
Directors:
/s/ Donald J. Carty /s/ Dee J. Kelly
- ---------------------------------- ----------------------------------------
Donald J. Carty Dee J. Kelly
/s/ Gerard J. Arpey /s/ Glenn W. Marschel, Jr.
- ---------------------------------- ----------------------------------------
Gerard J. Arpey Glenn W. Marschel, Jr.
/s/ Anne H. McNamara /s/ Bob L. Martin
- ---------------------------------- ----------------------------------------
Anne H. McNamara Bob L. Martin
/s/ Edward A. Brennan /s/ Richard L. Thomas
- ---------------------------------- ----------------------------------------
Edward A. Brennan Richard L. Thomas
/s/ Paul C. Ely, Jr.
- ----------------------------------
Paul C. Ely, Jr.
Date: March 19, 1999
63
<PAGE>
THIS AGREEMENT HAS CONFIDENTIAL PORTIONS OMITTED, WHICH PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED
PORTIONS ARE INDICATED IN THIS AGREEMENT WITH "[TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED]."
EXECUTION COPY
SERVICES AGREEMENT
between
AMR COMBS, INC.
and
THE SABRE GROUP, INC.
Effective as of July 1, 1996
<PAGE>
SERVICES AGREEMENT
THIS SERVICES AGREEMENT, effective as of July 1, 1996 (the
"Agreement") between AMR COMBS, INC., a Delaware corporation ("Customer") and
THE SABRE GROUP, INC., a Delaware corporation ("TSG").
W I T N E S S E T H :
WHEREAS, TSG is engaged in the business of providing certain
management and information processing services, including, but not limited
to, systems development services, systems integration services, management of
telecommunications systems, computer operation services, facilities
management services, hardware and software maintenance services and related
systems and services; and
WHEREAS, Customer and TSG desire to enter into a services agreement
pursuant to which TSG shall provide to Customer the services described in
this Agreement, on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements set forth herein, the Parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. All defined terms used in this Agreement shall
have the meanings set forth in Schedule 1.1. Schedule 1.1 also sets forth
various interpretive matters for this Agreement.
1.2 SCHEDULES. When this Agreement refers to a Schedule, such
Schedule is deemed incorporated herein by reference for all purposes. All
Schedules, as agreed to on or after the Effective Date, shall be deemed
incorporated herein upon the complete execution thereof.
ARTICLE II
TERM
2.1 TERM. Unless earlier terminated as provided herein, the term
of this Agreement (the "TERM") shall commence on the Effective Date and shall
end on the Expiration Date.
2.2 EXTENSIONS OF THE TERM. The Term shall be automatically
extended for successive [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
periods after the Expiration Date, unless either Party gives written notices
of its intent not to renew the Agreement at least one hundred twenty (120)
days prior to the date on which the Term or the then-current renewal period
(as applicable) expires. Notwithstanding the above, if Customer and TSG
become disaffiliated, either party shall have the option, in its sole and
absolute discretion, at any time six (6) months following the disaffiliation
to terminate this Agreement by giving six (6) months
1
<PAGE>
prior written notice to the other Party; provided, however, that prior to the
Expiration Date TSG may not terminate (except for breach pursuant to Section
20.1) Services provided hereunder to the extent such Services are required
for Customer to continue support of American Airlines, Inc.
ARTICLE III
SERVICES
3.1 SERVICES. Subject to the terms and conditions of this
Agreement, TSG shall perform the Services described in Schedule 3.1 for
Customer.
3.2 CHANGES TO SCOPE OF SERVICES. In the event that Customer
wishes to request modifications in the Services, including additions,
deletions and rearrangements thereof, Customer shall submit such requests to
TSG in writing. TSG will endeavor to within sixty (60) days (or such shorter
time as is reasonably practicable) from receipt of Customer's written request
for any such modification, determine the feasibility of such request and
provide Customer with a good faith estimate of the costs, if any, to Customer
of such modifications. Upon mutual written agreement of the Parties, TSG
shall be responsible for implementing modification requests and Customer
shall pay the agreed charges, if any. TSG will not be required to make any
such modifications prior to the mutual execution of any such written
agreement, and will continue to provide Services to Customer on the same
basis as TSG did prior to Customer's request until such a written agreement
is mutually executed.
3.3 MANAGEMENT OF TSG RESOURCES.
TSG shall have the right to manage all TSG resources used in providing
the Services.
ARTICLE IV
AUTHORIZATION OF NEW SERVICES;
RELATED DOCUMENTS
4.1 PROCEDURES. Any and all New Services, shall be authorized and
directed as set forth below:
(a) Customer may deliver to TSG one or more New Service
Requests. After receipt of a New Service Request, TSG shall prepare and
deliver to Customer a proposal in response thereto as promptly as reasonably
practicable. If TSG plans to charge Customer for preparation of any such
proposal, it will so inform Customer in writing together with an estimate of
the charges for preparation of the proposal. If TSG's estimate is accepted
by Customer in writing, TSG shall then promptly commence preparation of the
proposal. TSG may also prepare, on TSG's own initiative, and not in response
to a New Service Request, New Service proposals for Customer's review;
provided that TSG will not charge Customer for any fee or expense related to
the preparation of such proposals, except upon the written consent of
Customer.
2
<PAGE>
(b) After receipt of a New Service proposal, Customer shall
notify TSG in writing whether Customer desires to proceed at Customer's sole
discretion with the work as specified therein or upon some modified basis.
(c) Upon Customer's acceptance of the terms of any New
Service proposal, Customer and TSG shall execute a supplement to this
Agreement reflecting mutually agreed terms and conditions (a "SERVICES
SUPPLEMENT"), all of which shall be incorporated in this Agreement by
reference. After execution of any Services Supplement, TSG shall proceed
with the work specified therein upon the terms and conditions set forth
therein and in this Agreement.
4.2 NEW SERVICES. Customer will allow TSG the same rights and
opportunities to bid on any New Services [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] as it provides to any other prospective provider of such New
Services. If TSG chooses to bid on the New Services, Customer shall award
such New Services to TSG if TSG's bid is as favorable, in Customer's
reasonable discretion, to Customer (in terms of cost, terms, functionality
and time to market) as the best bid Customer receives.
4.3 EXPIRATION ASSISTANCE BY TSG. For a period of no more than
one hundred and twenty (120) days before the Expiration Date or termination
of any of the Services pursuant to Sections 2.2 or 20.1 (each period referred
to as the "EXPIRATION TRANSITION PERIOD"), TSG will provide to Customer or
its designee any and all expiration assistance reasonably requested by
Customer to facilitate the orderly transfer of responsibility for the
applicable Services to Customer or its designee. If the assistance requires
TSG to utilize resources or incur expenses in addition to those regularly
utilized in the performance of the Services, it shall so inform Customer in
writing and indicate any supplemental charges to Customer for such resources.
If accepted by Customer in writing, TSG will provide such incremental
services and Customer will pay TSG for such incremental assistance on a time
and materials basis at TSG's then-current rates for the Services performed
hereunder and reimburse TSG for all additional expenses incurred by TSG in
the performance of the expiration assistance. Prior to providing any of the
foregoing expiration assistance to a Customer designee, TSG shall be entitled
to receive from such designee, in form and substance reasonably acceptable to
TSG, assurances that (i) such designee will maintain at all times the
confidentiality of any TSG proprietary information, Software or materials
disclosed or provided to, or learned by, such designee in connection
therewith, (ii) such designee will use such information, Software or
materials exclusively for purposes for which Customer is authorized to use
such information, Software or materials pursuant to this Agreement, and (iii)
all fees and incremental charges due hereunder will be timely paid. Upon
Customer's request, TSG shall provide consultation services for at least
sixty (60) days after expiration of any Expiration Transition Period, to be
charged by TSG at TSG's then-current published standard rates for similar
services.
ARTICLE V
SERVICE LOCATIONS
3
<PAGE>
The charges set forth in this Agreement are based on the assumption
that Services will continue to be provided by TSG to Customer at Customer's
operations and service locations in existence as of July 1, 1998 as
identified in Schedule 5.1 (the "SERVICE LOCATIONS"). Nothing in this
Agreement shall prevent Customer from changing, consolidating, eliminating or
adding after July 1, 1998 any Service Locations, provided Customer will
endeavor to provide TSG with at least one hundred and twenty (120) days prior
written notice before any such change, consolidation, elimination or
addition. If any such change, consolidation, elimination or addition causes
no more than a de minimis increase in costs to TSG in the continuing
performance of the Services, then there will be no adjustment in the charges
hereunder. If, on the other hand, any such change, consolidation,
elimination or addition causes more than a de minimis increase in costs to
TSG in the continuing performance of the Services, TSG will promptly provide
Customer with a good faith estimate of the timing, costs and expenses of
making such change, consolidation, elimination or addition. TSG will make
such change consolidation, elimination or addition upon Customer's written
approval of such estimate.
ARTICLE VI
PROJECT STAFF
6.1 TSG SUBCONTRACTORS. TSG may utilize subcontractors during the
Term, subject to TSG remaining primarily liable for the performance of the
Services and such subcontractors agreeing in writing to maintaining the
confidentiality of Customer Data in accordance with Section 14.1. TSG will
manage and monitor the performance of any such subcontractors.
6.2 MANAGERIAL CONTROL. TSG shall have complete managerial
control over its employees. TSG shall have sole responsibility for
selection, supervision, daily direction and control of the work of, and may
dismiss, replace or reassign at any time, any member of the project staff
hereunder.
6.3 INFORMATION SERVICES CONTRACT MANAGER. Customer shall appoint
a contract coordinator to implement this Agreement (the "INFORMATION SERVICES
CONTRACT MANAGER" or "ISCM"). The ISCM's responsibilities shall be to (a)
serve as primary point of contact for TSG, (b) be responsible for the
implementation, management and enforcement of the Agreement on behalf of
Customer, and (c) supervise performance of Customer's obligations under the
Agreement. Customer will notify TSG in writing of its appointment of an ISCM
and his/her successors.
ARTICLE VII
CUSTOMER OBLIGATIONS
7.1 SERVICES AND OTHER OBLIGATIONS. During the Term, Customer
will provide TSG with all necessary and reasonable resources, information,
direction and other assistance, as may be requested by TSG from time to time,
in connection with the Services. TSG's nonperformance of its obligations
hereunder will be excused to the extent caused by Customer's failure to
timely provide such necessary and reasonable resources, information,
direction and other assistance.
4
<PAGE>
7.2 CUSTOMER FACILITIES AND RELATED SERVICES. During the Term,
for Services performed by TSG on-site at Customer's facilities, Customer
shall provide to TSG, at no cost to TSG, such access to and use of adequate
space and facilities required for performance of the Services (collectively,
the "CUSTOMER FACILITIES SPACE") for so long as and to the extent that the
Customer Facilities Space is reasonably required by TSG to effectively
perform the Services. Customer will also provide, at Customer's expense, all
utilities, required internal cabling and electrical installations for TSG at
the Customer Facilities Space and any Service Location in which the Services
will be performed. Customer will provide TSG with legal and physical access
to Customer's Facilities Space twenty-four (24) hours a day, seven (7) days a
week, for purposes of performing the Services. Customer represents to TSG
that all facilities provided by Customer under this Agreement are and shall
remain free of health and safety hazards. At all times when TSG uses space
and related utilities and services in any Customer Facilities Space, TSG
shall comply with the customary and reasonable policies governing access to
and use of the facilities in effect from time to time, provided, however,
that such policies shall not discriminate with respect to TSG or its
employees, agents or contractors.
7.3 CUSTOMER RESALE OR PASS-THROUGH OF SERVICES. Neither Customer
nor its Affiliates may resell or otherwise provide any of the Services
provided hereunder by TSG to any Person other than a Subsidiary of Customer,
without the prior written consent of TSG.
7.4 INSURANCE. During the Term, Customer shall procure and
maintain with insurers of recognized financial responsibility, Comprehensive
General Liability and Aviation Insurance coverage, including contractual
liability coverage pertaining to the indemnification obligations of Customer
under Article XVII of this Agreement, with limits of not less than [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED], combined single limit per
occurrence. If Customer and TSG are not Affiliates, Customer shall annually
provide TSG with evidence of such coverage with the following special
provisions:
1. The insurer(s) shall accept and insure Customer's indemnification
and hold harmless requirements pursuant to Article XVII of this
Agreement.
2. Each of the TSG Indemnified Parties shall be included as an
additional insured, to the extent of the Customer's
indemnification and hold harmless obligations hereunder.
3. The insurer(s) shall waive any rights of subrogation they may or
could have against any of the TSG Indemnified Parties, to the
extent of the Customer's indemnification and hold harmless
obligations hereunder.
4. Such policy(ies) shall be primary without right of contribution
from any insurance carried by TSG, to the extent of Customer's
indemnification and hold harmless obligations hereunder.
5. Such insurance (i) shall not be invalidated with respect to any
of the TSG Indemnified Parties by any action or inaction of
Customer, and (ii) shall insure each of the TSG Indemnified
Parties regardless of any breach or violation of such policy by
Customer.
5
<PAGE>
6. Such insurance policy(ies) may not be canceled or materially
changed without at least thirty (30) days prior written notice to
TSG.
ARTICLE VIII
CUSTOMER RETAINED RESOURCES
8.1 ONGOING CUSTOMER RESOURCES. During the Term Customer will
provide to TSG, at no cost to TSG, access to and use of all of the Equipment
necessary for performance of the Services. Customer shall be responsible for
all on-going costs and expenses relating to the Equipment, including, without
limitation, the insurance, maintenance and taxes. TSG will from time to time
provide its recommendations for (i) additions to the Equipment for
improvement of the Services, and (ii) replacements of the Equipment for the
maintenance of the Services at its existing levels. If Customer determines
that replacements of the Equipment are not needed or declines to participate
in the acquisition thereof to a degree unacceptable to TSG, TSG shall
thereafter be relieved of any Service obligations under this Agreement for
the affected Services, to the extent the failure to acquire replacements of
the Equipment adversely affects TSG's ability to properly perform the
Services.
8.2 PAYMENT RESPONSIBILITY FOR CUSTOMER RETAINED MATTERS.
Customer shall be responsible for all amounts due to Third Parties with
respect to the Equipment and other resources described in Section 8.1 and the
Customer Third-Party Agreements and for any related charges (including late
fees, interest, taxes and legal expenses); provided that TSG shall be
responsible for any such charges (including late fees, interest, and legal
expenses) payable primarily due to TSG's non-performance or mis-performance
(unless as may be excused pursuant to Article XIX) with respect to such
Equipment and Customer Third-Party Agreements. TSG shall not be responsible
for any act, omission, delay or default by vendors or other third parties in
the course of performance of any Customer Third-Party Agreement.
ARTICLE IX
SOFTWARE NEEDED FOR SERVICES
9.1 CUSTOMER LICENSED SOFTWARE. Customer hereby represents and
warrants it will obtain any licenses, consents, approvals or authorizations
from Third Parties necessary for TSG to legally and physically access and use
any Customer Licensed Software necessary to perform the Services, and will
provide written evidence of such consents to TSG upon TSG's request.
Customer shall pay all costs and expenses associated with the Customer
Licensed Software, including all required license, installation, maintenance
and upgrade fees. The Customer Licensed Software will be made available to
TSG in a form and on media compatible with the Equipment TSG is then
operating on Customer's behalf, together with appropriate documentation and
other materials.
9.2 CUSTOMER OWNED SOFTWARE. Customer will provide TSG with
object code and source code for the Customer Owned Software, if any,
necessary for TSG to perform the Services, together with any consents,
approvals, or authorizations from third parties necessary for TSG to legally
and physically access and use the Customer Owned Software, in both object
code and source code form, for purpose of providing the Services, and will
provide written evidence of such consents to TSG
6
<PAGE>
upon TSG's request. The Customer Owned Software will be available to TSG in
a form and on media compatible with the equipment TSG is then operating on
Customer's behalf, together with appropriate documentation and other
materials and will be provided in a timely manner when required by TSG in the
performance of the Services.
ARTICLE X
FEES AND CHARGES
10.1 FEES AND CHARGES. For each month during the Term, Customer
shall pay TSG the Fees shown in Schedule 10.1, as may be adjusted as provided
in Section 10.2. Except as otherwise agreed by the Parties in writing,
Customer shall only be required to pay for Services described in Schedule 3.1
and provided by TSG pursuant to the Fees Schedule shown in Schedule 10.1.
10.2 ADJUSTMENT TO CHARGES. [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED].
10.3 NEW SERVICES FEES. Unless otherwise agreed in writing by
Customer and TSG, in consideration of TSG's provision of New Services, for
each month during the Term, Customer shall pay to TSG the appropriate Fees
determined using the uniform contract rates shown in Schedule 10.1, as the
same may be adjusted pursuant to Section 10.2.
10.4 OTHER AMOUNTS PAYABLE. In addition to the Fees set forth
above, TSG may also charge Customer for other amounts expressly payable to
TSG under this Agreement. In addition, Customer shall retain responsibility
for Pass Through Fees as otherwise specified in this Agreement.
10.5 OUT OF POCKET EXPENSES. For any Service which is provided by
TSG personnel away from their principal location of business at Customer's
request, Customer will pay or reimburse TSG for actual travel and incidental
expenses incurred by TSG personnel in connection with the performance of the
Services hereunder; provided that such expenses are incurred in a manner
consistent with TSG's own standard travel expense policies applicable to its
own employees.
ARTICLE XI
PAYMENT SCHEDULE
11.1 INVOICING. TSG will submit an invoice to Customer for all
Services provided hereunder on a monthly basis, containing a summary and
detail of the relevant information to substantiate the Fees and charges.
Invoices shall be sent to Customer at 4255 Amon Carter Blvd., MD 4236, Ft.
Worth, Texas 76155, Attn.: Accounts Payable, or to such other address as
Customer may
7
<PAGE>
advise in writing from time to time. All Fees, expenses and other amounts
payable or creditable by either Party to the other under this Agreement shall
be paid or credited, respectively, in United States Dollars.
11.2 TIME OF PAYMENT. All sums due TSG under this Agreement will
be due and payable within thirty (30) days after receipt by Customer of an
invoice from TSG.
11.3 DISPUTED INVOICES. If Customer in good faith reasonably
disputes an invoice for sums owed hereunder, the following shall apply:
(a) If the disputed invoice is greater than or equal to the
prior month's invoice, Customer shall pay TSG all undisputed amounts, but in
no event less than ninety percent (90%) of the prior month's payment.
(b) If the disputed invoice is less than the prior month's
payment, Customer shall pay TSG all undisputed amounts, but in no event less
than ninety percent (90%) of the disputed invoice; therefore, in such event
and irrespective of the amount in dispute, Customer may not in respect to the
disputed invoice withhold payment of any amount in excess of ten percent
(10%).
(c) In no event shall a Party's adherence to the provisions
of this Section 11.3 be construed as constituting a waiver by either Party of
any claims against the other Party.
(d) All disputed amounts shall be resolved in accordance
with the Dispute Resolution process set forth in Article XVIII hereof.
11.4 LATE CHARGES. Following the period when TSG and Customer are
no longer Affiliates, any sum due TSG hereunder that is not paid when due
shall bear interest from the date due until paid at a rate of interest equal
to two percentage points (2%) per annum above the prime rate announced from
time to time by the principal New York office of Citibank, N.A., but in no
event to exceed the maximum rate of interest allowed by applicable law.
Notwithstanding the above, interest shall not accrue on any past due sum
during the period such sum has been reasonably disputed by Customer.
ARTICLE XII
TAXES
12.1 ALLOCATION OF RESPONSIBILITY FOR CERTAIN TAXES. Customer shall
be responsible for (and shall indemnify TSG for) national, federal, state and
local sales, use, excise, value added, withholding, registration fees, stamp
taxes and importation and custom duty taxes or similar taxes (including
penalty and interest) imposed on TSG arising from this Agreement, excluding
taxes imposed based on TSG's net income; and any additional tax imposed on
TSG as a result of any reimbursements under this provisions. All payments
hereunder by Customer to TSG shall be made free and clear of and without
deduction for any present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto. If
Customer shall be required by law to deduct any such amounts
8
<PAGE>
from or in respect of any sum payable hereunder, the sum payable shall be
increased as may be necessary so that after making all required deductions
TSG receives an amount equal to the sum it would have received had no such
deductions been made.
12.2 PROPERTY TAXES. Each of TSG and Customer 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.
12.3 TAX CLAIMS. If TSG receives notice from any taxing authority
with respect to an assessment or potential assessment or imposition of any
tax or other amount that the Customer would be responsible for paying
pursuant to Section 12.1 above, TSG shall promptly notify the Customer in
writing of such notice, and shall, subject to Customer's reasonable
discretion, contest or permit the Customer to contest or compromise such
proposed tax at Customer's expense. Subject to the reasonable discretion of
the Customer, Customer may request TSG to apply, at Customer's expense, for a
refund of taxes otherwise subject to indemnification under Section 12.1. In
lieu of pursuing such a claim, TSG may assign its rights to the indemnifying
party.
12.4 COOPERATION. Each Party shall cooperate as the other Party
may reasonably request in minimizing taxes incurred by the other Party in
connection with this Agreement; provided, however, that a cooperating Party
shall not 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 requesting Party agrees to reimburse the
cooperating Party for the incremental out-of-pocket costs. In the case of
either Party, such cooperation shall include, without limitation, maintaining
records as reasonably necessary for tax purposes, 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 as reasonably necessary in
connection with the preparation of any tax returns or any audit or tax
contest or refund claim.
ARTICLE XIII
PROPRIETARY RIGHTS AND LICENSES
13.1 TSG PROPRIETARY INFORMATION. TSG retains all rights, title
and interest in and to any and all TSG Software and documentation, software
development tools, know-how, methodologies, processes, technologies or
algorithms used in providing the Services that are trade secrets or
proprietary information of TSG or its Affiliates (other than Customer) or
otherwise owned or licensed by TSG or its Affiliates (other than Customer).
13.2 CUSTOMER DATA. Information relating to Customer contained in
Customer's data files ("CUSTOMER DATA") is the exclusive property of
Customer. TSG is authorized to have legal and physical access to and make use
of Customer Data for the sole purpose of performing the Services. Upon
expiration or termination of this Agreement, the Customer Data shall, at
Customer's written
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request and discretion, either be erased from the data files maintained by
TSG or, within thirty (30) days from Customer's written request and expense,
returned to Customer in TSG's then existing machine-readable format and media.
13.3 LICENSE TO TSG SOFTWARE. During the Term, TSG grants to
Customer a limited, non-exclusive and non-transferable right and license to
use the TSG Software in object code form only, strictly in accordance with
the terms of this Agreement. The rights hereby granted are limited to
Customer's use of the TSG Software to the extent necessary to access and
utilize the Services in connection with Customer's internal operation and no
other use. Customer shall not: (i) make any modifications or alterations to
the TSG Software; or (ii) reverse engineer, disassemble, compile, reverse
compile or decompile the TSG Software. If any Third Party Software
incorporated in TSG Software is licensed to Customer on a stand-alone basis
or is otherwise provided in connection with the Services provided hereunder,
and TSG must pay a royalty or license fee to the licensor of such Third Party
Software in order to make such Third Party Software available to Customer,
Customer will repay such amount to TSG upon demand. If TSG must pay any
Third Party a royalty or license fee for sublicensing or distributing or
otherwise granting access to or use of any such TSG Software to Customer,
then Customer will also reimburse TSG the amount of any such royalty or
license fee. Customer will notify TSG in writing of any proposed Change in
Control of Customer as soon as practicable but in no event less than thirty
(30) days in advance of such Change in Control. TSG will use reasonable
efforts to advise Customer within such thirty (30) day period of any royalty
or license fees that will become due and payable to the licensor or
distributor of any Third Party Software arising out of the Change in Control.
Customer shall have the option to terminate that portion of the Services
which require the payment of excessive additional royalty or license fees;
provided, however, that such election must occur prior to the actual Change
in Control.
13.4 SUBLICENSE. Customer shall not transfer or sublicense the TSG
Software or any component thereof to any Person, whether by operation of law
or otherwise, without the prior written consent of TSG.
ARTICLE XIV
CONFIDENTIALITY
14.1 CONFIDENTIAL INFORMATION. As of the Effective Date, and
except as otherwise provided in this Agreement, TSG and Customer each agree
that all information communicated to it by the other, including, without
limitation, the terms of this Agreement, which the recipient party knows or
has reason to know is the confidential or proprietary information of the
disclosing party ("CONFIDENTIAL INFORMATION") will be received in strict
confidence, will be used only for purposes of this Agreement, and will not be
disclosed by the recipient Party, its agents, subcontractors or employees
without the prior written consent of the other Party. TSG and Customer each
agree to use the same means it uses to protect its own confidential
information, but in any event not less than reasonable means, to prevent the
disclosure of the Confidential Information to outside parties. However,
neither TSG nor Customer shall be prevented from disclosing information which
belongs to
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such Party or is (a) already known by the recipient Party without an
obligation of confidentiality; (b) publicly known or becomes publicly known
through no unauthorized act of the recipient Party; (c) rightfully received
from a third party without an obligation of confidentiality; (d)
independently developed without use of the other Party's Confidential
Information; (e) approved by the other Party for disclosure; or (f) required
to be disclosed pursuant to a requirement of a governmental agency or law, if
the disclosing Party provides the other Party with notice of this requirement
prior to disclosure. Notwithstanding the foregoing, Customer shall be
entitled to disclose the terms of this Agreement to any potential purchaser
of all or substantially all of the stock or assets of Customer; provided,
that any such potential purchaser undertakes to treat the Confidential
Information as confidential with use and disclosure restrictions at least as
strict as those in this Section 14.1.
14.2 GENERAL KNOWLEDGE. Either Party may enhance its generalized
knowledge and experience during the Term and may already possess or hereafter
obtain concepts, data, discoveries, ideas, information, inventions, know-how,
knowledge, methodologies, processes, products, skills, techniques and/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 either Party's rights to develop,
disclose, display, market, obtain, own, publish, provide, release, sell,
transfer and/or use, in any manner whatsoever, any such generalized knowledge
and experience and/or any such concepts; provided, however, that the Parties
shall in all events comply with Section 14.1. Further, each Party shall be
free to use the ideas, concepts or know-how it develops in connection with
the Services that are in nontangible form and may be retained by the Party's
respective employees. Either Party may acquire, license, market, distribute,
develop for itself or others, or have others develop for its, similar
technology performing the same or similar functions as the technology
contemplated by this Agreement.
ARTICLE XV
WARRANTIES
15.1 MUTUAL WARRANTIES. Each Party represents and warrants to the
other that: (i) it is a corporation duly organized and validly existing and
in good standing under the laws of its jurisdiction of formation and/or place
of principal business; (ii) the performance of its obligations hereunder has
been duly authorized by all necessary corporate action; (iii) this Agreement
is a legal, valid and binding obligation enforceable against it in accordance
with its terms subject, as to enforcement, to bankruptcy, insolvency,
reorganization, liquidation and other laws and equitable principles relating
to or affecting the enforcement of creditors' rights generally as they may be
applied in the event of the bankruptcy, insolvency, moratorium,
reorganization or liquidation of, or the appointment of a receiver with
respect to the property of, or a similar event applicable to, such Party;
(iv) neither the execution and delivery of this Agreement nor the performance
of any of its obligations hereunder, nor the consummation of any of the
transactions contemplated hereby, will violate any agreement to which it is a
Party or any provision of its Certificate of Incorporation, Articles of
Incorporation, By-Laws or other document of corporate governance, nor any
applicable law, regulation, rule, judgment, order or decree; and (v) it has
duly obtained or made all consents, approvals or authorizations of, or
registrations, declarations or filings with, any governmental authority which
are required as a condition to the valid execution, delivery and performance
of this Agreement on its part.
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15.2 NO OTHER REPRESENTATIONS OR WARRANTIES. THE WARRANTIES
SPECIFIED HEREIN ARE THE ONLY WARRANTIES MADE BY TSG WITH RESPECT TO THE
SERVICES. EXCEPT AS OTHERWISE SPECIFIED HEREIN, THE SERVICES ARE PROVIDED
"AS IS" AND "WITH ALL FAULTS." THERE ARE NO OTHER WARRANTIES, EXPRESS OR
IMPLIED, BY OPERATION OF LAW OR OTHERWISE, INCLUDING WITHOUT LIMITATION ANY
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR INTENDED USE OR ANY
IMPLIED WARRANTIES ARISING OUT OF COURSE OF PERFORMANCE, COURSE OF DEALING,
OR USAGE OF TRADE. NO REPRESENTATION OR OTHER AFFIRMATION OF FACT WHICH IS
NOT CONTAINED IN THIS AGREEMENT, INCLUDING WITHOUT LIMITATION STATEMENTS
REGARDING CAPACITY, SUITABILITY FOR USE, OR PERFORMANCE OF THE HARDWARE
COMPONENTS, SOFTWARE OR DATA, OR RELATING TO THE SERVICES, WHETHER MADE BY
TSG OR OTHERWISE, SHALL BE DEEMED TO BE A WARRANTY FOR ANY PURPOSE OR GIVE
RISE TO ANY LIABILITY OF TSG.
ARTICLE XVI
LIMITATIONS OF LIABILITY
16.1 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 XVI 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.
16.2 NO LIABILITY FOR ORDINARY NEGLIGENCE. IN NO EVENT WILL TSG BE
LIABLE TO CUSTOMER FOR ANY GENERAL DAMAGES ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR THE PERFORMANCE OR NON-PERFORMANCE OF THE SERVICES,
UNLESS SUCH LOSS, LIABILITY, DAMAGE OR EXPENSE SHALL BE DUE TO THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF TSG.
16.3 NO CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL TSG BE LIABLE FOR
CUSTOMER'S CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE
PERFORMANCE OF THE SERVICES, EVEN IF TSG HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES. FURTHER, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER FOR ANY PUNITIVE OR EXEMPLARY DAMAGES ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT.
16.4 LIMITATION OF LIABILITY FOR GROSS NEGLIGENCE. TSG'S LIABILITY
ARISING UNDER OR RELATING IN ANY MANNER TO THIS AGREEMENT FOR GENERAL DAMAGES
RESULTING FROM TSG'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT IN THE
PERFORMANCE OF THE SERVICES HEREUNDER SHALL BE LIMITED AS FOLLOWS: [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
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[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
16.5 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 two years after the breach or other event constituting the basis for
that claim occurred, even if not discovered until after that two-year period.
Nevertheless, the two-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.
16.6 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 Sections 13.3,
13.4, 14.1, or 21.15, 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.
16.7 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.
16.8 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. Nothing
in this Article XVI shall affect any liability of a Party for Tort Damages or
Indemnifiable Losses under Article XVII.
16.9 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.
ARTICLE XVII
INDEMNIFICATION
17.1 GENERAL INDEMNIFICATION. Subject to the limitation set forth
in Section 16.4, each Party shall indemnify, defend and hold harmless the
other Party hereto, their respective officers, employees and directors (the
"INDEMNIFIED PARTY") from and against any and all Tort Damages which arises
out of the negligence, gross negligence or willful misconduct of the
indemnifying party
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("INDEMNIFYING PARTY"), its agents, employees or contractors in connection
with the Indemnifying Party's performance of this Agreement.
17.2 INTELLECTUAL PROPERTY INDEMNIFICATION BY TSG. TSG shall
indemnify, defend, and hold harmless Customer from and against any and all
Indemnifiable Losses arising out of, or relating to any claim by a third
party that any TSG Software provided under this Agreement infringes a
currently existing United States copyright, misappropriates a trade secret,
or willfully infringes a Untied States patent. TSG shall not indemnify
Customer, however, if the claim of infringement or misappropriation is caused
by:
(a) Customer's misuse or modification of the TSG Software,
(b) Customer's failure to use corrections or enhancements made
available by TSG,
(c) Customer's use of such item in combination with any product or
information not owned, developed or provided by TSG, except as
authorized in writing by TSG, or
(d) Any information, direction, specification, materials or software
provided by Customer or any third party.
If any such TSG Software is, or in TSG's opinion is likely to be, held
to constitute an infringing product, TSG shall, at its expense and option,
either:
(w) Procure the right for Customer to continue using such TSG
Software,
(x) Replace such TSG Software with a non-infringing equivalent
software, or
(y) Modify such TSG Software to make it non-infringing.
The rights and remedies stated in this Section 17.2 constitute the
sole and exclusive remedies of Customer, and TSG's entire liability, with
respect to any Third Party Claims of infringement or misappropriation.
17.3 CUSTOMER INDEMNIFICATION. Customer shall indemnify, defend,
and hold harmless the TSG Indemnified Parties from and against Indemnifiable
Losses resulting from, arising out of, or relating to Customer's rendering or
providing of any services to a third party in which Customer uses TSG's
Services or TSG Software to provide such Services.
17.4 AIRLINE INCIDENT INDEMNIFICATION. Customer (as the
Indemnifying Party), shall indemnify, defend and hold harmless the TSG
Indemnified Parties from and against any and all Indemnifiable Losses
resulting from, arising out of, or relating to any Airline Incident. For the
avoidance of doubt, Customer's indemnification obligations in connection with
this Section 17.4 extend to, and TSG shall have no liability whatsoever in
connection with, any incidental, indirect, special, exemplary or
consequential damages, including loss of use, loss of data, loss of profits
or loss
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of business, incurred by Customer, or any third party as a result of or in
connection with any Airline Incident. The Parties intend that the TSG
Indemnified Parties be indemnified notwithstanding any liability that TSG
might otherwise have under Section 17.1 relating to any Airline Incident.
17.5 CUSTOMER CONSENTS AND SUBLICENSES. Customer shall indemnify,
defend and hold harmless the TSG Indemnified Parties from and against all
Indemnifiable Losses resulting from, arising out of, or relating to
Customer's failure to obtain any consents required under Sections 9.1 and
9.2.
17.6 DEFENSE OF CLAIMS; SETTLEMENT. In the event a claim is made
or suit is brought which is covered by the indemnities in this Article XVII,
the Indemnified Party shall give the Indemnifying Party notice thereof
promptly after becoming aware of such claim provided that the failure to
provide such notice will not relieve the Indemnifying Party of any obligation
unless and only to the extent that such failure actually prejudices the
ability of the Indemnifying Party to contest such claim. The Indemnifying
Party shall, at its expense, thereafter assume all responsibility for any
claim covered by the foregoing indemnity and the Indemnified Party shall
provide reasonable assistance and cooperation during the defense or
settlement of the claim.
ARTICLE XVIII
DISPUTE RESOLUTION
18.1 INTERNAL DISPUTE PROCESS. The Parties shall attempt to
resolve any dispute, controversy or claim arising out of, relating to, or in
connection with, this Agreement, or the interpretation, breach, termination
or validity thereof (collectively, a "DISPUTE"), as follows:
(a) Upon either Party determining a Dispute exists, such
Party shall notify the other Party in writing with a detailed account of the
Dispute (the "DISPUTE NOTICE"). Such Dispute shall be fully discussed by the
ISCM and Account Manager in an attempt to achieve a resolution of such
Dispute as promptly as possible so as not to prejudice either Party. If the
ISCM and Account Manager are unable so to resolve such Dispute by mutual
agreement within twenty (20) business days following the date of the Dispute
Notice, such Dispute shall be submitted to the Customer's CEO and TSG's
President of the STS Division for resolution. The Parties' managements shall
meet and fully discuss such Dispute in an attempt to achieve a resolution of
such Dispute as promptly as possible so as not to prejudice either Party.
(b) So long as TSG and Customer remain Affiliates, in the
event that such Dispute shall not be so resolved by the Parties' managements
within fifty (50) days from the date of the Dispute Notice, the Dispute shall
be submitted to the AMR Executive Committee (or its successor). The AMR
Executive Committee (or its successor) shall meet and fully discuss such
Dispute in an attempt to achieve a resolution of such Dispute as promptly as
possible so as not to prejudice either party. If such Dispute is not so
resolved by the AMR Executive Committee (or its successor) within one hundred
(100) days form the date of the Dispute Notice, the Parties shall be free to
submit the Dispute to binding arbitration as set forth in Section 18.1(c)
below.
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(c) If TSG and Customer are no longer Affiliates, in the
event that such Dispute shall not be so resolved by the Parties' managements
(and the AMR Executive Committee if the Parties are Affiliates) within the
periods set forth above, the Dispute shall be submitted to binding
arbitration pursuant to the American Arbitration Association ("AAA")
commercial arbitration rules as in effect at the time of the submission of
the Dispute to AAA. The arbitration shall take place in Fort Worth, Texas or
such other place as the Parties may mutually agree. The arbitration shall be
arbitrated by a panel of three arbitrators (the "ARBITRATION PANEL"), one of
which shall be appointed by TSG, the second appointed by Customer, and the
third jointly appointed by the arbitrators appointed by TSG and Customer.
TSG and Customer shall abide by and perform any award rendered by the
Arbitration Panel. The Parties intend that any Dispute will be resolved by
application of the laws of the State of Texas and the terms of this
Agreement. The Arbitration Panel's determination of facts shall be final and
binding on TSG and Customer if there is substantial evidence in the record of
such arbitration to support such determination, it being the intention of the
Parties that the standard for any judicial review of the findings of award be
the same standard as applies in the case of appeals to actions of
administrative agencies in the State of Texas.
18.2 CONTINUITY OF SERVICES. Both Parties agree to continue
performing their respective obligations under this Agreement while the
dispute is being resolved unless and until this Agreement expires or is
terminated in accordance herewith.
18.3 EXPENSES. Each of Customer and TSG shall pay its own
out-of-pocket expenses in connection with the conduct of the dispute
resolution process set forth above. The costs and expenses of any
arbitration, other than out-of-pocket expenses in connection therewith, shall
be payable in accordance with the decision of the Arbitration Panel.
ARTICLE XIX
FORCE MAJEURE
Except for the obligations to make payments hereunder, each Party
shall be relieved of the obligations hereunder to the extent that performance
is delayed or prevented by any cause beyond its reasonable control,
including, without limitation, delays in or the withholding of decisions
required by the other Party, acts of God, public enemies, war, civil
disorder, communications failures, fire, flood, explosion, labor disputes or
strikes or any acts or orders of any governmental authority, failures or
fluctuations in electrical power, heat, light, air conditioning or
telecommunications equipment.
ARTICLE XX
TERMINATION
20.1 TERMINATION FOR BREACH. In the event of certain breaches of
this Agreement, TSG or Customer may terminate this Agreement in accordance
with this Section 20.1; provided that Customer gives TSG notice of its intent
to terminate within ninety (90) days after the date such breach occurred.
(a) Upon TSG's Egregious Breach of this Agreement, Customer
may terminate this Agreement, provided that Customer gives TSG seven (7)
days' written notice of its intent to
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terminate and TSG fails to cure the breach within such seven (7) days; and
provided, further, that such cure period will be extended an additional seven
(7) days if TSG delivers to Customer a written plan to cure the breach. In
both instances, unless TSG cures the Egregious 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 Customer's material breach of its obligations
under this Agreement, TSG may terminate this Agreement on ten (10) days prior
written notice to Customer of its intent to terminate and Customer fails to
cure the breach within such ten (10) days.
(c) If either Party (i) is adjudicated bankrupt or
insolvent by a court of competent jurisdiction, (ii) substantially ceases to
do business as currently conducted, (iii) fails to pay its debts generally as
they become due, or (iv) takes steps to declare bankruptcy, wind up, dissolve
or liquidate (in each case, other than for the purposes of an amalgamation,
restructuring, or reconstruction pursuant to which the surviving entity
becomes bound by or assumes the obligations under this Agreement), or a
receiver, trustee or similar officer is appointed over (or a lien holder
takes possession of) all or a substantial part of such Party's property or
assets, or anything similar to any of the foregoing occurs in relation to
such Party under the laws of any jurisdiction, the non-defaulting Party may
terminate this Agreement on notice to the defaulting Party.
20.2 REMEDIES FOR BREACH. Upon the occurrence of a breach of this
Agreement as outlined in Section 20.1 above, the non-defaulting Party shall
have the right, in addition to termination of the Agreement, to seek all
legal and equitable remedies to which it is entitled, subject to the
limitations of liability contained in Article XVI hereof.
ARTICLE XXI
MISCELLANEOUS
21.1 ASSIGNMENT. (a) This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the Parties hereto
and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto without the prior written consent of the other
Party, which may not be unreasonably withheld. Each Party shall respond in
writing with its decision within thirty (30) days after receipt of a request
for consent from the other Party; provided, however, that no TSG consent will
be required for Customer's assignment (or deemed assignment) of this
Agreement arising out of any transaction by which Customer becomes
disaffiliated with TSG. For purposes of this Agreement, a Change in Control
of Customer shall be considered an assignment of Customer's rights and
obligations.
(b) Customer's obligations under this Agreement shall
continue and survive in the event of any sale, spin off or divestiture of
Customer by its principal shareholder(s), any Change in Control, or
Customer's merger or consolidation with or into any Person. If any such
merger or consolidation occurs, the survivor of any such merger or
consolidation shall assume Customer's obligations and duties under this
Agreement and shall be bound by the terms and conditions of this Agreement.
In addition, if Customer should sell, divest, or spin off all or a
substantial part of its assets or business, in a
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single transaction or series of related transactions, then the entity
resulting from (or acquiring the business or assets of Customer in) such
transaction shall assume, and be obligated to pay and perform Customer's
obligations under this Agreement, and Customer shall not be released or
discharged form the payment and performance of its obligations under this
Agreement. Notwithstanding the foregoing, any change in the scope, nature,
quantity, costs or quality of the Services, as a result of any of the
described transactions, shall be subject to the change process set forth in
Section 3.2 above. Further, TSG shall have the right to levy additional
reasonable charges (which charges may include reasonable margins)
commensurate with the actual costs associated with, arising out of or in
connection with any of the Change in Control, sale, spin, divestiture,
merger, consolidation or similar transaction affecting Customer.
21.2 NOTICES. All notices, requests, demands, and other
communications to be given or delivered under or by reason of the provisions
of this Agreement shall be in writing and shall be deemed given when
delivered personally, on the next business day when sent by overnight Federal
Express, Express Mail or similar service, on the third business day after
being mailed when mailed by certified or registered first class mail, return
receipt requested, and upon receipt when sent by telecopy or electronic mail
with a confirmation copy by first-class mail, to each Party at the following
address (or to such other address as that Party may have specified by notice
given to the other pursuant to this provision):
If to TSG:
The SABRE Group, Inc.
4255 Amon Carter Blvd., MD
Fort Worth, Texas 76155
Attention: President, STS Division
With a copy to:
The SABRE Group, Inc.
Attn: General Counsel
4255 Amon Carter Blvd., MD 4204
Ft. Worth, Texas 76155
If to Customer:
AMR Combs, Inc.
8011 Lemmon Ave.
Dallas, Texas 75209
Attention: Chief Executive Officer
With a copy to:
AMR Combs, Inc.
4255 Amon Carter Blvd., MD 4240
Ft. Worth, Texas 76155
Attention: General Counsel
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21.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts all of which taken together will constitute one and the same
instrument.
21.4 NO WAIVER. No delay or omission by either Party hereto to
exercise any right or power hereunder shall impair such right or power or be
construed to be a waiver thereof. A waiver by either of the Parties hereto
of any of the obligations to be performed by the other or any breach thereof
shall not be construed to be a waiver of any succeeding breach thereof or of
any other obligation herein contained.
21.5 SURVIVAL. The provisions of Sections 4.3, 13.1, 13.2, 15.2,
21.10, 21.11, 21.15 and Articles XI, XII, XIV, XVI, XVII and XVIII shall
survive any expiration or termination of this Agreement.
21.6 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be deemed
restated to reflect the original intentions of the Parties as nearly as
possible in accordance with applicable law, and, if capable of substantial
performance, the remaining provisions of this Agreement shall be enforced as
if this Agreement was entered into without the invalid provision.
21.7 PUBLICITY. Except as otherwise agreed, neither Party shall
have any right to the other Party's trademarks, service marks, or trade names
in connection with any product, service, promotion or publication, except
that TSG may use Customer's name on TSG's client list and in reasonable
business promotion efforts by TSG.
21.8 ENTIRE AGREEMENT. This Agreement together with all Schedules
hereto, constitutes the entire agreement and understanding among the Parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, relating to such subject
matter.
21.9 AMENDMENTS. This Agreement may be amended or modified only by
a written instrument duly executed by or on behalf of each Party hereto.
21.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.
21.11 COMPLIANCE WITH LAWS; EXPORT REGULATION. Customer will be
responsible for obtaining any necessary government approvals, consents,
licenses and/or permits to enable Customer to (a) export any products or
technical data required for TSG's performance under this Agreement from the
United States or any other country of origin, (b) import such products and
technical data into any other country, and (c) pay TSG all amounts in U.S.
Dollars as required by this Agreement. Upon request, TSG will promptly
provide Customer with any end-user certificates, affidavits regarding
re-export or other certificates and documents as are reasonably available to
TSG and required from TSG
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to obtain any such approvals, consents, licenses and/or permits. The
obligations of TSG under this Agreement shall be conditioned on Customer's
obtaining such approvals, consents, licenses and/or permits. Each Party
shall bear all costs, fees and expenses associated with obtaining such
approvals, consents, certificates, affidavits and other items for which it is
responsible under this Agreement, and upon request will provide to the other
evidence that any such items have been obtained and all fees have been paid.
Notwithstanding anything in this Agreement to the contrary, Customer shall
not directly or indirectly export (or re-export) any hardware, products,
Software, technical data or products thereof or permit transshipment of same
(a) to any country or destination for which the United States Government or a
United States Government agency requires an export license or other approval
for export without first having obtained such license or other approval, or
(b) if otherwise contrary to United States law. The term "technical data"
shall include the TSG Services and any technical assistance provided by TSG.
This obligation shall survive the expiration or termination of this Agreement.
21.12 NO THIRD-PARTY BENEFICIARIES. The Parties agree that this
Agreement is for the benefit of the Parties hereto and is not intended to
confer any rights or benefits on any third party, including any employee of
either Party hereto, and that there are no third-party beneficiaries to this
Agreement.
21.13 SCHEDULES; GOVERNING DOCUMENTS. The terms and conditions of
any and all Schedules to this Agreement, as amended from time to time by
mutual agreement of the Parties, are incorporated into this Agreement by this
reference and shall constitute a part of this Agreement as if fully set forth
herein.
21.14 RELATIONSHIP OF THE PARTIES. TSG shall be and act as an
independent contractor hereunder and no employee of either Party shall be
deemed to be an employee of the other for any purpose whatsoever. Each Party
shall comply, at its own expense, with all applicable state and municipal
requirements and with all state and federal laws applicable to it as an
employer and otherwise.
21.15 NON-SOLICITATION OF EMPLOYEES. During the Term of this
Agreement and for a period of one (1) year thereafter, Customer shall not
directly solicit for employment of TSG's personnel.
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
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[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed by their authorized representatives as of the date first above
written.
AMR COMBS, INC. THE SABRE GROUP, INC.
- ----------------------------- -----------------------------
By: Jim Gunn By: Tom Cook
Title: Chief Executive Officer Title: President, SABRE Technology
Solutions Division
Date: Date:
----------------------------- -----------------------------
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SCHEDULE 1
DEFINITIONS
For the purpose of this Agreement, the following terms shall have the
following meanings:
"AAA" shall mean the American Arbitration Association.
"ACCOUNT MANAGER" shall be the person appointed from time to time by
TSG to consult with Customer and consider Customer's needs in connection with
the performance of this Agreement.
"AFFILIATE" shall mean a Person that directly or indirectly through
one or more intermediaries Controls, is Controlled by, or is under common
Control with another Person.
"AGREEMENT" shall have the meaning given in the preamble hereof.
"ARBITRATION PANEL" shall have the meaning given in Section 18.1.
"AIRLINE INCIDENT" means an occurrence of personal injury, death, or
property damage in connection with the operation of any aircraft.
"CHANGE IN CONTROL" means (a) the acquisition by any Person or group
of Person of 50% or more of the outstanding shares of voting stock, or
similar equity interest, of Customer, or (b) all or substantially all of the
assets of Customer are sold in a single transaction or series of related
transactions to any Person.
"CONFIDENTIAL INFORMATION" shall have the meaning given to such term
in Section 14.1.
"CONSEQUENTIAL DAMAGES" means 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" (including, with correlative meaning, the terms
"Controlling" or "Controlled by") means, with respect to any Person, the
right to exercise, directly or indirectly, more than fifty percent of the
voting power attributable to the equity interests in such Person.
("Controlling" and "Controlled" have correlative meanings.)
"CUSTOMER" shall have the meaning given in the preamble hereof.
"CUSTOMER DATA" shall mean (i) all data that is provided by or on
behalf of Customer to TSG in order for TSG to provide the Services, including
keyed input and electronic capture of information by the Services, (ii) all
data that is provided by or on behalf of TSG to Customer by means of the
Services, and (iii) all data that is produced by means of the Services as a
intermediate step in using or producing any such data, including databases
and files containing such data.
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"CUSTOMER FACILITIES SPACE" shall have the meaning given in Section
7.2.
"CUSTOMER LICENSED SOFTWARE" shall mean the third party software
licensed by Customer and used in the current data processing operations of
Customer, and any additions to or replacements for such software and
documentation.
"CUSTOMER OWNED SOFTWARE" shall mean software (in source code and
object code form), and all related systems design and user documentation,
which is owned by Customer and used in the current data processing operation
of Customer, and any additions to or replacements for such software and
documentation.
"CUSTOMER THIRD-PARTY AGREEMENTS" shall mean agreements between
Customer and any third party for the provision of products or services of any
kind.
"DISPUTE" shall have meaning given in Section 18.1.
"DISPUTE NOTICE" shall have the meaning given in Section 18.1.
"EFFECTIVE DATE" shall mean July 1, 1996.
"EGREGIOUS BREACH" shall mean a material breach of contract that
constitutes an intentional, unequivocal refusal to perform a material
obligation of this Agreement that frustrates one or more bases of the bargain
between Customer 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.
"EQUIPMENT" shall mean all office related equipment, telephone and
facsimile machines, supplies, including Hardware, owned or leased by Customer
and necessary for TSG to perform the Services.
"EXPIRATION DATE" shall mean the first to occur of: [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED].
"EXPIRATION TRANSITION PERIOD" shall have the meaning given in Section
4.3.
"FEES" shall mean, collectively, the fees and charges paid to TSG by
Customer for performance of Services as set forth in Article X.
"GENERAL DAMAGES" shall mean 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
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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 the
actual damages of a Person, but also punitive and exemplary damages and
Consequential Damages of such Person.
"HARDWARE" shall mean computers and related equipment, including, but
not limited to, central processing units and other processors, controllers,
modems, communications and telecommunications equipment (including radio
equipment), cables, storage devices, printers, terminals, other peripherals
and input and output devices, and other tangible mechanical and electronic
equipment intended for the processing, input, output, storage, manipulation,
communication, transmission and retrieval of information and data.
"INDEMNIFIABLE LOSSES" shall mean 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 incurred by a Person. Indemnifiable Losses consist only of the
actual damages of a Person, and excludes any Consequential Damages and any
punitive or exemplary damages (however described) of such Person. For the
avoidance of doubt, the Indemnifiable Losses of an Indemnified Party shall
include any Consequential Damages and any punitive or exemplary damages
(however described) awarded against such Indemnified Party in favor of a
Person making a Third Party Claim against such Indemnified Party.
"INDEMNIFIED PARTY" shall have the meaning given in Section 17.1.
"INDEMNIFYING PARTY" shall have the meaning given in Section 17.1.
"ISCM" shall have the meaning given in Section 6.3.
"NEW SERVICES" shall mean applications development and information
management services, including data processing and information services,
information management, training, electronic data processing and
telecommunication systems that are not described in Schedule 3.1 that are
mutually agreed upon by the Parties pursuant to Section 4.1. For purposes of
Section 4.2, there shall be no requirement that the Parties mutually agree
upon the Services pursuant to Section 4.1 for such Services to be considered
"NEW SERVICES".
"NEW SERVICE REQUEST" shall mean a written request delivered to TSG by
Customer to request New Services and shall include the following, as
appropriate:
(a) A reference to this Agreement;
(b) A general description or functional specification of
the New Services desired by Customer;
(c) Any special objectives or constraints with respect to
the budget and time schedule; and
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(d) The priority of the work in relationship to other
current or anticipated work.
"PARTY" shall mean each of the signatories to the Agreement, and their
successors and assigns as permitted by the Agreement. ("PARTIES" has the
correlative meaning).
"PASS THROUGH FEES" shall mean charges to TSG for certain services or
products that it acquires from third parties to enable it (in part) to
provide the Services, which charges TSG passes through as fees charged to
Customer. The initial list of Pass Through Fees are identified in Schedule
10.4.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, trust, business association, governmental entity or other entity.
"SERVICES" shall mean the information management services, including
data processing and information services, information management, training,
electronic data processing and telecommunication systems and shall consist of
the services described on Schedule 3.1 and New Services.
"SERVICE LOCATIONS" shall have the meaning given in Section 5.1.
"SOFTWARE" shall mean any computer programming code consisting of
instructions or statements in a form readable by individuals (source code) or
machines (object code), and documentation and supporting materials therefor,
in any form or medium, including electronic media.
"SUBSIDIARY" shall mean, with respect to any Person, a corporation,
company or other entity more than 50% of whose outstanding shares or
securities (representing the right to vote for the election of directors or
other managing authority) are now or hereafter owned or Controlled, directly
or indirectly, by such Person, but such corporation, company or other entity
shall be deemed to be a Subsidiary only so long as such ownership or Control
exists.
"TORT DAMAGES" shall mean bodily or personal injury or death or damage
to real or tangible personal property.
"TSG INDEMNIFIED PARTIES" shall mean TSG, its Affiliates (other than
Customer), and their respective officers, employees and directors.
"TERM" shall have the meaning given in Section 2.1.
"THIRD PARTY" means a Person other than a Party or either Party's
Affiliates.
"THIRD PARTY CLAIM" shall mean a claim of liability asserted against a
Party by a Person other than the other Party or either Party's Affiliates.
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"THIRD PARTY SOFTWARE" means software owned by a Third Party and
licensed to Customer or TSG and used in the performance of the Services.
"TSG" shall have the meaning set forth in the preamble.
"TSG SOFTWARE" shall mean the Software owned or licensed by TSG and
made available to Customer by TSG in connection with the performance of the
Services.
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;
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.
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SCHEDULE 3.1
DESCRIPTION OF SERVICES
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
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SCHEDULE 5.1
SERVICE LOCATIONS*
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
2
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SCHEDULE 10.1
FEES AND CHARGES
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
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SCHEDULE 10.4
PASS THROUGH FEES
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
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THIS AGREEMENT HAS CONFIDENTIAL PORTIONS OMITTED, WHICH PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED
PORTIONS ARE INDICATED IN THIS AGREEMENT WITH "[TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED]."
EXECUTION COPY
SERVICES AGREEMENT
between
TELESERVICE RESOURCES, INC.
and
THE SABRE GROUP, INC.
Effective as of July 1, 1996
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SERVICES AGREEMENT
THIS SERVICES AGREEMENT, effective as of July 1, 1996 (the
"Agreement") between TELESERVICE RESOURCES, INC., a Delaware corporation
("Customer") and THE SABRE GROUP, INC., a Delaware corporation ("TSG").
W I T N E S S E T H :
WHEREAS, TSG is engaged in the business of providing certain
management and information processing services, including, but not limited
to, systems development services, systems integration services, management of
telecommunications systems, computer operation services, facilities
management services, hardware and software maintenance services and related
systems and services; and
WHEREAS, Customer and TSG desire to enter into a services agreement
pursuant to which TSG shall provide to Customer the services described in
this Agreement, on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements set forth herein, the Parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. All defined terms used in this Agreement shall
have the meanings set forth in Schedule 1.1. Schedule 1.1 also sets forth
various interpretive matters for this Agreement.
1.2 SCHEDULES. When this Agreement refers to a Schedule, such
Schedule is deemed incorporated herein by reference for all purposes. All
Schedules, as agreed to on or after the Effective Date, shall be deemed
incorporated herein upon the complete execution thereof.
ARTICLE II
TERM
2.1 TERM. Unless earlier terminated as provided herein, the term
of this Agreement (the "TERM") shall commence on the Effective Date and shall
end on the Expiration Date.
2.2 EXTENSIONS OF THE TERM. The Term shall be automatically
extended for successive [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
periods after the Expiration Date, unless either Party gives written notices
of its intent not to renew the Agreement at least one hundred twenty (120)
days prior to the date on which the Term or the then-current renewal period
(as applicable) expires. Notwithstanding the above, if Customer and TSG
become disaffiliated, either party shall have the option, in its sole and
absolute discretion, at any time six (6) months following the disaffiliation
to terminate this Agreement by giving six (6) months prior written notice to
the other Party; provided, however, that prior to the Expiration Date TSG may
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not terminate (except for breach pursuant to Section 20.1) Services provided
hereunder to the extent such Services are required for Customer to continue
support of American Airlines, Inc.
ARTICLE III
SERVICES
3.1 SERVICES. Subject to the terms and conditions of this
Agreement, TSG shall perform the Services described in Schedule 3.1 for
Customer.
3.2 CHANGES TO SCOPE OF SERVICES. In the event that Customer
wishes to request modifications in the Services, including additions,
deletions and rearrangements thereof, Customer shall submit such requests to
TSG in writing. TSG will endeavor to within sixty (60) days (or such shorter
time as is reasonably practicable) from receipt of Customer's written request
for any such modification, determine the feasibility of such request and
provide Customer with a good faith estimate of the costs, if any, to Customer
of such modifications. Upon mutual written agreement of the Parties, TSG
shall be responsible for implementing modification requests and Customer
shall pay the agreed charges, if any. TSG will not be required to make any
such modifications prior to the mutual execution of any such written
agreement, and will continue to provide Services to Customer on the same
basis as TSG did prior to Customer's request until such a written agreement
is mutually executed.
3.3 MANAGEMENT OF TSG RESOURCES.
TSG shall have the right to manage all TSG resources used in providing
the Services.
ARTICLE IV
AUTHORIZATION OF NEW SERVICES;
RELATED DOCUMENTS
4.1 PROCEDURES. Any and all New Services, shall be authorized and
directed as set forth below:
(a) Customer may deliver to TSG one or more New Service
Requests. After receipt of a New Service Request, TSG shall prepare and
deliver to Customer a proposal in response thereto as promptly as reasonably
practicable. If TSG plans to charge Customer for preparation of any such
proposal, it will so inform Customer in writing together with an estimate of
the charges for preparation of the proposal. If TSG's estimate is accepted
by Customer in writing, TSG shall then promptly commence preparation of the
proposal. TSG may also prepare, on TSG's own initiative, and not in response
to a New Service Request, New Service proposals for Customer's review;
provided that TSG will not charge Customer for any fee or expense related to
the preparation of such proposals, except upon the written consent of
Customer.
(b) After receipt of a New Service proposal, Customer shall
notify TSG in writing whether Customer desires to proceed at Customer's sole
discretion with the work as specified therein or upon some modified basis.
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(c) Upon Customer's acceptance of the terms of any New
Service proposal, Customer and TSG shall execute a supplement to this
Agreement reflecting mutually agreed terms and conditions (a "SERVICES
SUPPLEMENT"), all of which shall be incorporated in this Agreement by
reference. After execution of any Services Supplement, TSG shall proceed
with the work specified therein upon the terms and conditions set forth
therein and in this Agreement.
4.2 NEW SERVICES. Customer will allow TSG the same rights and
opportunities to bid on any New Services [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED] as it provides to any other prospective provider of such
New Services. If TSG chooses to bid on the New Services, Customer shall
award such New Services to TSG if TSG's bid is as favorable, in Customer's
reasonable discretion, to Customer (in terms of cost, terms, functionality
and time to market) as the best bid Customer receives.
4.3 EXPIRATION ASSISTANCE BY TSG. For a period of no more than
one hundred and twenty (120) days before the Expiration Date or termination
of any of the Services pursuant to Sections 2.2 or 20.1 (each period referred
to as the "EXPIRATION TRANSITION PERIOD"), TSG will provide to Customer or
its designee any and all expiration assistance reasonably requested by
Customer to facilitate the orderly transfer of responsibility for the
applicable Services to Customer or its designee. If the assistance requires
TSG to utilize resources or incur expenses in addition to those regularly
utilized in the performance of the Services, it shall so inform Customer in
writing and indicate any supplemental charges to Customer for such resources.
If accepted by Customer in writing, TSG will provide such incremental
services and Customer will pay TSG for such incremental assistance on a time
and materials basis at TSG's then-current rates for the Services performed
hereunder and reimburse TSG for all additional expenses incurred by TSG in
the performance of the expiration assistance. Prior to providing any of the
foregoing expiration assistance to a Customer designee, TSG shall be entitled
to receive from such designee, in form and substance reasonably acceptable to
TSG, assurances that (i) such designee will maintain at all times the
confidentiality of any TSG proprietary information, Software or materials
disclosed or provided to, or learned by, such designee in connection
therewith, (ii) such designee will use such information, Software or
materials exclusively for purposes for which Customer is authorized to use
such information, Software or materials pursuant to this Agreement, and (iii)
all fees and incremental charges due hereunder will be timely paid. Upon
Customer's request, TSG shall provide consultation services for at least
sixty (60) days after expiration of any Expiration Transition Period, to be
charged by TSG at TSG's then-current published standard rates for similar
services.
ARTICLE V
SERVICE LOCATIONS
The charges set forth in this Agreement are based on the assumption that
Services will continue to be provided by TSG to Customer at Customer's
operations and service locations in existence as of July 1, 1998 as identified
in Schedule 5.1 (the "SERVICE LOCATIONS"). Nothing in this Agreement shall
prevent Customer from changing, consolidating, eliminating or adding after July
1, 1998 any Service
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Locations, provided Customer will endeavor to provide TSG with at least one
hundred and twenty (120) days prior written notice before any such change,
consolidation, elimination or addition. If any such change, consolidation,
elimination or addition causes no more than a de minimis increase in costs to
TSG in the continuing performance of the Services, then there will be no
adjustment in the charges hereunder. If, on the other hand, any such change,
consolidation, elimination or addition causes more than a de minimis increase
in costs to TSG in the continuing performance of the Services, TSG will
promptly provide Customer with a good faith estimate of the timing, costs and
expenses of making such change, consolidation, elimination or addition. TSG
will make such change consolidation, elimination or addition upon Customer's
written approval of such estimate.
ARTICLE VI
PROJECT STAFF
6.1 TSG SUBCONTRACTORS. TSG may utilize subcontractors during the
Term, subject to TSG remaining primarily liable for the performance of the
Services and such subcontractors agreeing in writing to maintaining the
confidentiality of Customer Data in accordance with Section 14.1. TSG will
manage and monitor the performance of any such subcontractors.
6.2 MANAGERIAL CONTROL. TSG shall have complete managerial
control over its employees. TSG shall have sole responsibility for
selection, supervision, daily direction and control of the work of, and may
dismiss, replace or reassign at any time, any member of the project staff
hereunder.
6.3 INFORMATION SERVICES CONTRACT MANAGER. Customer shall appoint
a contract coordinator to implement this Agreement (the "INFORMATION SERVICES
CONTRACT MANAGER" or "ISCM"). The ISCM's responsibilities shall be to (a)
serve as primary point of contact for TSG, (b) be responsible for the
implementation, management and enforcement of the Agreement on behalf of
Customer, and (c) supervise performance of Customer's obligations under the
Agreement. Customer will notify TSG in writing of its appointment of an ISCM
and his/her successors.
ARTICLE VII
CUSTOMER OBLIGATIONS
7.1 SERVICES AND OTHER OBLIGATIONS. During the Term, Customer
will provide TSG with all necessary and reasonable resources, information,
direction and other assistance, as may be requested by TSG from time to time,
in connection with the Services. TSG's nonperformance of its obligations
hereunder will be excused to the extent caused by Customer's failure to
timely provide such necessary and reasonable resources, information,
direction and other assistance.
7.2 CUSTOMER FACILITIES AND RELATED SERVICES. During the Term,
for Services performed by TSG on-site at Customer's facilities, Customer
shall provide to TSG, at no cost to TSG, such access to and use of adequate
space and facilities required for performance of the Services (collectively,
the "CUSTOMER FACILITIES SPACE") for so long as and to the extent that the
Customer Facilities Space is reasonably required by TSG to effectively
perform the Services. Customer will also provide, at Customer's expense, all
utilities, required internal cabling and electrical installations for TSG at
the
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Customer Facilities Space and any Service Location in which the Services will
be performed. Customer will provide TSG with legal and physical access to
Customer's Facilities Space twenty-four (24) hours a day, seven (7) days a
week, for purposes of performing the Services. Customer represents to TSG
that all facilities provided by Customer under this Agreement are and shall
remain free of health and safety hazards. At all times when TSG uses space
and related utilities and services in any Customer Facilities Space, TSG
shall comply with the customary and reasonable policies governing access to
and use of the facilities in effect from time to time, provided, however,
that such policies shall not discriminate with respect to TSG or its
employees, agents or contractors.
7.3 CUSTOMER RESALE OR PASS-THROUGH OF SERVICES. Neither Customer
nor its Affiliates may resell or otherwise provide any of the Services
provided hereunder by TSG to any Person other than a Subsidiary of Customer,
without the prior written consent of TSG.
7.4 INSURANCE. During the Term, Customer shall procure and
maintain with insurers of recognized financial responsibility, Comprehensive
General Liability Insurance coverage, including contractual liability
coverage pertaining to the indemnification obligations of Customer under
Article XVII of this Agreement, with limits of not less than [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED], combined single limit per occurrence. If
Customer and TSG are not Affiliates, Customer shall annually provide TSG with
evidence of such coverage with the following special provisions:
1. The insurer(s) shall accept and insure Customer's indemnification
and hold harmless requirements pursuant to Article XVII of this
Agreement.
2. Each of the TSG Indemnified Parties shall be included as an
additional insured, to the extent of the Customer's
indemnification and hold harmless obligations hereunder.
3. The insurer(s) shall waive any rights of subrogation they may or
could have against any of the TSG Indemnified Parties, to the
extent of the Customer's indemnification and hold harmless
obligations hereunder.
4. Such policy(ies) shall be primary without right of contribution
from any insurance carried by TSG, to the extent of Customer's
indemnification and hold harmless obligations hereunder.
5. Such insurance (i) shall not be invalidated with respect to any
of the TSG Indemnified Parties by any action or inaction of
Customer, and (ii) shall insure each of the TSG Indemnified
Parties regardless of any breach or violation of such policy by
Customer.
6. Such insurance policy(ies) may not be canceled or materially
changed without at least thirty (30) days prior written notice to
TSG.
ARTICLE VIII
CUSTOMER RETAINED RESOURCES
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8.1 ONGOING CUSTOMER RESOURCES. During the Term Customer will
provide to TSG, at no cost to TSG, access to and use of all of the Equipment
necessary for performance of the Services. Customer shall be responsible for
all on-going costs and expenses relating to the Equipment, including, without
limitation, the insurance, maintenance and taxes. TSG will from time to time
provide its recommendations for (i) additions to the Equipment for
improvement of the Services, and (ii) replacements of the Equipment for the
maintenance of the Services at its existing levels. If Customer determines
that replacements of the Equipment are not needed or declines to participate
in the acquisition thereof to a degree unacceptable to TSG, TSG shall
thereafter be relieved of any Service obligations under this Agreement for
the affected Services, to the extent the failure to acquire replacements of
the Equipment adversely affects TSG's ability to properly perform the
Services.
8.2 PAYMENT RESPONSIBILITY FOR CUSTOMER RETAINED MATTERS.
Customer shall be responsible for all amounts due to Third Parties with
respect to the Equipment and other resources described in Section 8.1 and the
Customer Third-Party Agreements and for any related charges (including late
fees, interest, taxes and legal expenses); provided that TSG shall be
responsible for any such charges (including late fees, interest, and legal
expenses) payable primarily due to TSG's non-performance or mis-performance
(unless as may be excused pursuant to Article XIX) with respect to such
Equipment and Customer Third-Party Agreements. TSG shall not be responsible
for any act, omission, delay or default by vendors or other third parties in
the course of performance of any Customer Third-Party Agreement.
ARTICLE IX
SOFTWARE NEEDED FOR SERVICES
9.1 CUSTOMER LICENSED SOFTWARE. Customer hereby represents and
warrants it will obtain any licenses, consents, approvals or authorizations
from Third Parties necessary for TSG to legally and physically access and use
any Customer Licensed Software necessary to perform the Services, and will
provide written evidence of such consents to TSG upon TSG's request.
Customer shall pay all costs and expenses associated with the Customer
Licensed Software, including all required license, installation, maintenance
and upgrade fees. The Customer Licensed Software will be made available to
TSG in a form and on media compatible with the Equipment TSG is then
operating on Customer's behalf, together with appropriate documentation and
other materials.
9.2 CUSTOMER OWNED SOFTWARE. Customer will provide TSG with
object code and source code for the Customer Owned Software, if any,
necessary for TSG to perform the Services, together with any consents,
approvals, or authorizations from third parties necessary for TSG to legally
and physically access and use the Customer Owned Software, in both object
code and source code form, for purpose of providing the Services, and will
provide written evidence of such consents to TSG upon TSG's request. The
Customer Owned Software will be available to TSG in a form and on media
compatible with the equipment TSG is then operating on Customer's behalf,
together with appropriate documentation and other materials and will be
provided in a timely manner when required by TSG in the performance of the
Services.
ARTICLE X
FEES AND CHARGES
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10.1 FEES AND CHARGES. For each month during the Term, Customer
shall pay TSG the Fees shown in Schedule 10.1, as may be adjusted as provided
in Section 10.2. Except as otherwise agreed by the Parties in writing,
Customer shall only be required to pay for Services described in Schedule 3.1
and provided by TSG pursuant to the Fees Schedule shown in Schedule 10.1.
10.2 ADJUSTMENT TO CHARGES. [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED].
10.3 NEW SERVICES FEES. Unless otherwise agreed in writing by
Customer and TSG, in consideration of TSG's provision of New Services, for
each month during the Term, Customer shall pay to TSG the appropriate Fees
determined using the uniform contract rates shown in Schedule 10.1, as the
same may be adjusted pursuant to Section 10.2.
10.4 OTHER AMOUNTS PAYABLE. In addition to the Fees set forth
above, TSG may also charge Customer for other amounts expressly payable to
TSG under this Agreement. In addition, Customer shall retain responsibility
for Pass Through Fees as otherwise specified in this Agreement.
10.5 OUT OF POCKET EXPENSES. For any Service which is provided by
TSG personnel away from their principal location of business at Customer's
request, Customer will pay or reimburse TSG for actual travel and incidental
expenses incurred by TSG personnel in connection with the performance of the
Services hereunder; provided that such expenses are incurred in a manner
consistent with TSG's own standard travel expense policies applicable to its
own employees.
ARTICLE XI
PAYMENT SCHEDULE
11.1 INVOICING. TSG will submit an invoice to Customer for all
Services provided hereunder on a monthly basis, containing a summary and
detail of the relevant information to substantiate the Fees and charges.
Invoices shall be sent to Customer at 4255 Amon Carter Blvd., MD 4236, Ft.
Worth, Texas 76155, Attn.: Accounts Payable, or to such other address as
Customer may advise in writing from time to time. All Fees, expenses and
other amounts payable or creditable by either Party to the other under this
Agreement shall be paid or credited, respectively, in United States Dollars.
11.2 TIME OF PAYMENT. All sums due TSG under this Agreement will
be due and payable within thirty (30) days after receipt by Customer of an
invoice from TSG.
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11.3 DISPUTED INVOICES. If Customer in good faith reasonably
disputes an invoice for sums owed hereunder, the following shall apply:
(a) If the disputed invoice is greater than or equal to the
prior month's invoice, Customer shall pay TSG all undisputed amounts, but in
no event less than ninety percent (90%) of the prior month's payment.
(b) If the disputed invoice is less than the prior month's
payment, Customer shall pay TSG all undisputed amounts, but in no event less
than ninety percent (90%) of the disputed invoice; therefore, in such event
and irrespective of the amount in dispute, Customer may not in respect to the
disputed invoice withhold payment of any amount in excess of ten percent
(10%).
(c) In no event shall a Party's adherence to the provisions
of this Section 11.3 be construed as constituting a waiver by either Party of
any claims against the other Party.
(d) All disputed amounts shall be resolved in accordance
with the Dispute Resolution process set forth in Article XVIII hereof.
11.4 LATE CHARGES. Following the period when TSG and Customer are
no longer Affiliates, any sum due TSG hereunder that is not paid when due
shall bear interest from the date due until paid at a rate of interest equal
to two percentage points (2%) per annum above the prime rate announced from
time to time by the principal New York office of Citibank, N.A., but in no
event to exceed the maximum rate of interest allowed by applicable law.
Notwithstanding the above, interest shall not accrue on any past due sum
during the period such sum has been reasonably disputed by Customer.
ARTICLE XII
TAXES
12.1 ALLOCATION OF RESPONSIBILITY FOR CERTAIN TAXES. Customer shall
be responsible for (and shall indemnify TSG for) national, federal, state and
local sales, use, excise, value added, withholding, registration fees, stamp
taxes and importation and custom duty taxes or similar taxes (including
penalty and interest) imposed on TSG arising from this Agreement, excluding
taxes imposed based on TSG's net income; and any additional tax imposed on
TSG as a result of any reimbursements under this provisions. All payments
hereunder by Customer to TSG shall be made free and clear of and without
deduction for any present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto. If
Customer shall be required by law to deduct any such amounts from or in
respect of any sum payable hereunder, the sum payable shall be increased as
may be necessary so that after making all required deductions TSG receives an
amount equal to the sum it would have received had no such deductions been
made.
12.2 PROPERTY TAXES. Each of TSG and Customer 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.
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12.3 TAX CLAIMS. If TSG receives notice from any taxing authority
with respect to an assessment or potential assessment or imposition of any
tax or other amount that the Customer would be responsible for paying
pursuant to Section 12.1 above, TSG shall promptly notify the Customer in
writing of such notice, and shall, subject to Customer's reasonable
discretion, contest or permit the Customer to contest or compromise such
proposed tax at Customer's expense. Subject to the reasonable discretion of
the Customer, Customer may request TSG to apply, at Customer's expense, for a
refund of taxes otherwise subject to indemnification under Section 12.1. In
lieu of pursuing such a claim, TSG may assign its rights to the indemnifying
party.
12.4 COOPERATION. Each Party shall cooperate as the other Party
may reasonably request in minimizing taxes incurred by the other Party in
connection with this Agreement; provided, however, that a cooperating Party
shall not 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 requesting Party agrees to reimburse the
cooperating Party for the incremental out-of-pocket costs. In the case of
either Party, such cooperation shall include, without limitation, maintaining
records as reasonably necessary for tax purposes, 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 as reasonably necessary in
connection with the preparation of any tax returns or any audit or tax
contest or refund claim.
ARTICLE XIII
PROPRIETARY RIGHTS AND LICENSES
13.1 TSG PROPRIETARY INFORMATION. TSG retains all rights, title
and interest in and to any and all TSG Software and documentation, software
development tools, know-how, methodologies, processes, technologies or
algorithms used in providing the Services that are trade secrets or
proprietary information of TSG or its Affiliates (other than Customer) or
otherwise owned or licensed by TSG or its Affiliates (other than Customer).
13.2 CUSTOMER DATA. Information relating to Customer contained in
Customer's data files ("CUSTOMER DATA") is the exclusive property of
Customer. TSG is authorized to have legal and physical access to and make use
of Customer Data for the sole purpose of performing the Services. Upon
expiration or termination of this Agreement, the Customer Data shall, at
Customer's written request and discretion, either be erased from the data
files maintained by TSG or, within thirty (30) days from Customer's written
request and expense, returned to Customer in TSG's then existing
machine-readable format and media.
13.3 LICENSE TO TSG SOFTWARE. During the Term, TSG grants to
Customer a limited, non-exclusive and non-transferable right and license to
use the TSG Software in object code form only, strictly in accordance with
the terms of this Agreement. The rights hereby granted are limited to
Customer's use of the TSG Software to the extent necessary to access and
utilize the Services in
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connection with Customer's internal operation and no other use. Customer
shall not: (i) make any modifications or alterations to the TSG Software; or
(ii) reverse engineer, disassemble, compile, reverse compile or decompile the
TSG Software. If any Third Party Software incorporated in TSG Software is
licensed to Customer on a stand-alone basis or is otherwise provided in
connection with the Services provided hereunder, and TSG must pay a royalty
or license fee to the licensor of such Third Party Software in order to make
such Third Party Software available to Customer, Customer will repay such
amount to TSG upon demand. If TSG must pay any Third Party a royalty or
license fee for sublicensing or distributing or otherwise granting access to
or use of any such TSG Software to Customer, then Customer will also
reimburse TSG the amount of any such royalty or license fee. Customer will
notify TSG in writing of any proposed Change in Control of Customer as soon
as practicable but in no event less than thirty (30) days in advance of such
Change in Control. TSG will use reasonable efforts to advise Customer within
such thirty (30) day period of any royalty or license fees that will become
due and payable to the licensor or distributor of any Third Party Software
arising out of the Change in Control. Customer shall have the option to
terminate that portion of the Services which require the payment of excessive
additional royalty or license fees; provided, however, that such election
must occur prior to the actual Change in Control.
13.4 SUBLICENSE. Customer shall not transfer or sublicense the TSG
Software or any component thereof to any Person, whether by operation of law
or otherwise, without the prior written consent of TSG.
ARTICLE XIV
CONFIDENTIALITY
14.1 CONFIDENTIAL INFORMATION. As of the Effective Date, and
except as otherwise provided in this Agreement, TSG and Customer each agree
that all information communicated to it by the other, including, without
limitation, the terms of this Agreement, which the recipient party knows or
has reason to know is the confidential or proprietary information of the
disclosing party ("CONFIDENTIAL INFORMATION") will be received in strict
confidence, will be used only for purposes of this Agreement, and will not be
disclosed by the recipient Party, its agents, subcontractors or employees
without the prior written consent of the other Party. TSG and Customer each
agree to use the same means it uses to protect its own confidential
information, but in any event not less than reasonable means, to prevent the
disclosure of the Confidential Information to outside parties. However,
neither TSG nor Customer shall be prevented from disclosing information which
belongs to such Party or is (a) already known by the recipient Party without
an obligation of confidentiality; (b) publicly known or becomes publicly
known through no unauthorized act of the recipient Party; (c) rightfully
received from a third party without an obligation of confidentiality; (d)
independently developed without use of the other Party's Confidential
Information; (e) approved by the other Party for disclosure; or (f) required
to be disclosed pursuant to a requirement of a governmental agency or law, if
the disclosing Party provides the other Party with notice of this requirement
prior to disclosure. Notwithstanding the foregoing, Customer shall be
entitled to disclose the terms of this Agreement to any potential purchaser
of all or substantially all of the stock or assets of Customer; provided,
that any
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such potential purchaser undertakes to treat the Confidential Information as
confidential with use and disclosure restrictions at least as strict as those
in this Section 14.1.
14.2 GENERAL KNOWLEDGE. Either Party may enhance its generalized
knowledge and experience during the Term and may already possess or hereafter
obtain concepts, data, discoveries, ideas, information, inventions, know-how,
knowledge, methodologies, processes, products, skills, techniques and/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 either Party's rights to develop,
disclose, display, market, obtain, own, publish, provide, release, sell,
transfer and/or use, in any manner whatsoever, any such generalized knowledge
and experience and/or any such concepts; provided, however, that the Parties
shall in all events comply with Section 14.1. Further, each Party shall be
free to use the ideas, concepts or know-how it develops in connection with
the Services that are in nontangible form and may be retained by the Party's
respective employees. Either Party may acquire, license, market, distribute,
develop for itself or others, or have others develop for its, similar
technology performing the same or similar functions as the technology
contemplated by this Agreement.
ARTICLE XV
WARRANTIES
15.1 MUTUAL WARRANTIES. Each Party represents and warrants to the
other that: (i) it is a corporation duly organized and validly existing and
in good standing under the laws of its jurisdiction of formation and/or place
of principal business; (ii) the performance of its obligations hereunder has
been duly authorized by all necessary corporate action; (iii) this Agreement
is a legal, valid and binding obligation enforceable against it in accordance
with its terms subject, as to enforcement, to bankruptcy, insolvency,
reorganization, liquidation and other laws and equitable principles relating
to or affecting the enforcement of creditors' rights generally as they may be
applied in the event of the bankruptcy, insolvency, moratorium,
reorganization or liquidation of, or the appointment of a receiver with
respect to the property of, or a similar event applicable to, such Party;
(iv) neither the execution and delivery of this Agreement nor the performance
of any of its obligations hereunder, nor the consummation of any of the
transactions contemplated hereby, will violate any agreement to which it is a
Party or any provision of its Certificate of Incorporation, Articles of
Incorporation, By-Laws or other document of corporate governance, nor any
applicable law, regulation, rule, judgment, order or decree; and (v) it has
duly obtained or made all consents, approvals or authorizations of, or
registrations, declarations or filings with, any governmental authority which
are required as a condition to the valid execution, delivery and performance
of this Agreement on its part.
15.2 NO OTHER REPRESENTATIONS OR WARRANTIES. THE WARRANTIES
SPECIFIED HEREIN ARE THE ONLY WARRANTIES MADE BY TSG WITH RESPECT TO THE
SERVICES. EXCEPT AS OTHERWISE SPECIFIED HEREIN, THE SERVICES ARE PROVIDED
"AS IS" AND "WITH ALL FAULTS." THERE ARE NO OTHER WARRANTIES, EXPRESS OR
IMPLIED, BY OPERATION OF LAW OR OTHERWISE, INCLUDING WITHOUT LIMITATION ANY
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR INTENDED USE OR ANY
IMPLIED WARRANTIES ARISING OUT OF COURSE OF PERFORMANCE, COURSE OF DEALING,
OR USAGE OF TRADE. NO
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REPRESENTATION OR OTHER AFFIRMATION OF FACT WHICH IS NOT CONTAINED IN THIS
AGREEMENT, INCLUDING WITHOUT LIMITATION STATEMENTS REGARDING CAPACITY,
SUITABILITY FOR USE, OR PERFORMANCE OF THE HARDWARE COMPONENTS, SOFTWARE OR
DATA, OR RELATING TO THE SERVICES, WHETHER MADE BY TSG OR OTHERWISE, SHALL BE
DEEMED TO BE A WARRANTY FOR ANY PURPOSE OR GIVE RISE TO ANY LIABILITY OF TSG.
ARTICLE XVI
LIMITATIONS OF LIABILITY
16.1 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 XVI 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.
16.2 NO LIABILITY FOR ORDINARY NEGLIGENCE. IN NO EVENT WILL TSG BE
LIABLE TO CUSTOMER FOR ANY GENERAL DAMAGES ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR THE PERFORMANCE OR NON-PERFORMANCE OF THE SERVICES,
UNLESS SUCH LOSS, LIABILITY, DAMAGE OR EXPENSE SHALL BE DUE TO THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF TSG.
16.3 NO CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL TSG BE LIABLE FOR
CUSTOMER'S CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE
PERFORMANCE OF THE SERVICES, EVEN IF TSG HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES. FURTHER, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER FOR ANY PUNITIVE OR EXEMPLARY DAMAGES ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT.
16.4 LIMITATION OF LIABILITY FOR GROSS NEGLIGENCE. TSG'S LIABILITY
ARISING UNDER OR RELATING IN ANY MANNER TO THIS AGREEMENT FOR GENERAL DAMAGES
RESULTING FROM TSG'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT IN THE
PERFORMANCE OF THE SERVICES HEREUNDER SHALL BE LIMITED AS FOLLOWS: [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
16.5 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 two years after the breach or other event constituting the basis for
that claim occurred, even if not discovered until after that two-year period.
Nevertheless, the two-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.
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16.6 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 Sections 13.3,
13.4, 14.1, or 21.15, 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.
16.7 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.
16.8 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. Nothing
in this Article XVI shall affect any liability of a Party for Tort Damages or
Indemnifiable Losses under Article XVII.
16.9 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.
ARTICLE XVII
INDEMNIFICATION
17.1 GENERAL INDEMNIFICATION. Subject to the limitation set forth
in Section 16.4, each Party shall indemnify, defend and hold harmless the
other Party hereto, their respective officers, employees and directors (the
"INDEMNIFIED PARTY") from and against any and all Tort Damages which arises
out of the negligence, gross negligence or willful misconduct of the
indemnifying party ("INDEMNIFYING PARTY"), its agents, employees or
contractors in connection with the Indemnifying Party's performance of this
Agreement.
17.2 INTELLECTUAL PROPERTY INDEMNIFICATION BY TSG. TSG shall
indemnify, defend, and hold harmless Customer from and against any and all
Indemnifiable Losses arising out of, or relating to any claim by a third
party that any TSG Software provided under this Agreement infringes a
currently existing United States copyright, misappropriates a trade secret,
or willfully infringes a Untied States patent. TSG shall not indemnify
Customer, however, if the claim of infringement or misappropriation is caused
by:
(a) Customer's misuse or modification of the TSG Software,
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(b) Customer's failure to use corrections or enhancements made
available by TSG,
(c) Customer's use of such item in combination with any product or
information not owned, developed or provided by TSG, except as
authorized in writing by TSG, or
(d) Any information, direction, specification, materials or software
provided by Customer or any third party.
If any such TSG Software is, or in TSG's opinion is likely to be, held
to constitute an infringing product, TSG shall, at its expense and option,
either:
(w) Procure the right for Customer to continue using such TSG
Software,
(x) Replace such TSG Software with a non-infringing equivalent
software, or
(y) Modify such TSG Software to make it non-infringing.
The rights and remedies stated in this Section 17.2 constitute the
sole and exclusive remedies of Customer, and TSG's entire liability, with
respect to any Third Party Claims of infringement or misappropriation.
17.3 CUSTOMER INDEMNIFICATION. Customer shall indemnify, defend,
and hold harmless the TSG Indemnified Parties from and against Indemnifiable
Losses resulting from, arising out of, or relating to Customer's rendering or
providing of any services to a third party in which Customer uses TSG's
Services or TSG Software to provide such Services.
17.4 INTENTIONALLY DELETED.
17.5 CUSTOMER CONSENTS AND SUBLICENSES. Customer shall indemnify,
defend and hold harmless the TSG Indemnified Parties from and against all
Indemnifiable Losses resulting from, arising out of, or relating to
Customer's failure to obtain any consents required under Sections 9.1 and
9.2.
17.6 DEFENSE OF CLAIMS; SETTLEMENT. In the event a claim is made
or suit is brought which is covered by the indemnities in this Article XVII,
the Indemnified Party shall give the Indemnifying Party notice thereof
promptly after becoming aware of such claim provided that the failure to
provide such notice will not relieve the Indemnifying Party of any obligation
unless and only to the extent that such failure actually prejudices the
ability of the Indemnifying Party to contest such claim. The Indemnifying
Party shall, at its expense, thereafter assume all responsibility for any
claim covered by the foregoing indemnity and the Indemnified Party shall
provide reasonable assistance and cooperation during the defense or
settlement of the claim.
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ARTICLE XVIII
DISPUTE RESOLUTION
18.1 INTERNAL DISPUTE PROCESS. The Parties shall attempt to
resolve any dispute, controversy or claim arising out of, relating to, or in
connection with, this Agreement, or the interpretation, breach, termination
or validity thereof (collectively, a "DISPUTE"), as follows:
(a) Upon either Party determining a Dispute exists, such
Party shall notify the other Party in writing with a detailed account of the
Dispute (the "DISPUTE NOTICE"). Such Dispute shall be fully discussed by the
ISCM and Account Manager in an attempt to achieve a resolution of such
Dispute as promptly as possible so as not to prejudice either Party. If the
ISCM and Account Manager are unable so to resolve such Dispute by mutual
agreement within twenty (20) business days following the date of the Dispute
Notice, such Dispute shall be submitted to the Customer's CEO and TSG's
President of the STS Division for resolution. The Parties' managements shall
meet and fully discuss such Dispute in an attempt to achieve a resolution of
such Dispute as promptly as possible so as not to prejudice either Party.
(b) So long as TSG and Customer remain Affiliates, in the
event that such Dispute shall not be so resolved by the Parties' managements
within fifty (50) days from the date of the Dispute Notice, the Dispute shall
be submitted to the AMR Executive Committee (or its successor). The AMR
Executive Committee (or its successor) shall meet and fully discuss such
Dispute in an attempt to achieve a resolution of such Dispute as promptly as
possible so as not to prejudice either party. If such Dispute is not so
resolved by the AMR Executive Committee (or its successor) within one hundred
(100) days form the date of the Dispute Notice, the Parties shall be free to
submit the Dispute to binding arbitration as set forth in Section 18.1(c)
below.
(c) If TSG and Customer are no longer Affiliates, in the
event that such Dispute shall not be so resolved by the Parties' managements
(and the AMR Executive Committee if the Parties are Affiliates) within the
periods set forth above, the Dispute shall be submitted to binding
arbitration pursuant to the American Arbitration Association ("AAA")
commercial arbitration rules as in effect at the time of the submission of
the Dispute to AAA. The arbitration shall take place in Fort Worth, Texas or
such other place as the Parties may mutually agree. The arbitration shall be
arbitrated by a panel of three arbitrators (the "ARBITRATION PANEL"), one of
which shall be appointed by TSG, the second appointed by Customer, and the
third jointly appointed by the arbitrators appointed by TSG and Customer.
TSG and Customer shall abide by and perform any award rendered by the
Arbitration Panel. The Parties intend that any Dispute will be resolved by
application of the laws of the State of Texas and the terms of this
Agreement. The Arbitration Panel's determination of facts shall be final and
binding on TSG and Customer if there is substantial evidence in the record of
such arbitration to support such determination, it being the intention of the
Parties that the standard for any judicial review of the findings of award be
the same standard as applies in the case of appeals to actions of
administrative agencies in the State of Texas.
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18.2 CONTINUITY OF SERVICES. Both Parties agree to continue
performing their respective obligations under this Agreement while the
dispute is being resolved unless and until this Agreement expires or is
terminated in accordance herewith.
18.3 EXPENSES. Each of Customer and TSG shall pay its own
out-of-pocket expenses in connection with the conduct of the dispute
resolution process set forth above. The costs and expenses of any
arbitration, other than out-of-pocket expenses in connection therewith, shall
be payable in accordance with the decision of the Arbitration Panel.
ARTICLE XIX
FORCE MAJEURE
Except for the obligations to make payments hereunder, each Party
shall be relieved of the obligations hereunder to the extent that performance
is delayed or prevented by any cause beyond its reasonable control,
including, without limitation, delays in or the withholding of decisions
required by the other Party, acts of God, public enemies, war, civil
disorder, communications failures, fire, flood, explosion, labor disputes or
strikes or any acts or orders of any governmental authority, failures or
fluctuations in electrical power, heat, light, air conditioning or
telecommunications equipment.
ARTICLE XX
TERMINATION
20.1 TERMINATION FOR BREACH. In the event of certain breaches of
this Agreement, TSG or Customer may terminate this Agreement in accordance
with this Section 20.1; provided that Customer gives TSG notice of its intent
to terminate within ninety (90) days after the date such breach occurred.
(a) Upon TSG's Egregious Breach of this Agreement, Customer
may terminate this Agreement, provided that Customer gives TSG seven (7)
days' written notice of its intent to terminate and TSG fails to cure the
breach within such seven (7) days; and provided, further, that such cure
period will be extended an additional seven (7) days if TSG delivers to
Customer a written plan to cure the breach. In both instances, unless TSG
cures the Egregious 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 Customer's material breach of its obligations
under this Agreement, TSG may terminate this Agreement on ten (10) days prior
written notice to Customer of its intent to terminate and Customer fails to
cure the breach within such ten (10) days.
(c) If either Party (i) is adjudicated bankrupt or
insolvent by a court of competent jurisdiction, (ii) substantially ceases to
do business as currently conducted, (iii) fails to pay its debts generally as
they become due, or (iv) takes steps to declare bankruptcy, wind up, dissolve
or liquidate (in each case, other than for the purposes of an amalgamation,
restructuring, or reconstruction pursuant to which the surviving entity
becomes bound by or assumes the obligations under this Agreement), or a
receiver, trustee or similar officer is appointed over (or a lien holder
takes possession of) all or a substantial part of such Party's property or
assets, or anything similar to any of the foregoing occurs in
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relation to such Party under the laws of any jurisdiction, the non-defaulting
Party may terminate this Agreement on notice to the defaulting Party.
20.2 REMEDIES FOR BREACH. Upon the occurrence of a breach of this
Agreement as outlined in Section 20.1 above, the non-defaulting Party shall
have the right, in addition to termination of the Agreement, to seek all
legal and equitable remedies to which it is entitled, subject to the
limitations of liability contained in Article XVI hereof.
ARTICLE XXI
MISCELLANEOUS
21.1 ASSIGNMENT. (a) This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the Parties hereto
and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto without the prior written consent of the other
Party, which may not be unreasonably withheld. Each Party shall respond in
writing with its decision within thirty (30) days after receipt of a request
for consent from the other Party; provided, however, that no TSG consent will
be required for Customer's assignment (or deemed assignment) of this
Agreement arising out of any transaction by which Customer becomes
disaffiliated with TSG. For purposes of this Agreement, a Change in Control
of Customer shall be considered an assignment of Customer's rights and
obligations.
(b) Customer's obligations under this Agreement shall continue and
survive in the event of any sale, spin off or divestiture of Customer by its
principal shareholder(s), any Change in Control, or Customer's merger or
consolidation with or into any Person. If any such merger or consolidation
occurs, the survivor of any such merger or consolidation shall assume
Customer's obligations and duties under this Agreement and shall be bound by
the terms and conditions of this Agreement. In addition, if Customer should
sell, divest, or spin off all or a substantial part of its assets or
business, in a single transaction or series of related transactions, then the
entity resulting from (or acquiring the business or assets of Customer in)
such transaction shall assume, and be obligated to pay and perform Customer's
obligations under this Agreement, and Customer shall not be released or
discharged form the payment and performance of its obligations under this
Agreement. Notwithstanding the foregoing, any change in the scope, nature,
quantity, costs or quality of the Services, as a result of any of the
described transactions, shall be subject to the change process set forth in
Section 3.2 above. Further, TSG shall have the right to levy additional
reasonable charges (which charges may include reasonable margins)
commensurate with the actual costs associated with, arising out of or in
connection with any of the Change in Control, sale, spin, divestiture,
merger, consolidation or similar transaction affecting Customer.
21.2 NOTICES. All notices, requests, demands, and other
communications to be given or delivered under or by reason of the provisions
of this Agreement shall be in writing and shall be deemed given when
delivered personally, on the next business day when sent by overnight Federal
Express, Express Mail or similar service, on the third business day after
being mailed when mailed by certified or registered first class mail, return
receipt requested, and upon receipt when sent by telecopy or electronic mail
with a confirmation copy by first-class mail, to each Party at the following
address
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(or to such other address as that Party may have specified by notice given to
the other pursuant to this provision):
If to TSG:
The SABRE Group, Inc.
4255 Amon Carter Blvd., MD
Fort Worth, Texas 76155
Attention: President, STS Division
With a copy to:
The SABRE Group, Inc.
Attn: General Counsel
4255 Amon Carter Blvd., MD 4204
Ft. Worth, Texas 76155
If to Customer:
TeleService Resources, Inc.
4255 Amon Carter Blvd., MD 4236
Ft. Worth, Texas 76155
Attention: President
With a copy to:
TeleService Resources, Inc.
4255 Amon Carter Blvd., MD 4240
Ft. Worth, Texas 76155
Attention: General Counsel
21.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts all of which taken together will constitute one and the same
instrument.
21.4 NO WAIVER. No delay or omission by either Party hereto to
exercise any right or power hereunder shall impair such right or power or be
construed to be a waiver thereof. A waiver by either of the Parties hereto
of any of the obligations to be performed by the other or any breach thereof
shall not be construed to be a waiver of any succeeding breach thereof or of
any other obligation herein contained.
21.5 SURVIVAL. The provisions of Sections 4.3, 13.1, 13.2, 15.2,
21.10, 21.11, 21.15 and Articles XI, XII, XIV, XVI, XVII and XVIII shall
survive any expiration or termination of this Agreement.
21.6 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be deemed
restated to reflect the original intentions of the Parties as nearly as
possible in accordance with
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applicable law, and, if capable of substantial performance, the remaining
provisions of this Agreement shall be enforced as if this Agreement was
entered into without the invalid provision.
21.7 PUBLICITY. Except as otherwise agreed, neither Party shall
have any right to the other Party's trademarks, service marks, or trade names
in connection with any product, service, promotion or publication, except
that TSG may use Customer's name on TSG's client list and in reasonable
business promotion efforts by TSG.
21.8 ENTIRE AGREEMENT. This Agreement together with all Schedules
hereto, constitutes the entire agreement and understanding among the Parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, relating to such subject
matter.
21.9 AMENDMENTS. This Agreement may be amended or modified only by
a written instrument duly executed by or on behalf of each Party hereto.
21.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.
21.11 COMPLIANCE WITH LAWS; EXPORT REGULATION. Customer will be
responsible for obtaining any necessary government approvals, consents,
licenses and/or permits to enable Customer to (a) export any products or
technical data required for TSG's performance under this Agreement from the
United States or any other country of origin, (b) import such products and
technical data into any other country, and (c) pay TSG all amounts in U.S.
Dollars as required by this Agreement. Upon request, TSG will promptly
provide Customer with any end-user certificates, affidavits regarding
re-export or other certificates and documents as are reasonably available to
TSG and required from TSG to obtain any such approvals, consents, licenses
and/or permits. The obligations of TSG under this Agreement shall be
conditioned on Customer's obtaining such approvals, consents, licenses and/or
permits. Each Party shall bear all costs, fees and expenses associated with
obtaining such approvals, consents, certificates, affidavits and other items
for which it is responsible under this Agreement, and upon request will
provide to the other evidence that any such items have been obtained and all
fees have been paid. Notwithstanding anything in this Agreement to the
contrary, Customer shall not directly or indirectly export (or re-export) any
hardware, products, Software, technical data or products thereof or permit
transshipment of same (a) to any country or destination for which the United
States Government or a United States Government agency requires an export
license or other approval for export without first having obtained such
license or other approval, or (b) if otherwise contrary to United States law.
The term "technical data" shall include the TSG Services and any technical
assistance provided by TSG. This obligation shall survive the expiration or
termination of this Agreement.
21.12 NO THIRD-PARTY BENEFICIARIES. The Parties agree that this
Agreement is for the benefit of the Parties hereto and is not intended to
confer any rights or benefits on any third party, including any employee of
either Party hereto, and that there are no third-party beneficiaries to this
Agreement.
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21.13 SCHEDULES; GOVERNING DOCUMENTS. The terms and conditions of
any and all Schedules to this Agreement, as amended from time to time by
mutual agreement of the Parties, are incorporated into this Agreement by this
reference and shall constitute a part of this Agreement as if fully set forth
herein.
21.14 RELATIONSHIP OF THE PARTIES. TSG shall be and act as an
independent contractor hereunder and no employee of either Party shall be
deemed to be an employee of the other for any purpose whatsoever. Each Party
shall comply, at its own expense, with all applicable state and municipal
requirements and with all state and federal laws applicable to it as an
employer and otherwise.
21.15 NON-SOLICITATION OF EMPLOYEES. During the Term of this
Agreement and for a period of one (1) year thereafter, neither party shall
directly solicit for employment the other party's personnel.
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
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21.18 PAYMENT DISCREPANCIES. The Parties acknowledge and agree that
Customer has been properly invoiced and has paid for all Services received
through the period ending December 31, 1997, and neither Party shall be
permitted to raise any claims of discrepancies with respect thereto.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed by their authorized representatives as of the date first above
written.
TELSERVICE RESOURCES, INC. THE SABRE GROUP, INC.
- ---------------------------------- ----------------------------------
By: Jim Gunn By: Tom Cook
Title: Vice Chairman Title: President, SABRE Technology
Solutions Division
Date: Date:
----------------------------- -----------------------------
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SCHEDULE 1
DEFINITIONS
For the purpose of this Agreement, the following terms shall have the
following meanings:
"AAA" shall mean the American Arbitration Association.
"ACCOUNT MANAGER" shall be the person appointed from time to time by
TSG to consult with Customer and consider Customer's needs in connection with
the performance of this Agreement.
"AFFILIATE" shall mean a Person that directly or indirectly through
one or more intermediaries Controls, is Controlled by, or is under common
Control with another Person.
"AGREEMENT" shall have the meaning given in the preamble hereof.
"ARBITRATION PANEL" shall have the meaning given in Section 18.1.
"AIRLINE INCIDENT" means an occurrence of personal injury, death, or
property damage in connection with the operation of any aircraft.
"CHANGE IN CONTROL" means (a) the acquisition by any Person or group
of Person of 50% or more of the outstanding shares of voting stock, or
similar equity interest, of Customer, or (b) all or substantially all of the
assets of Customer are sold in a single transaction or series of related
transactions to any Person.
"CONFIDENTIAL INFORMATION" shall have the meaning given to such term
in Section 14.1.
"CONSEQUENTIAL DAMAGES" means 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" (including, with correlative meaning, the terms
"Controlling" or "Controlled by") means, with respect to any Person, the
right to exercise, directly or indirectly, more than fifty percent of the
voting power attributable to the equity interests in such Person.
("Controlling" and "Controlled" have correlative meanings.)
"CUSTOMER" shall have the meaning given in the preamble hereof.
"CUSTOMER DATA" shall mean (i) all data that is provided by or on
behalf of Customer to TSG in order for TSG to provide the Services, including
keyed input and electronic capture of information by the Services, (ii) all
data that is provided by or on behalf of TSG to Customer by means of the
Services, and (iii) all data that is produced by means of the Services as a
intermediate step in using or producing any such data, including databases
and files containing such data.
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"CUSTOMER FACILITIES SPACE" shall have the meaning given in Section
7.2.
"CUSTOMER LICENSED SOFTWARE" shall mean the third party software
licensed by Customer and used in the current data processing operations of
Customer, and any additions to or replacements for such software and
documentation.
"CUSTOMER OWNED SOFTWARE" shall mean software (in source code and
object code form), and all related systems design and user documentation,
which is owned by Customer and used in the current data processing operation
of Customer, and any additions to or replacements for such software and
documentation.
"CUSTOMER THIRD-PARTY AGREEMENTS" shall mean agreements between
Customer and any third party for the provision of products or services of any
kind.
"DISPUTE" shall have meaning given in Section 18.1.
"DISPUTE NOTICE" shall have the meaning given in Section 18.1.
"EFFECTIVE DATE" shall mean July 1, 1996.
"EGREGIOUS BREACH" shall mean a material breach of contract that
constitutes an intentional, unequivocal refusal to perform a material
obligation of this Agreement that frustrates one or more bases of the bargain
between Customer 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.
"EQUIPMENT" shall mean all office related equipment, telephone and
facsimile machines, supplies, including Hardware, owned or leased by Customer
and necessary for TSG to perform the Services.
"EXPIRATION DATE" shall mean the first to occur of: [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED].
"EXPIRATION TRANSITION PERIOD" shall have the meaning given in Section
4.3.
"FEES" shall mean, collectively, the fees and charges paid to TSG by
Customer for performance of Services as set forth in Article X.
"GENERAL DAMAGES" shall mean 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
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avoidance of doubt, "General Damages" includes not only the actual damages of
a Person, but also punitive and exemplary damages and Consequential Damages
of such Person.
"HARDWARE" shall mean computers and related equipment, including, but
not limited to, central processing units and other processors, controllers,
modems, communications and telecommunications equipment (including radio
equipment), cables, storage devices, printers, terminals, other peripherals
and input and output devices, and other tangible mechanical and electronic
equipment intended for the processing, input, output, storage, manipulation,
communication, transmission and retrieval of information and data.
"INDEMNIFIABLE LOSSES" shall mean 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 incurred by a Person. Indemnifiable Losses consist only of the
actual damages of a Person, and excludes any Consequential Damages and any
punitive or exemplary damages (however described) of such Person. For the
avoidance of doubt, the Indemnifiable Losses of an Indemnified Party shall
include any Consequential Damages and any punitive or exemplary damages
(however described) awarded against such Indemnified Party in favor of a
Person making a Third Party Claim against such Indemnified Party.
"INDEMNIFIED PARTY" shall have the meaning given in Section 17.1.
"INDEMNIFYING PARTY" shall have the meaning given in Section 17.1.
"ISCM" shall have the meaning given in Section 6.3.
"NEW SERVICES" shall mean applications development and information
management services, including data processing and information services,
information management, training, electronic data processing and
telecommunication systems that are not described in Schedule 3.1 that are
mutually agreed upon by the Parties pursuant to Section 4.1. For purposes of
Section 4.2, there shall be no requirement that the Parties mutually agree
upon the Services pursuant to Section 4.1 for such Services to be considered
"NEW SERVICES".
"NEW SERVICE REQUEST" shall mean a written request delivered to TSG by
Customer to request New Services and shall include the following, as
appropriate:
(a) A reference to this Agreement;
(b) A general description or functional specification of
the New Services desired by Customer;
(c) Any special objectives or constraints with respect to
the budget and time schedule; and
(d) The priority of the work in relationship to other
current or anticipated work.
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"PARTY" shall mean each of the signatories to the Agreement, and their
successors and assigns as permitted by the Agreement. ("PARTIES" has the
correlative meaning).
"PASS THROUGH FEES" shall mean charges to TSG for certain services or
products that it acquires from third parties to enable it (in part) to
provide the Services, which charges TSG passes through as fees charged to
Customer. The initial list of Pass Through Fees are identified in Schedule
10.4.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, trust, business association, governmental entity or other entity.
"SERVICES" shall mean the information management services, including
data processing and information services, information management, training,
electronic data processing and telecommunication systems and shall consist of
the services described on Schedule 3.1 and New Services.
"SERVICE LOCATIONS" shall have the meaning given in Section 5.1.
"SOFTWARE" shall mean any computer programming code consisting of
instructions or statements in a form readable by individuals (source code) or
machines (object code), and documentation and supporting materials therefor,
in any form or medium, including electronic media.
"SUBSIDIARY" shall mean, with respect to any Person, a corporation,
company or other entity more than 50% of whose outstanding shares or
securities (representing the right to vote for the election of directors or
other managing authority) are now or hereafter owned or Controlled, directly
or indirectly, by such Person, but such corporation, company or other entity
shall be deemed to be a Subsidiary only so long as such ownership or Control
exists.
"TORT DAMAGES" shall mean bodily or personal injury or death or damage
to real or tangible personal property.
"TSG INDEMNIFIED PARTIES" shall mean TSG, its Affiliates (other than
Customer), and their respective officers, employees and directors.
"TERM" shall have the meaning given in Section 2.1.
"THIRD PARTY" means a Person other than a Party or either Party's
Affiliates.
"THIRD PARTY CLAIM" shall mean a claim of liability asserted against a
Party by a Person other than the other Party or either Party's Affiliates.
"THIRD PARTY SOFTWARE" means software owned by a Third Party and
licensed to Customer or TSG and used in the performance of the Services.
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"TSG" shall have the meaning set forth in the preamble.
"TSG SOFTWARE" shall mean the Software owned or licensed by TSG and
made available to Customer by TSG in connection with the performance of the
Services.
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;
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.
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SCHEDULE 3.1
DESCRIPTION OF SERVICES
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
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<PAGE>
SCHEDULE 5.1
SERVICE LOCATIONS*
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
2
<PAGE>
SCHEDULE 10.1
FEES AND CHARGES
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
3
<PAGE>
SCHEDULE 10.4
PASS THROUGH FEES
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
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<PAGE>
THIS AGREEMENT HAS CONFIDENTIAL PORTIONS OMITTED, WHICH PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED
PORTIONS ARE INDICATED IN THIS AGREEMENT WITH "[TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED]."
EXECUTION COPY
SERVICES AGREEMENT
between
AMR SERVICES CORPORATION
and
THE SABRE GROUP, INC.
Effective as of July 1, 1996
<PAGE>
SERVICES AGREEMENT
THIS SERVICES AGREEMENT, effective as of July 1, 1996 (the
"Agreement") between AMR SERVICES CORPORATION, a Delaware corporation
("Customer") and THE SABRE GROUP, INC., a Delaware corporation ("TSG").
W I T N E S S E T H :
WHEREAS, TSG is engaged in the business of providing certain
management and information processing services, including, but not limited
to, systems development services, systems integration services, management of
telecommunications systems, computer operation services, facilities
management services, hardware and software maintenance services and related
systems and services; and
WHEREAS, Customer and TSG desire to enter into a services agreement
pursuant to which TSG shall provide to Customer the services described in
this Agreement, on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements set forth herein, the Parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. All defined terms used in this Agreement shall
have the meanings set forth in Schedule 1.1. Schedule 1.1 also sets forth
various interpretive matters for this Agreement.
1.2 SCHEDULES. When this Agreement refers to a Schedule, such
Schedule is deemed incorporated herein by reference for all purposes. All
Schedules, as agreed to on or after the Effective Date, shall be deemed
incorporated herein upon the complete execution thereof.
ARTICLE II
TERM
2.1 TERM. Unless earlier terminated as provided herein, the term
of this Agreement (the "TERM") shall commence on the Effective Date and shall
end on the Expiration Date.
2.2 EXTENSIONS OF THE TERM. The Term shall be automatically
extended for successive [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
after the Expiration Date, unless either Party gives written notices of its
intent not to renew the Agreement at least one hundred twenty (120) days
prior to the date on which the Term or the then-current renewal period (as
applicable) expires. Notwithstanding the above, if Customer and TSG become
disaffiliated, either party shall have the option, in its sole and absolute
discretion, at any time six (6) months following the disaffiliation to
terminate this Agreement by giving six (6) months
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prior written notice to the other Party; provided, however, that prior to the
Expiration Date TSG may not terminate (except for breach pursuant to Section
20.1) Services provided hereunder to the extent such Services are required
for Customer to continue support of American Airlines, Inc.
ARTICLE III
SERVICES
3.1 SERVICES. Subject to the terms and conditions of this
Agreement, TSG shall perform the Services described in Schedule 3.1 for
Customer.
3.2 CHANGES TO SCOPE OF SERVICES. In the event that Customer
wishes to request modifications in the Services, including additions,
deletions and rearrangements thereof, Customer shall submit such requests to
TSG in writing. TSG will endeavor to within sixty (60) days (or such shorter
time as is reasonably practicable) from receipt of Customer's written request
for any such modification, determine the feasibility of such request and
provide Customer with a good faith estimate of the costs, if any, to Customer
of such modifications. Upon mutual written agreement of the Parties, TSG
shall be responsible for implementing modification requests and Customer
shall pay the agreed charges, if any. TSG will not be required to make any
such modifications prior to the mutual execution of any such written
agreement, and will continue to provide Services to Customer on the same
basis as TSG did prior to Customer's request until such a written agreement
is mutually executed.
3.3 MANAGEMENT OF TSG RESOURCES.
TSG shall have the right to manage all TSG resources used in providing
the Services.
ARTICLE IV
AUTHORIZATION OF NEW SERVICES;
RELATED DOCUMENTS
4.1 PROCEDURES. Any and all New Services, shall be authorized and
directed as set forth below:
(a) Customer may deliver to TSG one or more New Service
Requests. After receipt of a New Service Request, TSG shall prepare and
deliver to Customer a proposal in response thereto as promptly as reasonably
practicable. If TSG plans to charge Customer for preparation of any such
proposal, it will so inform Customer in writing together with an estimate of
the charges for preparation of the proposal. If TSG's estimate is accepted
by Customer in writing, TSG shall then promptly commence preparation of the
proposal. TSG may also prepare, on TSG's own initiative, and not in response
to a New Service Request, New Service proposals for Customer's review;
provided that TSG will not charge Customer for any fee or expense related to
the preparation of such proposals, except upon the written consent of
Customer.
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(b) After receipt of a New Service proposal, Customer shall
notify TSG in writing whether Customer desires to proceed at Customer's sole
discretion with the work as specified therein or upon some modified basis.
(c) Upon Customer's acceptance of the terms of any New
Service proposal, Customer and TSG shall execute a supplement to this
Agreement reflecting mutually agreed terms and conditions (a "SERVICES
SUPPLEMENT"), all of which shall be incorporated in this Agreement by
reference. After execution of any Services Supplement, TSG shall proceed
with the work specified therein upon the terms and conditions set forth
therein and in this Agreement.
4.2 NEW SERVICES. Customer will allow TSG the same rights and
opportunities to bid on any New Services [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] as it provides to any other prospective provider of such New
Services. If TSG chooses to bid on the New Services, Customer shall award
such New Services to TSG if TSG's bid is as favorable, in Customer's
reasonable discretion, to Customer (in terms of cost, terms, functionality
and time to market) as the best bid Customer receives.
4.3 EXPIRATION ASSISTANCE BY TSG. For a period of no more than
one hundred and twenty (120) days before the Expiration Date or termination
of any of the Services pursuant to Sections 2.2 or 20.1 (each period referred
to as the "EXPIRATION TRANSITION PERIOD"), TSG will provide to Customer or
its designee any and all expiration assistance reasonably requested by
Customer to facilitate the orderly transfer of responsibility for the
applicable Services to Customer or its designee. If the assistance requires
TSG to utilize resources or incur expenses in addition to those regularly
utilized in the performance of the Services, it shall so inform Customer in
writing and indicate any supplemental charges to Customer for such resources.
If accepted by Customer in writing, TSG will provide such incremental
services and Customer will pay TSG for such incremental assistance on a time
and materials basis at TSG's then-current rates for the Services performed
hereunder and reimburse TSG for all additional expenses incurred by TSG in
the performance of the expiration assistance. Prior to providing any of the
foregoing expiration assistance to a Customer designee, TSG shall be entitled
to receive from such designee, in form and substance reasonably acceptable to
TSG, assurances that (i) such designee will maintain at all times the
confidentiality of any TSG proprietary information, Software or materials
disclosed or provided to, or learned by, such designee in connection
therewith, (ii) such designee will use such information, Software or
materials exclusively for purposes for which Customer is authorized to use
such information, Software or materials pursuant to this Agreement, and (iii)
all fees and incremental charges due hereunder will be timely paid. Upon
Customer's request, TSG shall provide consultation services for at least
sixty (60) days after expiration of any Expiration Transition Period, to be
charged by TSG at TSG's then-current published standard rates for similar
services.
ARTICLE V
SERVICE LOCATIONS
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The charges set forth in this Agreement are based on the assumption
that Services will continue to be provided by TSG to Customer at Customer's
operations and service locations in existence as of July 1, 1998 as
identified in Schedule 5.1 (the "SERVICE LOCATIONS"). Nothing in this
Agreement shall prevent Customer from changing, consolidating, eliminating or
adding after July 1, 1998 any Service Locations, provided Customer will
endeavor to provide TSG with at least one hundred and twenty (120) days prior
written notice before any such change, consolidation, elimination or
addition. If any such change, consolidation, elimination or addition causes
no more than a de minimis increase in costs to TSG in the continuing
performance of the Services, then there will be no adjustment in the charges
hereunder. If, on the other hand, any such change, consolidation,
elimination or addition causes more than a de minimis increase in costs to
TSG in the continuing performance of the Services, TSG will promptly provide
Customer with a good faith estimate of the timing, costs and expenses of
making such change, consolidation, elimination or addition. TSG will make
such change consolidation, elimination or addition upon Customer's written
approval of such estimate.
ARTICLE VI
PROJECT STAFF
6.1 TSG SUBCONTRACTORS. TSG may utilize subcontractors during the
Term, subject to TSG remaining primarily liable for the performance of the
Services and such subcontractors agreeing in writing to maintaining the
confidentiality of Customer Data in accordance with Section 14.1. TSG will
manage and monitor the performance of any such subcontractors.
6.2 MANAGERIAL CONTROL. TSG shall have complete managerial
control over its employees. TSG shall have sole responsibility for
selection, supervision, daily direction and control of the work of, and may
dismiss, replace or reassign at any time, any member of the project staff
hereunder.
6.3 INFORMATION SERVICES CONTRACT MANAGER. Customer shall appoint
a contract coordinator to implement this Agreement (the "INFORMATION SERVICES
CONTRACT MANAGER" or "ISCM"). The ISCM's responsibilities shall be to (a)
serve as primary point of contact for TSG, (b) be responsible for the
implementation, management and enforcement of the Agreement on behalf of
Customer, and (c) supervise performance of Customer's obligations under the
Agreement. Customer will notify TSG in writing of its appointment of an ISCM
and his/her successors.
ARTICLE VII
CUSTOMER OBLIGATIONS
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<PAGE>
7.1 SERVICES AND OTHER OBLIGATIONS. During the Term, Customer
will provide TSG with all necessary and reasonable resources, information,
direction and other assistance, as may be requested by TSG from time to time,
in connection with the Services. TSG's nonperformance of its obligations
hereunder will be excused to the extent caused by Customer's failure to
timely provide such necessary and reasonable resources, information,
direction and other assistance.
7.2 CUSTOMER FACILITIES AND RELATED SERVICES. During the Term,
for Services performed by TSG on-site at Customer's facilities, Customer
shall provide to TSG, at no cost to TSG, such access to and use of adequate
space and facilities required for performance of the Services (collectively,
the "CUSTOMER FACILITIES SPACE") for so long as and to the extent that the
Customer Facilities Space is reasonably required by TSG to effectively
perform the Services. Customer will also provide, at Customer's expense, all
utilities, required internal cabling and electrical installations for TSG at
the Customer Facilities Space and any Service Location in which the Services
will be performed. Customer will provide TSG with legal and physical access
to Customer's Facilities Space twenty-four (24) hours a day, seven (7) days a
week, for purposes of performing the Services. Customer represents to TSG
that all facilities provided by Customer under this Agreement are and shall
remain free of health and safety hazards. At all times when TSG uses space
and related utilities and services in any Customer Facilities Space, TSG
shall comply with the customary and reasonable policies governing access to
and use of the facilities in effect from time to time, provided, however,
that such policies shall not discriminate with respect to TSG or its
employees, agents or contractors.
7.3 CUSTOMER RESALE OR PASS-THROUGH OF SERVICES. Other than as
provided in Section 13.4, neither Customer nor its Affiliates may resell or
otherwise provide any of the Services provided hereunder by TSG to any Person
other than a Subsidiary of Customer, without the prior written consent of
TSG.
7.4 INSURANCE. During the Term, Customer shall procure and
maintain with insurers of recognized financial responsibility, Comprehensive
General Liability and Aviation Insurance coverage, including contractual
liability coverage pertaining to the indemnification obligations of Customer
under Article XVII of this Agreement, with limits of not less than [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED], combined single limit per
occurrence. If Customer and TSG are not Affiliates, Customer shall annually
provide TSG with evidence of such coverage with the following special
provisions:
1. The insurer(s) shall accept and insure Customer's indemnification
and hold harmless requirements pursuant to Article XVII of this
Agreement.
2. Each of the TSG Indemnified Parties shall be included as an
additional insured, to the extent of the Customer's
indemnification and hold harmless obligations hereunder.
3. The insurer(s) shall waive any rights of subrogation they may or
could have against any of the TSG Indemnified Parties, to the
extent of the Customer's indemnification and hold harmless
obligations hereunder.
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4. Such policy(ies) shall be primary without right of contribution
from any insurance carried by TSG, to the extent of Customer's
indemnification and hold harmless obligations hereunder.
5. Such insurance (i) shall not be invalidated with respect to any
of the TSG Indemnified Parties by any action or inaction of
Customer, and (ii) shall insure each of the TSG Indemnified
Parties regardless of any breach or violation of such policy by
Customer.
6. Such insurance policy(ies) may not be canceled or materially
changed without at least thirty (30) days prior written notice to
TSG.
ARTICLE VIII
CUSTOMER RETAINED RESOURCES
8.1 ONGOING CUSTOMER RESOURCES. During the Term Customer will
provide to TSG, at no cost to TSG, access to and use of all of the Equipment
necessary for performance of the Services. Customer shall be responsible for
all on-going costs and expenses relating to the Equipment, including, without
limitation, the insurance, maintenance and taxes. TSG will from time to time
provide its recommendations for (i) additions to the Equipment for
improvement of the Services, and (ii) replacements of the Equipment for the
maintenance of the Services at its existing levels. If Customer determines
that replacements of the Equipment are not needed or declines to participate
in the acquisition thereof to a degree unacceptable to TSG, TSG shall
thereafter be relieved of any Service obligations under this Agreement for
the affected Services, to the extent the failure to acquire replacements of
the Equipment adversely affects TSG's ability to properly perform the
Services.
8.2 PAYMENT RESPONSIBILITY FOR CUSTOMER RETAINED MATTERS.
Customer shall be responsible for all amounts due to Third Parties with
respect to the Equipment and other resources described in Section 8.1 and the
Customer Third-Party Agreements and for any related charges (including late
fees, interest, taxes and legal expenses); provided that TSG shall be
responsible for any such charges (including late fees, interest, and legal
expenses) payable primarily due to TSG's non-performance or mis-performance
(unless as may be excused pursuant to Article XIX) with respect to such
Equipment and Customer Third-Party Agreements. TSG shall not be responsible
for any act, omission, delay or default by vendors or other third parties in
the course of performance of any Customer Third-Party Agreement.
ARTICLE IX
SOFTWARE NEEDED FOR SERVICES
9.1 CUSTOMER LICENSED SOFTWARE. Customer hereby represents and
warrants it will obtain any licenses, consents, approvals or authorizations
from Third Parties necessary for TSG to legally and physically access and use
any Customer Licensed Software necessary to perform the
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Services, and will provide written evidence of such consents to TSG upon
TSG's request. Customer shall pay all costs and expenses associated with the
Customer Licensed Software, including all required license, installation,
maintenance and upgrade fees. The Customer Licensed Software will be made
available to TSG in a form and on media compatible with the Equipment TSG is
then operating on Customer's behalf, together with appropriate documentation
and other materials.
9.2 CUSTOMER OWNED SOFTWARE. Customer will provide TSG with
object code and source code for the Customer Owned Software, if any,
necessary for TSG to perform the Services, together with any consents,
approvals, or authorizations from third parties necessary for TSG to legally
and physically access and use the Customer Owned Software, in both object
code and source code form, for purpose of providing the Services, and will
provide written evidence of such consents to TSG upon TSG's request. The
Customer Owned Software will be available to TSG in a form and on media
compatible with the equipment TSG is then operating on Customer's behalf,
together with appropriate documentation and other materials and will be
provided in a timely manner when required by TSG in the performance of the
Services.
ARTICLE X
FEES AND CHARGES
10.1 FEES AND CHARGES. For each month during the Term, Customer
shall pay TSG the Fees shown in Schedule 10.1, as may be adjusted as provided
in Section 10.2. Except as otherwise agreed by the Parties in writing,
Customer shall only be required to pay for Services described in Schedule 3.1
and provided by TSG pursuant to the Fees Schedule shown in Schedule 10.1.
10.2 ADJUSTMENT TO CHARGES. [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED].
10.3 NEW SERVICES FEES. Unless otherwise agreed in writing by
Customer and TSG, in consideration of TSG's provision of New Services, for
each month during the Term, Customer shall pay to TSG the appropriate Fees
determined using the uniform contract rates shown in Schedule 10.1, as the
same may be adjusted pursuant to Section 10.2.
10.4 OTHER AMOUNTS PAYABLE. In addition to the Fees set forth
above, TSG may also charge Customer for other amounts expressly payable to
TSG under this Agreement. In addition, Customer shall retain responsibility
for Pass Through Fees as otherwise specified in this Agreement.
10.5 OUT OF POCKET EXPENSES. For any Service which is provided by
TSG personnel away from their principal location of business at Customer's
request, Customer will pay or reimburse TSG for actual travel and incidental
expenses incurred by TSG personnel in connection with the
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performance of the Services hereunder; provided that such expenses are
incurred in a manner consistent with TSG's own standard travel expense
policies applicable to its own employees.
ARTICLE XI
PAYMENT SCHEDULE
11.1 INVOICING. TSG will submit an invoice to Customer for all
Services provided hereunder on a monthly basis, containing a summary and
detail of the relevant information to substantiate the Fees and charges.
Invoices shall be sent to Customer at 4255 Amon Carter Blvd., MD 4236, Ft.
Worth, Texas 76155, Attn.: Accounts Payable, or to such other address as
Customer may advise in writing from time to time. All Fees, expenses and
other amounts payable or creditable by either Party to the other under this
Agreement shall be paid or credited, respectively, in United States Dollars.
11.2 TIME OF PAYMENT. All sums due TSG under this Agreement will
be due and payable within thirty (30) days after receipt by Customer of an
invoice from TSG.
11.3 DISPUTED INVOICES. If Customer in good faith reasonably
disputes an invoice for sums owed hereunder, the following shall apply:
(a) If the disputed invoice is greater than or equal to the
prior month's invoice, Customer shall pay TSG all undisputed amounts, but in
no event less than ninety percent (90%) of the prior month's payment.
(b) If the disputed invoice is less than the prior month's
payment, Customer shall pay TSG all undisputed amounts, but in no event less
than ninety percent (90%) of the disputed invoice; therefore, in such event
and irrespective of the amount in dispute, Customer may not in respect to the
disputed invoice withhold payment of any amount in excess of ten percent
(10%).
(c) In no event shall a Party's adherence to the provisions
of this Section 11.3 be construed as constituting a waiver by either Party of
any claims against the other Party.
(d) All disputed amounts shall be resolved in accordance
with the Dispute Resolution process set forth in Article XVIII hereof.
11.4 LATE CHARGES. Following the period when TSG and Customer are
no longer Affiliates, any sum due TSG hereunder that is not paid when due
shall bear interest from the date due until paid at a rate of interest equal
to two percentage points (2%) per annum above the prime rate announced from
time to time by the principal New York office of Citibank, N.A., but in no
event to exceed the maximum rate of interest allowed by applicable law.
Notwithstanding the above, interest shall not accrue on any past due sum
during the period such sum has been reasonably disputed by Customer.
ARTICLE XII
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TAXES
12.1 ALLOCATION OF RESPONSIBILITY FOR CERTAIN TAXES. Customer shall
be responsible for (and shall indemnify TSG for) national, federal, state and
local sales, use, excise, value added, withholding, registration fees, stamp
taxes and importation and custom duty taxes or similar taxes (including
penalty and interest) imposed on TSG arising from this Agreement, excluding
taxes imposed based on TSG's net income; and any additional tax imposed on
TSG as a result of any reimbursements under this provisions. All payments
hereunder by Customer to TSG shall be made free and clear of and without
deduction for any present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto. If
Customer shall be required by law to deduct any such amounts from or in
respect of any sum payable hereunder, the sum payable shall be increased as
may be necessary so that after making all required deductions TSG receives an
amount equal to the sum it would have received had no such deductions been
made.
12.2 PROPERTY TAXES. Each of TSG and Customer 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.
12.3 TAX CLAIMS. If TSG receives notice from any taxing authority
with respect to an assessment or potential assessment or imposition of any
tax or other amount that the Customer would be responsible for paying
pursuant to Section 12.1 above, TSG shall promptly notify the Customer in
writing of such notice, and shall, subject to Customer's reasonable
discretion, contest or permit the Customer to contest or compromise such
proposed tax at Customer's expense. Subject to the reasonable discretion of
the Customer, Customer may request TSG to apply, at Customer's expense, for a
refund of taxes otherwise subject to indemnification under Section 12.1. In
lieu of pursuing such a claim, TSG may assign its rights to the indemnifying
party.
12.4 COOPERATION. Each Party shall cooperate as the other Party
may reasonably request in minimizing taxes incurred by the other Party in
connection with this Agreement; provided, however, that a cooperating Party
shall not 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 requesting Party agrees to reimburse the
cooperating Party for the incremental out-of-pocket costs. In the case of
either Party, such cooperation shall include, without limitation, maintaining
records as reasonably necessary for tax purposes, 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 as reasonably necessary in
connection with the preparation of any tax returns or any audit or tax
contest or refund claim.
ARTICLE XIII
PROPRIETARY RIGHTS AND LICENSES
13.1 TSG PROPRIETARY INFORMATION. TSG retains all rights, title
and interest in and to any and all TSG Software and documentation, software
development tools, know-how, methodologies, processes, technologies or
algorithms used in providing the Services that are trade secrets or
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proprietary information of TSG or its Affiliates (other than Customer) or
otherwise owned or licensed by TSG or its Affiliates (other than Customer).
13.2 CUSTOMER DATA. Information relating to Customer contained in
Customer's data files ("CUSTOMER DATA") is the exclusive property of
Customer. TSG is authorized to have legal and physical access to and make use
of Customer Data for the sole purpose of performing the Services. Upon
expiration or termination of this Agreement, the Customer Data shall, at
Customer's written request and discretion, either be erased from the data
files maintained by TSG or, within thirty (30) days from Customer's written
request and expense, returned to Customer in TSG's then existing
machine-readable format and media.
13.3 LICENSE TO TSG SOFTWARE. During the Term, TSG grants to
Customer a limited, non-exclusive and non-transferable right and license to
use the TSG Software in object code form only, strictly in accordance with
the terms of this Agreement. The rights hereby granted are limited to
Customer's use of the TSG Software to the extent necessary to access and
utilize the Services in connection with Customer's internal operation and no
other use. Customer shall not: (i) make any modifications or alterations to
the TSG Software; or (ii) reverse engineer, disassemble, compile, reverse
compile or decompile the TSG Software. If any Third Party Software
incorporated in TSG Software is licensed to Customer on a stand-alone basis
or is otherwise provided in connection with the Services provided hereunder,
and TSG must pay a royalty or license fee to the licensor of such Third Party
Software in order to make such Third Party Software available to Customer,
Customer will repay such amount to TSG upon demand. If TSG must pay any
Third Party a royalty or license fee for sublicensing or distributing or
otherwise granting access to or use of any such TSG Software to Customer,
then Customer will also reimburse TSG the amount of any such royalty or
license fee. Customer will notify TSG in writing of any proposed Change in
Control of Customer as soon as practicable but in no event less than thirty
(30) days in advance of such Change in Control. TSG will use reasonable
efforts to advise Customer within such thirty (30) day period of any royalty
or license fees that will become due and payable to the licensor or
distributor of any Third Party Software arising out of the Change in Control.
Customer shall have the option to terminate that portion of the Services
which require the payment of excessive additional royalty or license fees;
provided, however, that such election must occur prior to the actual Change
in Control.
13.4 SUBLICENSE. Customer shall not transfer or sublicense the TSG
Software or any component thereof to any Person, whether by operation of law
or otherwise, without the prior written consent of TSG. Notwithstanding the
foregoing sentence, from and after the date of the complete execution of this
Agreement as set forth on the signature page, Customer shall have the right
to resell FOS Services to third parties only if, prior to reselling any FOS
Services to any third party, Customer enters into a written agreement with
such third party which contains: (i) warranty disclaimers, limitations of
liability and indemnification provisions in the form substantially similar to
that set forth in Schedule 13.4 hereto, (ii) Customer maintains the insurance
required pursuant to Section 7.4 above, and (iii) a prohibition of the
further resale of FOS Services by such third party. Customer shall provide
TSG with copies of such written agreements immediately upon request by TSG,
and in the event that TSG reasonably determines that any such agreement does
not comply with the provisions of this Section 13.4 or if TSG otherwise
reasonably believes that it is not adequately protected in connection
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with the potential liability arising from the Customer's resale of FOS
Services, TSG may immediately revoke Customer's right to resell FOS Services
to any or all third parties.
ARTICLE XIV
CONFIDENTIALITY
14.1 CONFIDENTIAL INFORMATION. As of the Effective Date, and
except as otherwise provided in this Agreement, TSG and Customer each agree
that all information communicated to it by the other, including, without
limitation, the terms of this Agreement, which the recipient party knows or
has reason to know is the confidential or proprietary information of the
disclosing party ("CONFIDENTIAL INFORMATION") will be received in strict
confidence, will be used only for purposes of this Agreement, and will not be
disclosed by the recipient Party, its agents, subcontractors or employees
without the prior written consent of the other Party. TSG and Customer each
agree to use the same means it uses to protect its own confidential
information, but in any event not less than reasonable means, to prevent the
disclosure of the Confidential Information to outside parties. However,
neither TSG nor Customer shall be prevented from disclosing information which
belongs to such Party or is (a) already known by the recipient Party without
an obligation of confidentiality; (b) publicly known or becomes publicly
known through no unauthorized act of the recipient Party; (c) rightfully
received from a third party without an obligation of confidentiality; (d)
independently developed without use of the other Party's Confidential
Information; (e) approved by the other Party for disclosure; or (f) required
to be disclosed pursuant to a requirement of a governmental agency or law, if
the disclosing Party provides the other Party with notice of this requirement
prior to disclosure. Notwithstanding the foregoing, Customer shall be
entitled to disclose the terms of this Agreement to any potential purchaser
of all or substantially all of the stock or assets of Customer; provided,
that any such potential purchaser undertakes to treat the Confidential
Information as confidential with use and disclosure restrictions at least as
strict as those in this Section 14.1.
14.2 GENERAL KNOWLEDGE. Either Party may enhance its generalized
knowledge and experience during the Term and may already possess or hereafter
obtain concepts, data, discoveries, ideas, information, inventions, know-how,
knowledge, methodologies, processes, products, skills, techniques and/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 either Party's rights to develop,
disclose, display, market, obtain, own, publish, provide, release, sell,
transfer and/or use, in any manner whatsoever, any such generalized knowledge
and experience and/or any such concepts; provided, however, that the Parties
shall in all events comply with Section 14.1. Further, each Party shall be
free to use the ideas, concepts or know-how it develops in connection with
the Services that are in nontangible form and may be retained by the Party's
respective employees. Either Party may acquire, license, market, distribute,
develop for itself or others, or have others develop for its, similar
technology performing the same or similar functions as the technology
contemplated by this Agreement.
ARTICLE XV
WARRANTIES
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15.1 MUTUAL WARRANTIES. Each Party represents and warrants to the
other that: (i) it is a corporation duly organized and validly existing and
in good standing under the laws of its jurisdiction of formation and/or place
of principal business; (ii) the performance of its obligations hereunder has
been duly authorized by all necessary corporate action; (iii) this Agreement
is a legal, valid and binding obligation enforceable against it in accordance
with its terms subject, as to enforcement, to bankruptcy, insolvency,
reorganization, liquidation and other laws and equitable principles relating
to or affecting the enforcement of creditors' rights generally as they may be
applied in the event of the bankruptcy, insolvency, moratorium,
reorganization or liquidation of, or the appointment of a receiver with
respect to the property of, or a similar event applicable to, such Party;
(iv) neither the execution and delivery of this Agreement nor the performance
of any of its obligations hereunder, nor the consummation of any of the
transactions contemplated hereby, will violate any agreement to which it is a
Party or any provision of its Certificate of Incorporation, Articles of
Incorporation, By-Laws or other document of corporate governance, nor any
applicable law, regulation, rule, judgment, order or decree; and (v) it has
duly obtained or made all consents, approvals or authorizations of, or
registrations, declarations or filings with, any governmental authority which
are required as a condition to the valid execution, delivery and performance
of this Agreement on its part.
15.2 NO OTHER REPRESENTATIONS OR WARRANTIES. THE WARRANTIES
SPECIFIED HEREIN ARE THE ONLY WARRANTIES MADE BY TSG WITH RESPECT TO THE
SERVICES. EXCEPT AS OTHERWISE SPECIFIED HEREIN, THE SERVICES ARE PROVIDED
"AS IS" AND "WITH ALL FAULTS." THERE ARE NO OTHER WARRANTIES, EXPRESS OR
IMPLIED, BY OPERATION OF LAW OR OTHERWISE, INCLUDING WITHOUT LIMITATION ANY
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR INTENDED USE OR ANY
IMPLIED WARRANTIES ARISING OUT OF COURSE OF PERFORMANCE, COURSE OF DEALING,
OR USAGE OF TRADE. NO REPRESENTATION OR OTHER AFFIRMATION OF FACT WHICH IS
NOT CONTAINED IN THIS AGREEMENT, INCLUDING WITHOUT LIMITATION STATEMENTS
REGARDING CAPACITY, SUITABILITY FOR USE, OR PERFORMANCE OF THE HARDWARE
COMPONENTS, SOFTWARE OR DATA, OR RELATING TO THE SERVICES, WHETHER MADE BY
TSG OR OTHERWISE, SHALL BE DEEMED TO BE A WARRANTY FOR ANY PURPOSE OR GIVE
RISE TO ANY LIABILITY OF TSG.
ARTICLE XVI
LIMITATIONS OF LIABILITY
16.1 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 XVI 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.
16.2 NO LIABILITY FOR ORDINARY NEGLIGENCE. IN NO EVENT WILL TSG BE
LIABLE TO CUSTOMER FOR ANY GENERAL DAMAGES ARISING OUT OF OR IN CONNECTION
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WITH THIS AGREEMENT OR THE PERFORMANCE OR NON-PERFORMANCE OF THE SERVICES,
UNLESS SUCH LOSS, LIABILITY, DAMAGE OR EXPENSE SHALL BE DUE TO THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF TSG.
16.3 NO CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL TSG BE LIABLE FOR
CUSTOMER'S CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE
PERFORMANCE OF THE SERVICES, EVEN IF TSG HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES. FURTHER, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER FOR ANY PUNITIVE OR EXEMPLARY DAMAGES ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT.
16.4 LIMITATION OF LIABILITY FOR GROSS NEGLIGENCE. TSG'S LIABILITY
ARISING UNDER OR RELATING IN ANY MANNER TO THIS AGREEMENT FOR GENERAL DAMAGES
RESULTING FROM TSG'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT IN THE
PERFORMANCE OF THE SERVICES HEREUNDER SHALL BE LIMITED AS FOLLOWS:
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
16.5 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 two years after the breach or other event constituting the basis for
that claim occurred, even if not discovered until after that two-year period.
Nevertheless, the two-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.
16.6 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 Sections 13.3,
13.4, 14.1, or 21.15, 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.
16.7 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.
16.8 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. Nothing
in this Article XVI shall affect any liability of a Party for Tort Damages or
Indemnifiable Losses under Article XVII.
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16.9 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.
ARTICLE XVII
INDEMNIFICATION
17.1 GENERAL INDEMNIFICATION. Subject to the limitation set forth
in Section 16.4, each Party shall indemnify, defend and hold harmless the
other Party hereto, their respective officers, employees and directors (the
"INDEMNIFIED PARTY") from and against any and all Tort Damages which arises
out of the negligence, gross negligence or willful misconduct of the
indemnifying party ("INDEMNIFYING PARTY"), its agents, employees or
contractors in connection with the Indemnifying Party's performance of this
Agreement.
17.2 INTELLECTUAL PROPERTY INDEMNIFICATION BY TSG. TSG shall
indemnify, defend, and hold harmless Customer from and against any and all
Indemnifiable Losses arising out of, or relating to any claim by a third
party that any TSG Software provided under this Agreement infringes a
currently existing United States copyright, misappropriates a trade secret,
or willfully infringes a Untied States patent. TSG shall not indemnify
Customer, however, if the claim of infringement or misappropriation is caused
by:
(a) Customer's misuse or modification of the TSG Software,
(b) Customer's failure to use corrections or enhancements made
available by TSG,
(c) Customer's use of such item in combination with any product or
information not owned, developed or provided by TSG, except as
authorized in writing by TSG, or
(d) Any information, direction, specification, materials or software
provided by Customer or any third party.
If any such TSG Software is, or in TSG's opinion is likely to be, held
to constitute an infringing product, TSG shall, at its expense and option,
either:
(w) Procure the right for Customer to continue using such TSG
Software,
(x) Replace such TSG Software with a non-infringing equivalent
software, or
(y) Modify such TSG Software to make it non-infringing.
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The rights and remedies stated in this Section 17.2 constitute the
sole and exclusive remedies of Customer, and TSG's entire liability, with
respect to any Third Party Claims of infringement or misappropriation.
17.3 CUSTOMER INDEMNIFICATION. Customer shall indemnify, defend,
and hold harmless the TSG Indemnified Parties from and against Indemnifiable
Losses resulting from, arising out of, or relating to Customer's rendering or
providing of any services to a third party in which Customer uses TSG's
Services or TSG Software to provide such Services.
17.4 AIRLINE INCIDENT INDEMNIFICATION. Customer (as the
Indemnifying Party), shall indemnify, defend and hold harmless the TSG
Indemnified Parties from and against any and all Indemnifiable Losses
resulting from, arising out of, or relating to any Airline Incident. For the
avoidance of doubt, Customer's indemnification obligations in connection with
this Section 17.4 extend to, and TSG shall have no liability whatsoever in
connection with, any incidental, indirect, special, exemplary or
consequential damages, including loss of use, loss of data, loss of profits
or loss of business, incurred by Customer, any of Customer's sublicensees
pursuant to Section 13.4, or any third party as a result of or in connection
with any Airline Incident. The Parties intend that the TSG Indemnified
Parties be indemnified notwithstanding any liability that TSG might otherwise
have under Section 17.1 relating to any Airline Incident.
17.5 CUSTOMER CONSENTS AND SUBLICENSES. Customer shall indemnify,
defend and hold harmless the TSG Indemnified Parties from and against all
Indemnifiable Losses resulting from, arising out of, or relating to
Customer's failure to obtain any consents required under Sections 9.1 and
9.2. Customer shall further indemnify, defend and hold harmless the TSG
Indemnified Parties from and against all Indemnifiable Losses resulting from,
arising out of, or relating to any resale of FOS Services Plans as
contemplated by Section 13.4.
17.6 DEFENSE OF CLAIMS; SETTLEMENT. In the event a claim is made
or suit is brought which is covered by the indemnities in this Article XVII,
the Indemnified Party shall give the Indemnifying Party notice thereof
promptly after becoming aware of such claim provided that the failure to
provide such notice will not relieve the Indemnifying Party of any obligation
unless and only to the extent that such failure actually prejudices the
ability of the Indemnifying Party to contest such claim. The Indemnifying
Party shall, at its expense, thereafter assume all responsibility for any
claim covered by the foregoing indemnity and the Indemnified Party shall
provide reasonable assistance and cooperation during the defense or
settlement of the claim.
ARTICLE XVIII
DISPUTE RESOLUTION
18.1 INTERNAL DISPUTE PROCESS. The Parties shall attempt to
resolve any dispute, controversy or claim arising out of, relating to, or in
connection with, this Agreement, or the interpretation, breach, termination
or validity thereof (collectively, a "DISPUTE"), as follows:
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(a) Upon either Party determining a Dispute exists, such
Party shall notify the other Party in writing with a detailed account of the
Dispute (the "DISPUTE NOTICE"). Such Dispute shall be fully discussed by the
ISCM and Account Manager in an attempt to achieve a resolution of such
Dispute as promptly as possible so as not to prejudice either Party. If the
ISCM and Account Manager are unable so to resolve such Dispute by mutual
agreement within twenty (20) business days following the date of the Dispute
Notice, such Dispute shall be submitted to the Customer's CEO and TSG's
President of the STS Division for resolution. The Parties' managements shall
meet and fully discuss such Dispute in an attempt to achieve a resolution of
such Dispute as promptly as possible so as not to prejudice either Party.
(b) So long as TSG and Customer remain Affiliates, in the
event that such Dispute shall not be so resolved by the Parties' managements
within fifty (50) days from the date of the Dispute Notice, the Dispute shall
be submitted to the AMR Executive Committee (or its successor). The AMR
Executive Committee (or its successor) shall meet and fully discuss such
Dispute in an attempt to achieve a resolution of such Dispute as promptly as
possible so as not to prejudice either party. If such Dispute is not so
resolved by the AMR Executive Committee (or its successor) within one hundred
(100) days form the date of the Dispute Notice, the Parties shall be free to
submit the Dispute to binding arbitration as set forth in Section 18.1(c)
below.
(c) If TSG and Customer are no longer Affiliates, in the
event that such Dispute shall not be so resolved by the Parties' managements
(and the AMR Executive Committee if the Parties are Affiliates) within the
periods set forth above, the Dispute shall be submitted to binding
arbitration pursuant to the American Arbitration Association ("AAA")
commercial arbitration rules as in effect at the time of the submission of
the Dispute to AAA. The arbitration shall take place in Fort Worth, Texas or
such other place as the Parties may mutually agree. The arbitration shall be
arbitrated by a panel of three arbitrators (the "ARBITRATION PANEL"), one of
which shall be appointed by TSG, the second appointed by Customer, and the
third jointly appointed by the arbitrators appointed by TSG and Customer.
TSG and Customer shall abide by and perform any award rendered by the
Arbitration Panel. The Parties intend that any Dispute will be resolved by
application of the laws of the State of Texas and the terms of this
Agreement. The Arbitration Panel's determination of facts shall be final and
binding on TSG and Customer if there is substantial evidence in the record of
such arbitration to support such determination, it being the intention of the
Parties that the standard for any judicial review of the findings of award be
the same standard as applies in the case of appeals to actions of
administrative agencies in the State of Texas.
18.2 CONTINUITY OF SERVICES. Both Parties agree to continue
performing their respective obligations under this Agreement while the
dispute is being resolved unless and until this Agreement expires or is
terminated in accordance herewith.
18.3 EXPENSES. Each of Customer and TSG shall pay its own
out-of-pocket expenses in connection with the conduct of the dispute
resolution process set forth above. The costs and expenses of any
arbitration, other than out-of-pocket expenses in connection therewith, shall
be payable in accordance with the decision of the Arbitration Panel.
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ARTICLE XIX
FORCE MAJEURE
Except for the obligations to make payments hereunder, each Party
shall be relieved of the obligations hereunder to the extent that performance
is delayed or prevented by any cause beyond its reasonable control,
including, without limitation, delays in or the withholding of decisions
required by the other Party, acts of God, public enemies, war, civil
disorder, communications failures, fire, flood, explosion, labor disputes or
strikes or any acts or orders of any governmental authority, failures or
fluctuations in electrical power, heat, light, air conditioning or
telecommunications equipment.
ARTICLE XX
TERMINATION
20.1 TERMINATION FOR BREACH. In the event of certain breaches of
this Agreement, TSG or Customer may terminate this Agreement in accordance
with this Section 20.1; provided that Customer gives TSG notice of its intent
to terminate within ninety (90) days after the date such breach occurred.
(a) Upon TSG's Egregious Breach of this Agreement, Customer
may terminate this Agreement, provided that Customer gives TSG seven (7)
days' written notice of its intent to terminate and TSG fails to cure the
breach within such seven (7) days; and provided, further, that such cure
period will be extended an additional seven (7) days if TSG delivers to
Customer a written plan to cure the breach. In both instances, unless TSG
cures the Egregious 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 Customer's material breach of its obligations
under this Agreement, TSG may terminate this Agreement on ten (10) days prior
written notice to Customer of its intent to terminate and Customer fails to
cure the breach within such ten (10) days.
(c) If either Party (i) is adjudicated bankrupt or
insolvent by a court of competent jurisdiction, (ii) substantially ceases to
do business as currently conducted, (iii) fails to pay its debts generally as
they become due, or (iv) takes steps to declare bankruptcy, wind up, dissolve
or liquidate (in each case, other than for the purposes of an amalgamation,
restructuring, or reconstruction pursuant to which the surviving entity
becomes bound by or assumes the obligations under this Agreement), or a
receiver, trustee or similar officer is appointed over (or a lien holder
takes possession of) all or a substantial part of such Party's property or
assets, or anything similar to any of the foregoing occurs in relation to
such Party under the laws of any jurisdiction, the non-defaulting Party may
terminate this Agreement on notice to the defaulting Party.
20.2 REMEDIES FOR BREACH. Upon the occurrence of a breach of this
Agreement as outlined in Section 20.1 above, the non-defaulting Party shall
have the right, in addition to termination of the Agreement, to seek all
legal and equitable remedies to which it is entitled, subject to the
limitations of liability contained in Article XVI hereof.
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ARTICLE XXI
MISCELLANEOUS
21.1 ASSIGNMENT. (a) This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the Parties hereto
and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto without the prior written consent of the other
Party, which may not be unreasonably withheld. Each Party shall respond in
writing with its decision within thirty (30) days after receipt of a request
for consent from the other Party; provided, however, that no TSG consent will
be required for Customer's assignment (or deemed assignment) of this
Agreement arising out of any transaction by which Customer becomes
disaffiliated with TSG. For purposes of this Agreement, a Change in Control
of Customer shall be considered an assignment of Customer's rights and
obligations.
(b) Customer's obligations under this Agreement shall continue and
survive in the event of any sale, spin off or divestiture of Customer by its
principal shareholder(s), any Change in Control, or Customer's merger or
consolidation with or into any Person. If any such merger or consolidation
occurs, the survivor of any such merger or consolidation shall assume
Customer's obligations and duties under this Agreement and shall be bound by
the terms and conditions of this Agreement. In addition, if Customer should
sell, divest, or spin off all or a substantial part of its assets or
business, in a single transaction or series of related transactions, then the
entity resulting from (or acquiring the business or assets of Customer in)
such transaction shall assume, and be obligated to pay and perform Customer's
obligations under this Agreement, and Customer shall not be released or
discharged form the payment and performance of its obligations under this
Agreement. Notwithstanding the foregoing, any change in the scope, nature,
quantity, costs or quality of the Services, as a result of any of the
described transactions, shall be subject to the change process set forth in
Section 3.2 above. Further, TSG shall have the right to levy additional
reasonable charges (which charges may include reasonable margins)
commensurate with the actual costs associated with, arising out of or in
connection with any of the Change in Control, sale, spin, divestiture,
merger, consolidation or similar transaction affecting Customer.
21.2 NOTICES. All notices, requests, demands, and other
communications to be given or delivered under or by reason of the provisions
of this Agreement shall be in writing and shall be deemed given when
delivered personally, on the next business day when sent by overnight Federal
Express, Express Mail or similar service, on the third business day after
being mailed when mailed by certified or registered first class mail, return
receipt requested, and upon receipt when sent by telecopy or electronic mail
with a confirmation copy by first-class mail, to each Party at the following
address (or to such other address as that Party may have specified by notice
given to the other pursuant to this provision):
If to TSG:
The SABRE Group, Inc.
4255 Amon Carter Blvd., MD
Fort Worth, Texas 76155
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Attention: President, STS Division
With a copy to:
The SABRE Group, Inc.
Attn: General Counsel
4255 Amon Carter Blvd., MD 4204
Ft. Worth, Texas 76155
If to Customer:
AMR Services Corporation
4255 Amon Carter Blvd., MD 4235
Fort Worth, Texas 76155
Attention: President
With a copy to:
AMR Services Corporation
4255 Amon Carter Blvd., MD 4240
Ft. Worth, Texas 76155
Attention: General Counsel
21.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts all of which taken together will constitute one and the same
instrument.
21.4 NO WAIVER. No delay or omission by either Party hereto to
exercise any right or power hereunder shall impair such right or power or be
construed to be a waiver thereof. A waiver by either of the Parties hereto
of any of the obligations to be performed by the other or any breach thereof
shall not be construed to be a waiver of any succeeding breach thereof or of
any other obligation herein contained.
21.5 SURVIVAL. The provisions of Sections 4.3, 13.1, 13.2, 15.2,
21.10, 21.11, 21.15 and Articles XI, XII, XIV, XVI, XVII and XVIII shall
survive any expiration or termination of this Agreement.
21.6 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be deemed
restated to reflect the original intentions of the Parties as nearly as
possible in accordance with applicable law, and, if capable of substantial
performance, the remaining provisions of this Agreement shall be enforced as
if this Agreement was entered into without the invalid provision.
21.7 PUBLICITY. Except as otherwise agreed, neither Party shall
have any right to the other Party's trademarks, service marks, or trade names
in connection with any product, service, promotion
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or publication, except that TSG may use Customer's name on TSG's client list
and in reasonable business promotion efforts by TSG.
21.8 ENTIRE AGREEMENT. This Agreement together with all Schedules
hereto, constitutes the entire agreement and understanding among the Parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, relating to such subject
matter.
21.9 AMENDMENTS. This Agreement may be amended or modified only by
a written instrument duly executed by or on behalf of each Party hereto.
21.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.
21.11 COMPLIANCE WITH LAWS; EXPORT REGULATION. Customer will be
responsible for obtaining any necessary government approvals, consents,
licenses and/or permits to enable Customer to (a) export any products or
technical data required for TSG's performance under this Agreement from the
United States or any other country of origin, (b) import such products and
technical data into any other country, and (c) pay TSG all amounts in U.S.
Dollars as required by this Agreement. Upon request, TSG will promptly
provide Customer with any end-user certificates, affidavits regarding
re-export or other certificates and documents as are reasonably available to
TSG and required from TSG to obtain any such approvals, consents, licenses
and/or permits. The obligations of TSG under this Agreement shall be
conditioned on Customer's obtaining such approvals, consents, licenses and/or
permits. Each Party shall bear all costs, fees and expenses associated with
obtaining such approvals, consents, certificates, affidavits and other items
for which it is responsible under this Agreement, and upon request will
provide to the other evidence that any such items have been obtained and all
fees have been paid. Notwithstanding anything in this Agreement to the
contrary, Customer shall not directly or indirectly export (or re-export) any
hardware, products, Software, technical data or products thereof or permit
transshipment of same (a) to any country or destination for which the United
States Government or a United States Government agency requires an export
license or other approval for export without first having obtained such
license or other approval, or (b) if otherwise contrary to United States law.
The term "technical data" shall include the TSG Services and any technical
assistance provided by TSG. This obligation shall survive the expiration or
termination of this Agreement.
21.12 NO THIRD-PARTY BENEFICIARIES. The Parties agree that this
Agreement is for the benefit of the Parties hereto and is not intended to
confer any rights or benefits on any third party, including any employee of
either Party hereto, and that there are no third-party beneficiaries to this
Agreement.
21.13 SCHEDULES; GOVERNING DOCUMENTS. The terms and conditions of
any and all Schedules to this Agreement, as amended from time to time by
mutual agreement of the Parties, are
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incorporated into this Agreement by this reference and shall constitute a
part of this Agreement as if fully set forth herein.
21.14 RELATIONSHIP OF THE PARTIES. TSG shall be and act as an
independent contractor hereunder and no employee of either Party shall be
deemed to be an employee of the other for any purpose whatsoever. Each Party
shall comply, at its own expense, with all applicable state and municipal
requirements and with all state and federal laws applicable to it as an
employer and otherwise.
21.15 NON-SOLICITATION OF EMPLOYEES. During the Term of this
Agreement and for a period of one (1) year thereafter, Customer shall not
directly solicit for employment TSG's personnel.
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed by their authorized representatives as of the date first above
written.
AMR SERVICES THE SABRE GROUP, INC.
CORPORATION
- -------------------------------- --------------------------------
By: Jim Gunn By: Tom Cook
Title: Vice Chairman Title: President, SABRE Technology
Solutions Division
Date: Date:
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SCHEDULE 1
DEFINITIONS
For the purpose of this Agreement, the following terms shall have the
following meanings:
"AAA" shall mean the American Arbitration Association.
"ACCOUNT MANAGER" shall be the person appointed from time to time by
TSG to consult with Customer and consider Customer's needs in connection with
the performance of this Agreement.
"AFFILIATE" shall mean a Person that directly or indirectly through
one or more intermediaries Controls, is Controlled by, or is under common
Control with another Person.
"AGREEMENT" shall have the meaning given in the preamble hereof.
"ARBITRATION PANEL" shall have the meaning given in Section 18.1.
"AIRLINE INCIDENT" means an occurrence of personal injury, death, or
property damage in connection with the operation of any aircraft.
"CHANGE IN CONTROL" means (a) the acquisition by any Person or group
of Person of 50% or more of the outstanding shares of voting stock, or
similar equity interest, of Customer, or (b) all or substantially all of the
assets of Customer are sold in a single transaction or series of related
transactions to any Person.
"CONFIDENTIAL INFORMATION" shall have the meaning given to such term
in Section 14.1.
"CONSEQUENTIAL DAMAGES" means 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" (including, with correlative meaning, the terms
"Controlling" or "Controlled by") means, with respect to any Person, the
right to exercise, directly or indirectly, more than fifty percent of the
voting power attributable to the equity interests in such Person.
("Controlling" and "Controlled" have correlative meanings.)
"CUSTOMER" shall have the meaning given in the preamble hereof.
"CUSTOMER DATA" shall mean (i) all data that is provided by or on
behalf of Customer to TSG in order for TSG to provide the Services, including
keyed input and electronic capture of information by the Services, (ii) all
data that is provided by or on behalf of TSG to Customer by means of the
Services, and (iii) all data that is produced by means of the Services as a
intermediate step in using or producing any such data, including databases
and files containing such data.
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"CUSTOMER FACILITIES SPACE" shall have the meaning given in Section
7.2.
"CUSTOMER LICENSED SOFTWARE" shall mean the third party software
licensed by Customer and used in the current data processing operations of
Customer, and any additions to or replacements for such software and
documentation.
"CUSTOMER OWNED SOFTWARE" shall mean software (in source code and
object code form), and all related systems design and user documentation,
which is owned by Customer and used in the current data processing operation
of Customer, and any additions to or replacements for such software and
documentation.
"CUSTOMER THIRD-PARTY AGREEMENTS" shall mean agreements between
Customer and any third party for the provision of products or services of any
kind.
"DISPUTE" shall have meaning given in Section 18.1.
"DISPUTE NOTICE" shall have the meaning given in Section 18.1.
"EFFECTIVE DATE" shall mean July 1, 1996.
"EGREGIOUS BREACH" shall mean a material breach of contract that
constitutes an intentional, unequivocal refusal to perform a material
obligation of this Agreement that frustrates one or more bases of the bargain
between Customer 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.
"EQUIPMENT" shall mean all office related equipment, telephone and
facsimile machines, supplies, including Hardware, owned or leased by Customer
and necessary for TSG to perform the Services.
"EXPIRATION DATE" shall mean the first to occur of: [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED].
"EXPIRATION TRANSITION PERIOD" shall have the meaning given in Section
4.3.
"FEES" shall mean, collectively, the fees and charges paid to TSG by
Customer for performance of Services as set forth in Article X.
"FOS SERVICES" shall mean the services provided by TSG or Customer
hereunder utilizing the Flight Operating System (as defined in Exhibit A).
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"GENERAL DAMAGES" shall mean 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 the actual damages of a Person, but also punitive and exemplary
damages and Consequential Damages of such Person.
"HARDWARE" shall mean computers and related equipment, including, but
not limited to, central processing units and other processors, controllers,
modems, communications and telecommunications equipment (including radio
equipment), cables, storage devices, printers, terminals, other peripherals
and input and output devices, and other tangible mechanical and electronic
equipment intended for the processing, input, output, storage, manipulation,
communication, transmission and retrieval of information and data.
"INDEMNIFIABLE LOSSES" shall mean 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 incurred by a Person. Indemnifiable Losses consist only of the
actual damages of a Person, and excludes any Consequential Damages and any
punitive or exemplary damages (however described) of such Person. For the
avoidance of doubt, the Indemnifiable Losses of an Indemnified Party shall
include any Consequential Damages and any punitive or exemplary damages
(however described) awarded against such Indemnified Party in favor of a
Person making a Third Party Claim against such Indemnified Party.
"INDEMNIFIED PARTY" shall have the meaning given in Section 17.1.
"INDEMNIFYING PARTY" shall have the meaning given in Section 17.1.
"ISCM" shall have the meaning given in Section 6.3.
"NEW SERVICES" shall mean applications development and information
management services, including data processing and information services,
information management, training, electronic data processing and
telecommunication systems that are not described in Schedule 3.1 that are
mutually agreed upon by the Parties pursuant to Section 4.1. For purposes of
Section 4.2, there shall be no requirement that the Parties mutually agree
upon the Services pursuant to Section 4.1 for such Services to be considered
"NEW SERVICES".
"NEW SERVICE REQUEST" shall mean a written request delivered to TSG by
Customer to request New Services and shall include the following, as
appropriate:
(a) A reference to this Agreement;
(b) A general description or functional specification of
the New Services desired by Customer;
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(c) Any special objectives or constraints with respect to
the budget and time schedule; and
(d) The priority of the work in relationship to other
current or anticipated work.
"PARTY" shall mean each of the signatories to the Agreement, and their
successors and assigns as permitted by the Agreement. ("PARTIES" has the
correlative meaning).
"PASS THROUGH FEES" shall mean charges to TSG for certain services or
products that it acquires from third parties to enable it (in part) to
provide the Services, which charges TSG passes through as fees charged to
Customer. The initial list of Pass Through Fees are identified in Schedule
10.4.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, trust, business association, governmental entity or other entity.
"SERVICES" shall mean the information management services, including
data processing and information services, information management, training,
electronic data processing and telecommunication systems and shall consist of
the services described on Schedule 3.1 and New Services.
"SERVICE LOCATIONS" shall have the meaning given in Section 5.1.
"SOFTWARE" shall mean any computer programming code consisting of
instructions or statements in a form readable by individuals (source code) or
machines (object code), and documentation and supporting materials therefor,
in any form or medium, including electronic media.
"SUBSIDIARY" shall mean, with respect to any Person, a corporation,
company or other entity more than 50% of whose outstanding shares or
securities (representing the right to vote for the election of directors or
other managing authority) are now or hereafter owned or Controlled, directly
or indirectly, by such Person, but such corporation, company or other entity
shall be deemed to be a Subsidiary only so long as such ownership or Control
exists.
"TORT DAMAGES" shall mean bodily or personal injury or death or damage
to real or tangible personal property.
"TSG INDEMNIFIED PARTIES" shall mean TSG, its Affiliates (other than
Customer), and their respective officers, employees and directors.
"TERM" shall have the meaning given in Section 2.1.
"THIRD PARTY" means a Person other than a Party or either Party's
Affiliates.
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"THIRD PARTY CLAIM" shall mean a claim of liability asserted against a
Party by a Person other than the other Party or either Party's Affiliates.
"THIRD PARTY SOFTWARE" means software owned by a Third Party and
licensed to Customer or TSG and used in the performance of the Services.
"TSG" shall have the meaning set forth in the preamble.
"TSG SOFTWARE" shall mean the Software owned or licensed by TSG and
made available to Customer by TSG in connection with the performance of the
Services.
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;
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.
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SCHEDULE 3.1
DESCRIPTION OF SERVICES
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
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SCHEDULE 5.1
SERVICE LOCATIONS*
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
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SCHEDULE 10.1
FEES AND CHARGES
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
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SCHEDULE 10.4
PASS THROUGH FEES
The initial Pass Through Fees include the following:
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
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SCHEDULE 13.4
WARRANTY DISCLAIMER, LIMITATIONS OF LIABILITY AND INDEMNIFICATION PROVISIONS
FOR CERTAIN OF CUSTOMER'S THIRD PARTY AGREEMENTS
LIMITED WARRANTY. In the event of a material defect in the FOS Services
provided hereunder that is reported by Customer to AMRS and that can be
reproduced by AMRS, then AMRS will use reasonable efforts to correct such
malfunction or defect without additional charge to Customer. THE FOREGOING
SHALL BE CUSTOMER'S SOLE AND EXCLUSIVE REMEDY FOR ANY DEFECT IN THE FOS
SERVICES.
EXCLUSION OF OTHER WARRANTY. EXCEPT AS SPECIFICALLY PROVIDED IN THIS
AGREEMENT, THE FOS SERVICES ARE PROVIDED BY AMRS, THE FOS LICENSOR, ITS
INFORMATION PROVIDERS OR THE OWNER OF ANY ELEMENT THEREOF (AS THE CASE MAY
BE) "AS IS" WITHOUT ANY WARRANTY WHATSOEVER. CUSTOMER RECOGNIZES THAT THE "AS
IS" CLAUSE OF THIS AGREEMENT IS AN IMPORTANT PART OF THE BASIS OF THIS
AGREEMENT, WITHOUT WHICH AMRS WOULD NOT HAVE AGREED TO ENTER THIS AGREEMENT.
AMRS DISCLAIMS ALL OTHER WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY,
REGARDING THE FOS SERVICES, INCLUDING ANY WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, TITLE, AND NONINFRINGEMENT. NO
REPRESENTATION OR OTHER AFFIRMATION OF FACT, INCLUDING, WITHOUT LIMITATION,
STATEMENTS REGARDING CAPACITY, SUITABILITY FOR USE, OR PERFORMANCE OF FOS
SERVICES SHALL BE DEEMED A WARRANTY FOR ANY PURPOSE OR GIVE RISE TO ANY
LIABILITY OF AMRS, THE FOS LICENSOR, ITS INFORMATION PROVIDERS OR THE OWNER
OF ANY ELEMENT THEREOF WHATSOEVER. CUSTOMER ACKNOWLEDGES THAT IT HAS RELIED
ON NO WARRANTIES OTHER THAN THE EXPRESS WARRANTIES IN THIS AGREEMENT.
LIMITATION OF LIABILITY. NEITHER AMRS, THE FOS LICENSOR, INFORMATION
PROVIDER OR ANY OWNER OF ANY ELEMENT OF THE FOS SERVICES SHALL BE LIABLE TO
CUSTOMER OR ANY THIRD PARTY FOR ANY INJURY, LOSS, CLAIM OR DAMAGE CAUSED IN
WHOLE OR IN PART BY THE NEGLIGENCE OF AMRS OR ANY INFOMRATION PROVIDER OR BY
ANY OWNER OF ANY ELEMENT OF THE FOS SERVICES OR BY EVENTS BEYOND THE CONTROL
OF AMRS OR OF ANY OF THOSE OTHER PERSONS. NEITHER AMRS, NOR THE FOS LICENSOR,
ANY INFORMATION PROVIDER OR ANY OWNER OF ANY ELEMENT OF THE FOS SERVICES
SHALL BE LIABLE TO CUSTOMER UNDER ANY THEORY OF LIABILITY OR ANY FORM OF
ACTION, INCLUDING NEGLIGENCE, WHETHER CONTRIBUTORY, SOLE OR JOINT. AMRS, ITS
INFORMATION PROVIDER AN ANY OWNER OF ANY ELEMENT OF THE FOS SERVICES SHALL
NOT BE LIABLE TO CUSTOMER FOR ANY INCIDENTAL, INDIRECT, EXEMPLARY, SPECIAL OR
CONSEQUENTIAL DAMAGES, UNDER ANY CIRCUMSTANCES, INCLUDING, BUT NOT LIMITED
TO, LOST PROFITS, REVENUE OR SAVINGS, OR THE LOSS OF USE OF ANY DATA, EVEN IF
AMRS HAD BEEN ADVISED OF, KNEW, OR SHOULD HAVE KNOWN, OF THE POSSIBILITY
THEREOF.
INDEMNIFICATION. Customer will defend, indemnify, and hold harmless AMRS,
its officers, agents, employees, contractors, subcontractors, parent
corporation, subsidiaries, affiliates, and the FOS licensor, any information
providers and the owners of any element of the FOS Services (referred to
individually and collectively as the "Indemnified Party") from and against
any and all claims, liabilities, loss, damages, costs, fines, penalties or
expenses (including but not limited to attorney's fees and all costs of
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litigation)("Damages") which the Indemnified Party may hereafter incur,
suffer or be required to pay by reason of damage to property or injury to or
death of persons which arises out of the Indemnified Party's failure to
perform or negligent performance of the FOS Services, but excluding those
Damages attributable solely to the Indemnified Party's gross negligence. The
Indemnified Party's rights under this paragraph shall survive the termination
of this Agreement.
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THIS AGREEMENT HAS CONFIDENTIAL PORTIONS OMITTED, WHICH PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED
PORTIONS ARE INDICATED IN THIS AGREEMENT WITH "[TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED]."
AGREEMENT FOR
INFORMATION TECHNOLOGY SERVICES
THIS AGREEMENT FOR INFORMATION TECHNOLOGY SERVICES (this "AGREEMENT") is
entered into by and between TeleService Resources, Inc., a Delaware corporation,
with a principal business address of 4201 Cambridge Road, Fort Worth, Texas
76155 ("CUSTOMER"), and The SABRE Group, Inc., a Delaware corporation, with a
principal business address of 4255 Amon Carter Boulevard, Fort Worth, Texas
76155 ("TSG").
WHEREAS, TSG is engaged in the business of providing certain information
technology and related services to the worldwide travel-related industry; and
WHEREAS, TSG has the right to use the SPIRIT Multihost Reservations
System ("SPIRIT") on behalf of and to provide services to third parties in
accordance with the terms and conditions of the Information Technology
Outsourcing and Commercialization Agreement among Hyatt Corporation ("HYATT"),
CSC Outsourcing Inc. and Computer Sciences Corporation ("CSC"), with an
acknowledgment by The SABRE Group, Inc., dated June 30, 1996 (the "HYATT
AGREEMENT"), and the Information Technology Outsourcing and Commercialization
Subcontract Agreement, among CSC Outsourcing, Inc., Computer Sciences
Corporation and The SABRE Group, dated July 1, 1996; and
WHEREAS, Customer and TSG wish to enter into this Agreement, pursuant to
which TSG shall provide to Customer the information technology and related
services described in this Agreement, and will use SPIRIT on behalf of Customer,
all upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the above premises, the parties
hereby agree as follows:
ARTICLE 1
DEFINITIONS AND SCHEDULES
1.1 DEFINITIONS. Terms which are capitalized herein shall have the
meaning assigned to them in the body of this Agreement.
1.2 SCHEDULES. When this Agreement refers to an attached Schedule,
such Schedule is deemed incorporated herein by reference for all purposes.
ARTICLE 2
TERM
2.1 TERM OF AGREEMENT. Unless earlier terminated as provided herein,
the term of this Agreement (the "TERM") shall commence as of July 1, 1998 (the
"EFFECTIVE DATE") and shall end on June 30, 2005 (the "EXPIRATION DATE"), or
such anniversary
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thereof to which the Term is extended pursuant to ARTICLE 2.2 hereof.
2.2 EXTENSIONS OF THE TERM. The Term of this Agreement may be
extended by mutual agreement for an additional three (3) years, by either party
providing the other with written notice at least six (6) months before the
Expiration Date. Upon the renewal, if any, of this Agreement, TSG has the right
to modify the pricing for the Base Services, as defined in ARTICLE 3.1. If the
parties fail to reach agreement on the pricing modifications prior to the
Expiration Date, then this Agreement shall expire effective as of such
Expiration Date.
ARTICLE 3
TSG SERVICES
3.1 BASE SERVICES. TSG began providing services to Customer pursuant
to a letter of intent between TSG and Customer dated July 14, 1997 (the "LETTER
OF INTENT"), and the Letter of Intent shall govern the relationship between TSG
and Customer until the Effective Date of this Agreement. This Agreement
supersedes the Letter of Intent and sets forth the definitive agreement between
the parties as to the provision of such services from and after the Effective
Date. In addition, ARTICLES 11, 12, 13 AND 14 of this Agreement retroactively
supersede and replace ARTICLES 2, 3 AND 4 of the Letter of Intent for the period
from July 14, 1997 until the Effective Date. During the Term of this Agreement,
TSG shall perform the Base Services described in SCHEDULE 3.1 for Customer (the
"BASE SERVICES"). TSG shall perform the Base Services in accordance with the
service levels for the performance of the Base Services (the "SERVICE LEVELS"),
as set forth in SCHEDULE 3.1.1. The Service Levels shall take effect as of the
date commencing forty-five (45) days after the implementation of the [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED] hotel (the "MASL DATE").
3.2 NEW OR ADDITIONAL SERVICE. A "NEW OR ADDITIONAL SERVICE" shall
be defined as services that are not described as a Base Service in SCHEDULE 3.1.
The Base Services and the New or Additional Services shall be referred to
collectively as the "TSG SERVICES". Either party may, from time to time during
the Term, request the provision of a New or Additional Service. Customer and
TSG shall jointly decide whether such New or Additional Service shall be
provided. In such event, TSG will prepare a written proposal to Customer for
the cost of such New or Additional Service. Customer shall reject or accept
such proposal within forty-five (45) days after receipt.
3.3 TSG RIGHTS TO MANAGE TSG RESOURCES. Subject to the other
provisions of this Agreement, TSG shall have the right to manage all resources
used in providing the TSG Services as TSG deems appropriate. Nothing in this
Agreement shall prevent TSG from changing, consolidating, eliminating or adding,
after the Effective Date, locations at which it provides the TSG Services, which
cost shall be borne by TSG; provided, that such changes, consolidations,
eliminations or additions shall not change the Service Levels identified herein.
3.4 SERVICE LEVELS. The measured application service levels ("MASL")
for
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the performance of the Base Services are set forth in SCHEDULE 3.1.1. During
the six (6) month period commencing upon the MASL Date, TSG's Client Service
Representative and Customer's Contract Manager (each as hereinafter defined)
shall confirm that such MASLs are reasonable and achievable for the
performance of the TSG Services. In the event of a failure by TSG to reach
the Service Levels during the Term of this Agreement, Customer's sole and
exclusive remedies for such failure (other than termination of this Agreement
for Material Default under ARTICLE 17.1) shall be those set forth on SCHEDULE
3.1.1 hereto.
3.5 REMOTE DATABASE ACCESS SERVICES. TSG shall contract for and
manage on behalf of Customer the Remote Database Access Services as defined in
ARTICLE 5.4, for the purpose of providing the TSG Services to Customer.
Customer shall be responsible for all charges relating to the Remote Database
Access Services and related to the performance of the TSG Services, except in
the case where Customer and TSG are sharing use of any lines, in which case the
charges shall be shared by both Customer and TSG as follows. During the first
year of the Term of the Agreement, TSG and Customer will each pay [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED] percent ([TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED]%) of TSG's total bill amount from the
telecommunications network provider relating to the Remote Database Access
Services provided by TSG on behalf of Customer for the shared circuits set
forth on SCHEDULE 3.5, including any related installation charges.
Thereafter, upon each anniversary of the Effective Date of this Agreement,
the parties agree to jointly determine the percentage of use for such shared
circuits for the past twelve (12) months and will prorate and share the costs
accordingly for the following year. The parties may mutually agree to change
the circuits designated on SCHEDULE 3.5.
3.6 MARKETING. The parties agree to the marketing arrangement set
forth on SCHEDULE 3.6 hereto.
ARTICLE 4
EMPLOYEES AND IMPLEMENTATION
4.1 TRANSITIONED EMPLOYEES. As of the Effective Date of this
Agreement, TSG has made offers of employment to certain employees of Customer as
identified on SCHEDULE 4.1 (the "EMPLOYEES"). TSG will extend such offers to
the Employees in accordance with TSG's normal employment policies. The
Employees who accept employment with TSG within thirty (30) days after their
role in the Implementation is complete shall be transitioned to TSG
("TRANSITIONED EMPLOYEES"). The parties will provide each other with reasonable
cooperation in the timely transition of the Employees. TSG agrees to provide
positions which are comparable to the positions that the Transitioned Employees
held prior to the transition.
4.2 SALARY AND BENEFITS. TSG agrees to offer to each of the
Transitioned Employees, for a period of six (6) months, the same salary and
substantially similar benefits which were earned by the Transitioned Employees
as of the date upon which such Transitioned Employees commence employment with
TSG (the "TRANSITION DATE"); subject, however, to termination for cause by TSG.
Any pension, or other
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benefits or rights to which the Transitioned Employees are entitled, as of
the Transition Date and by virtue of the termination of their employment with
Customer, shall be the responsibility of Customer.
4.3 IMPLEMENTATION OF SOFTWARE.
4.3.1 TSG hereby grants to Customer a limited, nonexclusive,
nontransferable and revocable (pursuant to the terms of ARTICLE 17 of this
Agreement) right to use and access the SPIRIT executable code, in connection
with Customer's voice reservation services or global distribution system
("GDS"), for the purpose of processing reservations and performing related
services for its hotel customers, strictly in accordance with the terms of this
Agreement, including, without limitation, the marketing terms set forth on
SCHEDULE 3.6. SPIRIT has been renamed by TSG under the new trade name of
RESERVE-TM-, but for purposes of this Agreement, it shall be referred to as
"SPIRIT". TSG shall provide Customer with the SPIRIT functionality set forth on
SCHEDULE 4.3 hereto (the "SPIRIT FUNCTIONALITY") and the SPIRIT enhancements set
forth on SCHEDULE 6.10.1. TSG shall [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] charge Customer [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
license fee for the provision of SPIRIT hereunder. Upon Customer's request,
TSG will provide SPIRIT to Customer in GUI format, once it is made available,
at no additional net reservation or license fee. Customer will use SPIRIT in
connection with Customer's internal operations, and on behalf of all of the
existing hotel customers of Customer which are listed on SCHEDULE 4.3.1 (the
"EXISTING HOTELS") and any other hotel which becomes a customer of Customer
after the Effective Date ("NEW HOTELS"), and for no other use.
The systems which are listed in SCHEDULE 4.3 as "NON-SPIRIT
APPLICATIONS" are Hyatt and TSG-owned systems which are not currently part of
the SPIRIT functionality. The "HYATT SOFTWARE" shall include the systems listed
on SCHEDULE 4.3. The "TSG SOFTWARE" shall include the systems listed on
SCHEDULE 4.3, which are owned by either TSG or a third party other than Hyatt,
and used in the performance of the TSG Services. In accordance with terms and
conditions, including pricing, to be mutually agreed to by the parties in
writing in advance, TSG may use either the Hyatt Software or the TSG Software
(other than the CRSVIEW and QIK-ACCESS systems described below) on behalf of
Customer.
4.3.2 TSG hereby grants Customer a limited, nonexclusive,
nontransferable right and license to the application development environment
("ADE") for sixty (60) users to use TSG's proprietary software systems known as
CRSVIEW (now known as RESERVE LINK-TM-) and QIK-ACCESS-TM-, including the
framework rate code developed for Hyatt, strictly in accordance with the license
terms set forth in ARTICLE 4.4 below, except that Customer shall have the right
to create databases or applications from the ADE at no additional cost. TSG
shall [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] charge Customer [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED] license fee for the provision of
the CRSVIEW and QIK-ACCESS systems hereunder. The rights hereby granted are
limited strictly to Customer's use of CRSVIEW and QIK-ACCESS in connection
with Customer's internal operations and on behalf of the New
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and Existing Hotels.
4.3.3 The Hyatt Software shall be and remain at all times the
exclusive property of Hyatt, and Hyatt, at its option, may license, transfer or
assign the Hyatt Software at any time to any third party including, without
limitation, any competitors of Customer, subject to Customer's right to continue
to use and operate the Hyatt Software under this Agreement. TSG shall continue
to be fully bound by the provisions of this Agreement and such license, transfer
or assignment shall in no way modify its obligations hereunder. TSG shall own
all right, title and interest in and to any SPIRIT Enhancements or New
Functionality (each as hereinafter defined) created under this Agreement, even
if created solely for Customer.
4.3.4 The TSG Software, including any documentation,
modifications or enhancements to, or works derivative of such TSG Software
developed by TSG pursuant to this Agreement shall be and remain TSG's property
(except to the extent owned by a third party licensor), and Customer shall have
no rights or interest in the TSG Software, except as provided in this Agreement.
TSG retains all right, title and interest in and to any and all of the TSG
Software and related documentation, software development tools, know-how,
methodologies, processes, technologies or algorithms used in providing the TSG
Services that are trade secrets or proprietary information of TSG or its
affiliates or otherwise owned or licensed by TSG or its affiliates.
4.3.5 TSG shall deliver the Hyatt Software and the CRSVIEW and
QIK-ACCESS systems to Customer either prior to or upon execution of this
Agreement. Acceptance of the Hyatt Software and the CRSVIEW and QIK-ACCESS
systems shall be deemed upon Customer's productive use of SPIRIT, which shall be
defined herein as the first sustained ability to make hotel reservations for a
period of longer than ten (10) days.
4.4 RESTRICTIONS ON SOFTWARE.
4.4.1 Customer may make copies of CRSVIEW and QIK-ACCESS for
its own internal use on no more than sixty (60) Customer workstations connected
to the main operating system, and for back-up data security purposes, but
Customer must inform TSG in writing of how many copies have been made. Customer
shall reproduce and include on each copy and on each partial copy of CRSVIEW and
QIK-ACCESS any copyright notice and proprietary rights legend contained on or in
such systems, as such notice and legend appear on or in the original.
4.4.2 Customer shall make no modifications, alterations,
developments or derivative works of CRSVIEW and QIK-ACCESS, SPIRIT or the Hyatt
Software, except for the CRSVIEW software, for which Customer may create
databases or applications from the ADE. Customer shall own any such databases
or applications which Customer creates. Customer shall receive system upgrades
and bug fixes for CRSVIEW and QIK-ACCESS at no additional cost, but shall pay
TSG for enhancements, modifications or other maintenance or custom development
services as
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a New or Additional Service. Customer shall not reverse engineer,
disassemble, compile, reverse compile or decompile CRSVIEW and QIK-ACCESS or
SPIRIT. CRSVIEW and QIK-ACCESS and SPIRIT shall only be used for Customer's
internal operations or on behalf of the New or Existing Hotels, and shall not
be installed at any New or Existing Hotel sites.
4.4.3 Customer shall not make available, sell, transfer,
assign, sublease, convey, remarket or sublicense CRSVIEW, QIK-ACCESS, SPIRIT or
the Hyatt Software, or any component thereof, to any New or Existing Hotel, or
to any person or entity, whether by operation of law or otherwise, without the
prior written consent of TSG, which shall not be unreasonably withheld.
4.5 IMPLEMENTATION OF SPIRIT. TSG and Customer shall jointly develop
a plan and shall convert the Existing Hotels from ACTION and HDS (the hotel
reservation system platforms currently used by Customer and hereinafter referred
to collectively as "ACTION") and convert the guest name records ("GNR"),
including the GNRs of past stays, and rate records for the Existing Hotels onto
SPIRIT ("IMPLEMENTATION"). TSG and Customer shall agree on the specific dates
for the Implementation of each Existing Hotel on an ongoing basis and agree to
an end date of March 31, 1999 for Implementation of all Existing Hotels;
subject, however, to development work to be performed by PMS interface vendors,
and subject also to cooperation by TSG with the PMS vendors, which shall not be
unreasonably withheld. Conversion of the GNR and the rate records from any
customer reservation system other than ACTION for Existing Hotels will require
additional development costs which will be billed to Customer by TSG as a New or
Additional Service.
4.5.1 The responsibilities of each party for the Implementation
of the Existing Hotels (the "IMPLEMENTATION RESPONSIBILITIES") are set forth on
SCHEDULE 4.5.1 (the "IMPLEMENTATION PLAN"). Each party agrees to pay its own
costs for the Implementation, in accordance with the performance of the
Implementation Responsibilities. The Implementation shall be deemed
successfully terminated upon the completion of the milestones set forth in the
Implementation Plan and the compliance of each party with the Implementation
Responsibilities.
4.5.2 After the Effective Date, TSG shall endeavor to implement
any New Hotel onto SPIRIT within ninety (90) days from the date that Customer
notifies TSG in writing, except where major system modifications or a
significant increase in capacity are either requested or required, in which case
TSG will provide a different Implementation Plan, which shall be mutually agreed
to by the parties in writing. TSG and Customer will also agree in writing to
the Implementation charges and the billing schedule for each New Hotel.
4.6 ONGOING RESPONSIBILITIES. After the Implementation, Customer and
TSG shall perform the ongoing responsibilities for the Implementation set forth
for each on SCHEDULE 4.6.
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ARTICLE 5
CUSTOMER RESPONSIBILITIES AND DUTIES
5.1 CUSTOMER EMPLOYEES.
5.1.1 Customer will cooperate with TSG during the transition of
the Employees to TSG. Customer has not made and will not make any
representation or promise, whether written or oral, to the Employees regarding
employment with TSG, or the employment benefits, plans or practices of TSG,
without obtaining the prior written consent of TSG.
5.1.2 All pension and other obligations (including vacation
time) accrued as of the Transition Date, if any, with respect to the
Transitioned Employees shall remain the responsibility of Customer.
5.1.3 TSG shall have responsibility for giving the Transitioned
Employees credit for sick time accrued as of the Transition Date.
5.2 CUSTOMER FACILITIES AND RELATED SERVICES. During the
Implementation, Customer shall provide to TSG, at no cost to TSG, such access to
and use of adequate space and services (collectively, the "CUSTOMER FACILITIES
SPACE") to the extent that the Customer Facilities Space is reasonably required
by TSG to effectively perform the TSG Services. Customer shall also provide to
TSG, at any Customer location in which the TSG Services will be performed,
facilities which are free of health and safety hazards. At all times during the
Implementation when TSG uses space and related utilities and services in any
Customer Facilities Space, TSG shall comply with the customary and reasonable
policies governing access to and use of the facilities in effect from time to
time and which are communicated to TSG in writing.
5.3 MINIMUM TRANSACTION VOLUME. Customer shall process (or pay TSG
for) a minimum transaction volume of Net Reservations (as defined in ARTICLE
7.2) during the Term of the Agreement as set forth below:
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] Million Net
Reservations during the period from July 1, 1998 to June 30,
1999;
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] Million Net
Reservations during the period from July 1, 1999 to June 30,
2000;
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] Million Net
Reservations during the period from July 1, 2000 to June 30,
2001;
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] Net
Reservations during the period from July 1, 2001 to June 30,
2002;
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] Net
Reservations during the period from July 1, 2002 to June 30,
2003;
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[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] Net
Reservations during the period from July 1, 2003 to June 30,
2004; and
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] Net
Reservations during the period from July 1, 2004 to June 30,
2005.
TSG agrees to credit all Net Reservations made by Customer during the period
from August 1, 1997 to June 30, 1998, equaling [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED] Net Reservations, to the amount of 1.6 Million Net
Reservations due in the first year of the Term. In the event that the
Existing Hotels discontinue their call center or GDS relationship with
Customer but continue to use SPIRIT, such Net Reservations will continue to
be counted toward the above minimums. In addition, TSG shall credit toward
such minimums any other Net Reservations made on SPIRIT by customers of
Customer other than the Existing Hotels.
5.4 REMOTE DATABASE ACCESS SERVICES. TSG will contract with a third
party telecommunications network provider for the provision and maintenance of a
data telecommunications network necessary to support the TSG Services under this
Agreement (the "REMOTE DATABASE ACCESS SERVICES"), at 4255 Amon Carter
Boulevard, CentrePort IV, Fort Worth, Texas (the "TSG DATA CENTER"), and
Customer shall pay for the charges for such Remote Database Access Services,
including line communications, hardware and maintenance charges, and will be
responsible for assisting TSG in the administration of the contract for the
Remote Database Access Services for the benefit of the New or Existing Hotels.
Customer and TSG shall share the cost of any lines which are shared by both
Customer and TSG, as set forth in ARTICLE 3.5 of this Agreement.
5.5 CUSTOMER CONTRACT MANAGER. From time to time during the Term,
Customer will designate a contract manager (the "CUSTOMER CONTRACT MANAGER") who
will be authorized to act as the primary point of contact for Customer in
addressing issues concerning each party's obligations or requests for
modifications under this Agreement, and shall have authority to make decisions
regarding this Agreement on behalf of Customer (which must also be agreed to in
writing by TSG).
5.6 ASSISTANCE. Each party shall provide the other with all
necessary and reasonable resources, information and other assistance, as may be
agreed by the parties from time to time, in connection with the activities
contemplated by this Agreement and each party shall punctually perform its
obligations under this Agreement.
5.7 PRIORITIES. Customer will establish, in coordination and
cooperation with TSG, appropriate data processing priorities for Customer.
Customer will make available, as reasonably requested by TSG, such management
decisions, access to personnel, information, approvals and acceptances so that
TSG may timely perform the TSG Services.
5.8 USE OF TSG SERVICES. Customer may not (i) use the TSG Services
for
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any purposes other than for its own internal operations and on behalf of the
Existing or New Hotels, or (ii) transfer any material or information related
to the TSG Services, in any form whatsoever, to any third party or allow any
third party to access or use any such material or information, except with
the prior consent of TSG, which shall not be unreasonably withheld. This
ARTICLE 5.8 shall be subject to the provisions set forth in ARTICLE 11.1
regarding Confidential Information and exceptions therefor.
5.9 TRAINING OF CUSTOMER PERSONNEL. Customer will train Customer's
personnel to properly prepare input for, and appropriately use output from, the
TSG Software.
5.10 PROVISION OF SOURCE DATA AND TRANSFER OF GNRS. Customer will
supply to TSG for processing all required source data and machine readable data
(i) in the form presently used in Customer's information technology operations,
or (ii) in such form and on such time schedule as set forth in the documentation
provided to TSG by Customer, and as may be reasonably requested by TSG with
respect to the performance of the TSG Services. Customer will be responsible
for the quality, accuracy and legibility of the data provided to TSG. TSG will
not be liable for any default in its performance of the TSG Services which is
due to any insufficiency of such data provided by Customer to TSG. Customer
shall also be responsible for the transfer to the TSG Data Center of any GNR and
rate records from any customer reservation system of a New Hotel.
5.11 INSPECTION. Customer will timely inspect and review all reports
and output provided by TSG. Customer will notify TSG of any incorrect (i) daily
or weekly reports within three (3) business days after receipt of such reports,
and (ii) monthly or other reports within five (5) business days after receipt of
such reports.
5.12 GOVERNMENTAL APPROVALS. Customer shall, at its expense,
cooperate and provide reasonable assistance to TSG in obtaining all required
governmental approvals which are a prerequisite to this Agreement becoming
effective or as may be necessary for TSG to perform the TSG Services.
5.13 SOFTWARE. Customer will be responsible for providing any
emulation software (other than for the host system) required for the operation
of SPIRIT, and will not use any emulation software (or any other third party
software) that adversely impacts the performance of SPIRIT.
ARTICLE 6
TSG RESPONSIBILITIES AND DUTIES
6.1 CHANGES TO SERVICE LEVELS. At any time after the Effective Date
hereof, in the event that the parties decide that such MASLs are not reasonable
or achievable during the Term of the Agreement, TSG's Client Service
Representative and Customer's Contract Manager may, upon the parties' mutual
written agreement, make
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changes to the Service Levels. Any such change in a Service Level shall be
set forth in a written amendment or supplement to this Agreement.
6.2 YEAR 2000 WARRANTY. TSG warrants that, as of the Effective Date
of this Agreement, SPIRIT accepts hotel bookings for the year 2000 A.D. and
beyond. In addition, TSG warrants that, by December 31, 1998, SPIRIT will
correctly process date data for the year 2000 A.D. and beyond. This warranty
does not include a warranty of data or interoperability with other software or
hardware. The exclusive liability of TSG and the exclusive remedy of Customer
in the event of a breach of this warranty shall be repair under the maintenance
provisions set forth on SCHEDULE 6.9 herein.
6.3 TSG EQUIPMENT.
6.3.1 Commencing on the Effective Date, TSG will use (a) TSG's
equipment, either owned or leased, for purposes of performing the services and
functions to be performed by TSG pursuant to this Agreement and (b) any other
equipment that TSG may acquire from time to time for use in providing the TSG
Services (the "TSG EQUIPMENT"). The parties acknowledge and agree that the TSG
Equipment will remain the property of TSG and that TSG may from time to time
relocate the TSG Equipment to another TSG facility, at no additional cost to
Customer, for the sole purpose of performing the TSG Services and with no
adverse impact to the Service Levels.
6.3.2 During the Term, TSG will pay all on-going costs and
expenses relating to the TSG Equipment, including, without limitation, the
insurance, maintenance and taxes. TSG will be responsible for its agreements
with vendors or other third parties with respect to the operation or maintenance
of any TSG Equipment. Customer shall be responsible for all other equipment
used to support its own internal operations.
6.4 RETENTION AND SAFEGUARDING OF CUSTOMER DATA. TSG will store and
safeguard magnetic tapes and other magnetic or optical storage media containing
Customer Data in the possession or custody of TSG. "CUSTOMER DATA" shall be
defined as data, whether provided or produced before, on, or after the Effective
Date, which: (1) is provided by or on behalf of Customer to TSG in order for
TSG to provide the TSG Services, including keyed input and electronic capture of
information by the TSG Services; (2) is provided by or on behalf of TSG to
Customer by means of the TSG Services, including reports and all other output of
the TSG Software; or (3) is produced by means of TSG Services as an intermediate
step in using or producing any of the Customer Data, including databases and
files containing Customer Data. TSG will maintain the same safeguards it uses,
but not less than reasonable means, to protect similar clients against the
accidental or unauthorized deletion, destruction or alteration of Customer Data
in the possession or custody of TSG. If Customer reasonably requests additional
safeguards, TSG will provide such additional safeguards at no additional cost.
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6.5 REMOTE DATABASE ACCESS SERVICES. During the Term, TSG will
assist Customer in the selection of the data communications lines for the Remote
Database Access Services, will provide capacity planning to notify Customer when
upgrades to such lines are required, and will provide coverage of the lines 7
days a week, 24 hours a day, to report any malfunctions of the lines to the
telecommunications network provider. TSG will also manage the Remote Database
Access Services provided by the telecommunications network provider, in
accordance with the terms and conditions of the contract between TSG and the
telecommunications network provider, and for the purpose of performing the TSG
Services. TSG will retain responsibility for any charges associated with its
own router and associated hardware costs.
6.6 TSG CLIENT SERVICE REPRESENTATIVE. TSG will provide a Client
Service Representative (the "TSG CLIENT SERVICE REPRESENTATIVE") to be the
primary contact for Customer during the Term, and who shall consult with
Customer and consider Customer's needs. The TSG Client Service Representative
will (a) have overall responsibility for managing and coordinating the delivery
of the TSG Services, (b) serve as the primary point of contact for Customer in
addressing issues concerning each party's obligations or requests for
modifications under this Agreement (which modifications must also be agreed to
in writing by both parties), (c) provide frequent status reports to Customer,
and (d) coordinate and consult with Customer management.
6.7 USERS GROUPS. TSG will allow Customer and the New and Existing
Hotels to participate in any SPIRIT user groups at no additional charge.
6.8 TRAINING. TSG will provide Customer the application and database
training described on SCHEDULE 6.8 at no additional charge. The training will
be provided by TSG employees with the appropriate skills and knowledge to
conduct such training.
6.9 MAINTENANCE AND OTHER SUPPORT. TSG will provide Customer the
maintenance support described on SCHEDULE 6.9 for the TSG Software. TSG will
also support transactional access to SPIRIT for all remote devices that are both
currently supported for ACTION and were planned to be supported for the HDS
application, on behalf of Customer and the Existing Hotels. Conversion of
records from any CRS other than ACTION and HDS for the Existing Hotels will be
billed as a New or Additional Service, as defined in ARTICLE 3.2.
6.10 SPIRIT FUNCTIONALITY AND ENHANCEMENTS.
6.10.1 TSG agrees to provide Customer with the SPIRIT
Functionality for SPIRIT. Customer may have any part of the SPIRIT
Functionality deactivated for New or Existing Hotels at no additional cost, upon
giving TSG fifteen (15) days prior written notice. TSG has customized and
developed the SPIRIT Functionality as of the Effective Date of this Agreement
with the enhancements set forth on SCHEDULE 6.10.1 (the "SPIRIT ENHANCEMENTS").
TSG shall provide the SPIRIT Enhancements as part
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of the Implementation of the Existing Hotels.
6.10.2 Any enhancement requested by Customer after the Effective
Date of this Agreement other than the SPIRIT Enhancements will be provided by
TSG as a New or Additional Service, as defined in ARTICLE 3.4, unless otherwise
agreed. In addition, Customer may, at Customer's option, request and fund
enhancements, or receive enhancements which are funded by other SPIRIT multihost
customers including Hyatt or TSG, but in either case Customer must pay for any
cost that may be required for Customer implementation plus the cost of training
Customer's employees to use such enhancements ("NEW FUNCTIONALITY"), at the rate
set forth in ARTICLE 7.4 for New and Additional Services.
6.10.3 TSG shall provide written notification and documentation
of changes to the SPIRIT Functionality at least thirty (30) days prior to their
implementation. TSG will provide input on the required training and hardware
upgrades, if any, and will discuss with Customer the potential impact on talk
time and on New and Existing Hotels. Customer will have the ability to test and
approve all enhancements and associated training documentation in the SPIRIT
test environment prior to implementation. Customer will also have the ability
to review enhancements in the SPIRIT test environment that have not been already
requested by Customer.
6.10.4 Customer may have any part of the SPIRIT Enhancements
deactivated for New or Existing Hotels at no additional cost, upon giving TSG
fifteen (15) days prior written notice.
ARTICLE 7
FEES AND CHARGES
7.1 MONTHLY BASE CHARGE. In consideration for the performance of the
Base Services, Customer shall pay TSG a monthly base charge for each month
during the Term, which shall be equal to the total number of Net Reservations
(as defined in ARTICLE 7.2) for such month, multiplied by the Net Reservation
Fee (also defined in ARTICLE 7.2) (the "MONTHLY BASE CHARGE").
7.2 NET RESERVATION FEE. Customer shall pay TSG a fee of US$[TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED] for each net reservation made
(the "NET RESERVATION FEE") by a New or Existing Hotel, subject to adjustment
as provided in ARTICLE 7.5. Regardless of the actual number of reservations
made, Customer shall pay TSG Net Reservation Fees for the minimum transaction
volumes set forth in ARTICLE 5.3. TSG guarantees that it will charge
Customer the most favored rate per Net Reservation (as hereinafter defined)
for any New or Existing Hotels for which TSG provides multihost services. A
"NET RESERVATION" is defined as the total number of reservation transactions
made minus the total number of cancellations of such Reservation Transactions
made (as hereinafter defined). "No shows" will not be deducted from the
calculation of Net Reservations. A "RESERVATION TRANSACTION" is a
reservation booking for a continuous stay for each room at a single property
(excluding "no shows"). In the case where a
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booking contains more than one (1) rate plan, such booking shall only be
considered as one (1) Reservation Transaction; provided, however, that
Customer shall be responsible for performing the itinerary function so as to
treat such multiple rate plans as one (1) reservation booking.
7.3 REMOTE DATABASE ACCESS SERVICES CHARGES. Customer will be
responsible for the costs associated with the procurement, installation,
operation and maintenance of the telecommunication equipment which will be used
to provide the Remote Database Access Services, and shall pay either TSG or the
telecommunications service provider directly for such Remote Database Access
Services. In addition, Customer shall pay TSG an administrative charge per
month of [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] percent ([TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED]%) of TSG's total bill amount from
the telecommunications network provider relating to the Remote Database
Access Services provided by TSG on behalf of Customer, to be invoiced monthly
by TSG in addition to the Monthly Base Charge.
7.4 NEW OR ADDITIONAL SERVICE CHARGES. Customer will pay TSG (a) the
amounts mutually agreed upon in writing by Customer and TSG for any New or
Additional Services and (b) any reasonable travel expenses of TSG incurred in
the performance of such New or Additional Services as provided in ARTICLE 7.6.
The parties hereby agree that any incremental labor for all New or Additional
Services will be charged to Customer at a rate of US$[TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] per hour, which will be adjusted by TSG
upon each anniversary of the Effective Date in accordance with an increase in
the CPI, as defined in ARTICLE 7.5 below.
7.5 ADJUSTMENTS TO CHARGES. Upon each anniversary of the Effective
Date during the Term, TSG and Customer may agree to make in writing an
adjustment to the Net Reservation Fee based on the increase in the percentage of
the current Consumer Price Index for All Urban Consumers, U.S. City Average, for
All Items (1982-84 = 100), as published in the Bureau of Labor Statistics of the
Department of Labor, as measured from the date of the last anniversary of the
Effective Date (the "CPI"). In addition, Customer will notify TSG at least
thirty (30) days in advance if it wishes to change the manner of calculating a
Reservation Transaction for New or Existing Hotels, and the parties agree to
mutually discuss such corresponding change in the pricing methodology. No such
changes pursuant to this ARTICLE 7.5 may be made without mutual written
agreement of the parties.
7.6 TRAVEL EXPENSES. For any TSG Services which are requested by
Customer to be provided at a site other than the Dallas/Ft. Worth AMR
headquarter offices or TSG's offices in Chicago, Illinois, Customer will pay TSG
all travel expenses actually incurred for such travel (including food, lodging,
local transportation and incidental expenses), and all such travel will be
reimbursable according to TSG's travel policy. Customer and TSG shall agree in
advance to the cost and provision of air transportation required for such
travel. TSG shall not bill Customer for the travel time of TSG's employees.
ARTICLE 8
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INVOICES AND PAYMENT
8.1 MONTHLY BASE CHARGE. Customer shall pay TSG the Monthly Base
Charge, each month during the Term of this Agreement, within thirty (30) days of
receipt of an invoice from TSG.
8.2 OTHER CHARGES. TSG shall invoice Customer for all other fees and
charges due under this Agreement on a monthly basis and in arrears. The Net
Reservations Fee shall be billed based on actual Net Reservations volume, and
shall be settled in the following monthly invoice, according to actual Net
Reservations made. Invoices shall be sent to Customer at 4201 Cambridge Road,
Fort Worth, Texas 76155, Attn.: TSR Controller.
8.3 PAYMENT AND OUTSTANDING CHARGES. The Monthly Base Charge and any
other sums due TSG under this Agreement will be due and payable within thirty
(30) days after receipt by Customer of an invoice from TSG. The Monthly Base
Charge shall be prorated for any partial month. Customer shall also pay to TSG,
within thirty (30) days of receipt of an invoice from TSG, all outstanding
charges owed by Customer as of the Effective Date of this Agreement and invoiced
by TSG.
ARTICLE 9
TAXES
9.1 RESPONSIBILITY FOR CERTAIN TAXES. Customer 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 Customer
pursuant to this Agreement; provided, however, that TSG shall be responsible for
(and shall indemnify Customer 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.
9.2 PROPERTY TAXES. Subject to the terms of other leases or
agreements, each of TSG and Customer 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.
9.3 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; provided, however, that TSG
shall not 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 Customer agrees to reimburse it for that material disadvantage or
those material costs. In the case of either party, such cooperation shall
include maintaining records as reasonably necessary for tax purposes; making
such records available to the other party (or permitting the other party to copy
at its own expense, such records); and making information in its possession and
employees with technical expertise available as reasonably necessary
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in connection with the preparation of any tax returns or any audit or tax
contest or refund claim.
9.4 DEFINITION OF TAXES. For purposes of this Agreement, "TAXES" means
taxes of any kind, levies or other like assessments, customs, duties, imposts,
charges or fees, (other than taxes based upon net income, capital, net worth, or
franchise or similar tax), imposed on or payable to any federal, state, county,
local or foreign government or subdivision or agency thereof, and in each
instance such term shall include any interest, penalties or additions to tax
attributable to any such Taxes or requirement to report information with respect
thereto and any damages, costs, expenses, fees or other liability arising from
such tax or reporting requirement.
ARTICLE 10
PROPRIETARY RIGHTS
10.1 TSG PROPRIETARY INFORMATION. TSG retains all right, title and
interest in and to any and all TSG Software (except for that software owned by a
third party licensor) and documentation, software development tools, know-how,
methodologies, processes, technologies or algorithms used in providing the TSG
Services that are trade secrets or proprietary information of TSG or its
affiliates or otherwise owned or licensed by TSG or its affiliates, and Customer
shall have no rights or interest in the TSG Software other than the rights
granted to Customer under this Agreement. TSG shall have and retain all right,
title and interest in and to any new software, modifications, enhancements or
derivative works created by TSG under this Agreement.
10.2 CUSTOMER DATA. The Customer Data is the exclusive property of
Customer. TSG is authorized to have legal and physical access to and make use
of Customer Data for the sole purpose of performing the TSG Services. TSG shall
retain Customer's reservation history online in the booking archives for a
period of twelve (12) months after checkout, after which time such records will
be available within five (5) business days of receipt of a request from
Customer. Upon expiration of this Agreement, termination for Material Default
of TSG, or termination for convenience by TSG, the Customer Data shall be either
erased from the data files maintained by TSG, with Customer's prior written
consent, or, at TSG's expense, returned to Customer in TSG's then existing
machine-readable format and media. Upon termination of this Agreement for
Material Default of Customer or termination for convenience by Customer, such
return of the data shall be at Customer's expense.
ARTICLE 11
CONFIDENTIAL INFORMATION
11.1 CONFIDENTIAL INFORMATION. As of the Effective Date of this
Agreement and during the Term of this Agreement and for a period of three (3)
years thereafter, except
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as otherwise provided in this Agreement, TSG and Customer each agree that all
information communicated to it by the other, including, without limitation,
(i) any software delivered or developed hereunder, (ii) the terms of this
Agreement (except for disclosure of the terms of this Agreement to (a) Hyatt,
which TSG will ensure is maintained confidential by Hyatt, or (b) any
prospective purchaser of all or substantially all of the stock or assets of
Customer that has agreed in writing to maintain the confidentiality of such
terms), (iii) any information which is marked or identified as confidential,
and (iv) oral or visual information identified as confidential at the time of
disclosure, which is accurately summarized in writing and provided to the
other party in such written form promptly after such oral or visual
disclosure (collectively, the "CONFIDENTIAL INFORMATION"), will be received
in strict confidence, will be used only for purposes of this Agreement, and
will not be disclosed by the recipient party, its agents, subcontractors or
employees without the prior written consent of the other party. TSG and
Customer each agree to use the same means it uses to protect its own
confidential information, but in any event not less than reasonable means, to
prevent the disclosure of the Confidential Information to outside parties.
However, neither TSG nor Customer shall be prevented from disclosing
information which belongs to such party or is (a) already known by the
recipient party without an obligation of confidentiality; (b) publicly known
or becomes publicly known through no unauthorized act of the recipient party;
(c) rightfully received from a third party without an obligation of
confidentiality; (d) independently developed without use of the other party's
confidential information; (e) disclosed without similar restrictions to a
third party by the party owning the confidential information; (f) approved by
the other party for disclosure; or (g) required to be disclosed pursuant to a
requirement of a governmental agency or law, if the disclosing party provides
the other party with notice of this requirement prior to disclosure.
11.2 RESIDUAL KNOWLEDGE. TSG shall be free to use the ideas, concepts
or know-how developed by TSG during the performance of the TSG Services and
incorporated in the Hyatt Software that are in nontangible form and may be
retained by TSG's employees. TSG may acquire, license, market, distribute,
develop for itself or others, or have others develop for it, similar technology
performing the same or similar functions as the Hyatt Software, the TSG Software
or the TSG Services contemplated by this Agreement.
ARTICLE 12
REPRESENTATIONS AND WARRANTIES
12.1 MUTUAL WARRANTIES.
12.1.1 Each party represents and warrants to the other that:
(i) it is a corporation duly organized and validly existing and in good
standing under the laws of its jurisdiction of formation and/or place of
principal business; (ii) the performance of its obligations hereunder has
been duly authorized by all necessary corporate action; (iii) this Agreement
is a legal, valid and binding obligation enforceable against it in accordance
with its terms subject, as to enforcement, to bankruptcy, insolvency,
reorganization, liquidation
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and other laws and equitable principles relating to or affecting the
enforcement of creditors' rights generally as they may be applied in the
event of the bankruptcy, insolvency, moratorium, reorganization or
liquidation of, or the appointment of a receiver with respect to the property
of, or a similar event applicable to, such party; (iv) neither the execution
and delivery of this Agreement nor the performance of any of its obligations
hereunder, nor the consummation of any of the transactions contemplated
hereby, will violate any agreement to which it is a party or any provision of
its Certificate of Incorporation, Articles of Incorporation, By-Laws or other
document of corporate governance, nor any applicable law, regulation, rule,
judgment, order or decree; and (v) it has duly obtained or made all consents,
approvals or authorizations of, or registrations, declarations or filings
with, any governmental authority which are required as a condition to the
valid execution, delivery and performance of this Agreement on its part.
12.1.2 TSG represents and warrants to Customer that TSG (i) owns
all right, title and interest in and to, or has the right to license, CRSVIEW
and QIK-ACCESS and accompanying documentation, software development tools,
know-how, methodologies, processes, technologies or algorithms used in providing
the TSG Services that are trade secrets or proprietary information of TSG, and
(ii) has the right to grant to Customer the license set forth in ARTICLE 4.3.2
of this Agreement. TSG also represents and warrants that it (i) has the right
to use SPIRIT on behalf of and to provide the TSG Services to Customer in
accordance with the terms and conditions of the Hyatt Agreement, and (ii) has
the right to grant to Customer the right to use and access SPIRIT as set forth
in ARTICLE 4.3.1 of this Agreement.
12.2 NO OTHER REPRESENTATIONS OR WARRANTIES. THE WARRANTIES SPECIFIED
IN THIS AGREEMENT ARE THE ONLY WARRANTIES MADE BY TSG WITH RESPECT TO THE TSG
SOFTWARE AND SERVICES. EXCEPT AS OTHERWISE SPECIFIED IN THIS AGREEMENT, THE TSG
SOFTWARE AND SERVICES ARE PROVIDED "AS IS" AND "WITH ALL FAULTS." THERE ARE NO
OTHER WARRANTIES, EXPRESS OR IMPLIED, BY OPERATION OF LAW OR OTHERWISE,
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR INTENDED USE OR ANY IMPLIED WARRANTIES ARISING OUT OF COURSE OF
PERFORMANCE, COURSE OF DEALING, OR USAGE OF TRADE. NO REPRESENTATION OR OTHER
AFFIRMATION OF FACT WHICH IS NOT CONTAINED IN THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, STATEMENTS REGARDING CAPACITY, SUITABILITY FOR USE, OR PERFORMANCE
OF THE HARDWARE, TSG SOFTWARE OR DATA, OR TSG SERVICES, SHALL BE DEEMED TO BE A
WARRANTY FOR ANY PURPOSE OR GIVE RISE TO ANY LIABILITY OF TSG.
WITH RESPECT TO THE HYATT SOFTWARE PROVIDED HEREUNDER, CUSTOMER
ACKNOWLEDGES AND AGREES THAT HYATT MAKES NO REPRESENTATIONS, WARRANTIES OR
GUARANTEES WHATSOEVER WITH RESPECT TO THE HYATT SOFTWARE, ITS FITNESS, CONDITION
OR THE RESULTS TO BE OBTAINED FROM ITS USE. HYATT SPECIFICALLY DISCLAIMS ANY
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT OF THE HYATT SOFTWARE.
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ARTICLE 13
LIMITATIONS OF LIABILITY
13.1 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 13 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.
13.2 GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. EXCEPT AS OTHERWISE
SET FORTH IN THIS AGREEMENT, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE
OTHER FOR ANY LOSS, LIABILITY, DAMAGE OR EXPENSE ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR THE PERFORMANCE OR NONPERFORMANCE OF THE
TSG SOFTWARE OR SERVICES, OR THE PERFORMANCE OR NONPERFORMANCE OF EITHER
PARTY'S OBLIGATIONS UNDER THIS AGREEMENT, UNLESS SUCH LOSS, LIABILITY, DAMAGE
OR EXPENSE SHALL BE DUE TO THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
PARTY.
13.3 CONSEQUENTIAL DAMAGES. "CONSEQUENTIAL DAMAGES" shall be defined
as damages consisting of (i) lost profits or lost income or failure to realize
savings, (ii) loss of goodwill and loss of business, or (iii) consequential,
indirect, exemplary, special or incidental damages. IN NO EVENT WILL EITHER
PARTY BE LIABLE FOR ANY CONSEQUENTIAL DAMAGES RESULTING FROM OR ARISING OUT OF
OR IN CONNECTION WITH THE PERFORMANCE OR NONPERFORMANCE OF THE TSG SOFTWARE OR
SERVICES, OR THE PERFORMANCE OR NONPERFORMANCE OF EITHER PARTY'S OBLIGATIONS
UNDER THIS AGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES.
IN NO EVENT SHALL HYATT BE LIABLE FOR ANY DAMAGES OF ANY KIND UNDER
THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, DIRECT, PUNITIVE OR
CONSEQUENTIAL DAMAGES THAT MAY ARISE AT ANY TIME WITH RESPECT TO THE HYATT
SOFTWARE, EVEN IF HYATT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
CUSTOMER SPECIFICALLY AGREES THAT HYATT SHALL NOT BE LIABLE FOR LOST PROFITS,
LOST BUSINESS REVENUE, FAILURE TO REALIZE SAVINGS, LOST DATA OR OTHER
COMMERCIAL OR ECONOMIC LOSS OF ANY KIND.
13.4 LIMITATION ON DAMAGES. Neither Customer nor TSG shall have any
liability under or relating in any manner to this Agreement for any General
Damages or for Indemnifiable Losses (each as hereinafter defined) in excess of
(i) in the aggregate for any particular claim, the amount paid to TSG by
Customer for any fees or charges in the [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] ([TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]) months
immediately preceding the date the claim arose, and (ii) in the aggregate
during the Term, [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] Dollars
(US$[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]).
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13.4.1 "GENERAL DAMAGES" shall be defined as actual, out of
pocket 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),
and other direct damages of any kind or nature actually suffered or incurred by
a person, including bodily or personal injury or death or damage to real or
tangible personal property. For the avoidance of doubt, General Damages shall
exclude punitive damages and Consequential Damages.
13.4.2 "INDEMNIFIABLE LOSSES" shall be defined as General
Damages awarded under the provisions of ARTICLE 14. Indemnifiable Losses shall
exclude punitive damages and Consequential Damages awarded against either the
Customer Indemnitee or TSG Indemnitee (each as defined in ARTICLE 14.1, and
hereafter referred to generally as the "INDEMNITEE"), in favor of a third party
making a claim against a party to this Agreement (a "THIRD PARTY CLAIM").
13.4.3 TSG disclaims all liability resulting from or arising out
of any act or omission of the Remote Database Access Services network provider.
13.5 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, only within two years after the breach or other
event constituting the basis for that claim occurred or was discovered.
Nevertheless, the two-year limit on the time for asserting or making any claim
shall not apply to a claim (including an indemnification claim under ARTICLE 14)
based on a Third Party Claim.
13.6 WARRANTIES. Each party's warranties in this Agreement are made
solely to and for the benefit of the other party. No person other than a party
may assert or make a claim based on the other party's warranties under this
Agreement.
13.7 EQUITABLE RELIEF. To the extent that any monetary or other
relief available under this Agreement through arbitration in accordance with the
dispute resolution procedures set forth in ARTICLE 16 is not an adequate remedy
for any breach of this Agreement, or upon any breach or impending breach of
ARTICLE 11.1, 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 or which
are available at law or in equity.
13.8 EXCLUSIVE REMEDIES. The remedies described in this Agreement are
the sole and 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.
13.9 NONCUMULATIVE REMEDIES. If more than one remedy for 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
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upon such breach or event, excluding equitable relief which may be sought as
described in ARTICLE 13.7 above.
ARTICLE 14
INDEMNIFICATION
14.1 REPRESENTATIONS AND WARRANTIES.
14.1.1 Customer shall indemnify, defend and hold harmless TSG,
its directors, officers, employees, and agents and the heirs, executors,
successors, and permitted assigns of any of those persons (collectively, the
"TSG INDEMNITEES") from and against all General Damages actually suffered or
incurred by a TSG Indemnitee resulting from, arising out of, or relating to, any
breach of any representation or warranty of Customer set forth in this
Agreement.
14.1.2 TSG shall indemnify, defend and hold harmless Customer
and its directors, officers, employees, and agents and the heirs, executors,
successors, and permitted assigns of any of those persons (collectively, the
"CUSTOMER INDEMNITEES") from and against all General Damages actually suffered
or incurred by a Customer Indemnitee resulting from, arising out of, or relating
to, any breach of any representation or warranty of TSG set forth in this
Agreement.
14.2 EXISTING OR NEW HOTELS.
14.2.1 Customer shall indemnify, defend and hold harmless the
TSG Indemnitees from and against all General Damages actually suffered or
incurred by a person, and resulting from, arising out of, or relating to any
claim made by any New or Existing Hotel regarding Customer's performance or
nonperformance of its obligations under this Agreement or its obligations under
any agreement between Customer and the New or Existing Hotels.
Customer shall also indemnify, defend and hold harmless Hyatt,
its respective parent and affiliate corporations, and its respective directors,
officers employees, servants and agents from and against all General Damages
actually suffered or incurred by a person, and resulting from, arising out of,
or relating to any claim made by any New or Existing Hotel regarding any Hyatt
Software provided under this Agreement or the use of such Hyatt Software by TSG
on behalf of Customer.
14.2.2 TSG shall indemnify, defend and hold harmless the
Customer Indemnitees from and against all General Damages actually suffered or
incurred by a person, and resulting from, arising out of, or relating to any
claim made by any New or Existing Hotel regarding TSG's gross negligence or
willful misconduct in the performance or nonperformance of its obligations under
this Agreement.
14.3 EMPLOYMENT RELATED MATTERS.
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14.3.1 Customer will indemnify, defend and hold the TSG
Indemnitees harmless from and against any General Damages actually suffered or
incurred by a person, and resulting from, arising out of, or relating to any
hiring, termination, transition or other personnel action taken by Customer with
respect to any Employee or Transitioned Employee, whether such actions occurred
or claims arose prior to or after the Transition Date, and to the extent such
actions do not result from or relate to a default by TSG of the terms of this
Agreement.
14.3.2 TSG will indemnify, defend and hold harmless the Customer
Indemnitees from and against any General Damages actually suffered or incurred
by a person, and resulting from, arising out of, or relating to any hiring,
termination, transition or other personnel action taken by TSG with respect to
any Employee or Transitioned Employee, to the extent such actions occurred or
claims arose prior to or after the Transition Date and do not result from or
relate to a default by Customer of the terms of this Agreement.
14.4 INFRINGEMENT.
14.4.1 TSG shall indemnify, defend and hold harmless the
Customer Indemnitees from and against all General Damages actually suffered or
incurred by a Customer Indemnitee, to the extent that such action is based on a
claim that any element of the TSG Software or the TSG Services constitutes a
direct infringement of any duly issued United States patent or a direct
infringement of any copyright established in the United States ("INFRINGEMENT").
TSG shall pay all damages and costs finally awarded against a Customer
Indemnitee which are attributable to such Infringement, subject to Customer's
compliance with the procedures set forth in ARTICLE 14.6 below.
14.4.2 Should any element of the TSG Software or Services
become, or in TSG's opinion be likely to become the subject of a claim of
Infringement, then TSG will, at its option and expense, use all commercially
reasonable efforts to, in the following order: (i) procure for Customer the
right to use such infringing element of the TSG Software or Services free of any
liability for Infringement; or (ii) replace or modify the infringing element of
the TSG Software or Services with a non-infringing substitute otherwise
complying with all the functionality for the replaced services. TSG shall not
be obligated to defend, or be liable for costs and damages, if the Infringement
arises out of (x) Customer's equipment, facilities or services, (y) the Hyatt
Software or any third party services or software, or (z) a breach of this
Agreement by Customer.
14.4.3 The foregoing sets forth TSG's sole and exclusive
liability, and Customer's sole and exclusive remedies, with respect to any
claims for Infringement.
14.5 TELECOMMUNICATIONS NETWORK. Customer will indemnify, defend and
hold harmless the TSG Indemnitees from and against all General Damages actually
suffered or incurred by a person, and resulting from, arising out of, or
relating to any claim made regarding (a) any libel, slander, invasion of
privacy, infringement of
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copyright, or invasion, theft, destruction or alteration of the
telecommunications network caused by Customer or New and Existing Hotels
during the provision of the TSG Services, or of records or data of Customer
or the New and Existing Hotels which reside on SPIRIT, (b) the use of the
telecommunications network by Customer or New and Existing Hotels during the
provision of the TSG Services, or (c) the abuse or fraudulent use of the
telecommunications network by Customer or the New and Existing Hotels during
the provision of the TSG Services.
14.6 INDEMNIFICATION PROCEDURES.
14.6.1 The indemnification obligations set forth in this Article
shall not apply unless the party claiming indemnification: (i) notifies the
other promptly of any matters in respect of which the indemnity may apply and of
which the notifying party has knowledge, in order to allow the indemnitor the
opportunity to investigate and defend the matter; provided, however, that the
failure to so notify shall only relieve the indemnitor of its obligations under
this ARTICLE 14 if and to the extent that the indemnitor is prejudiced thereby;
and (ii) gives the other party full opportunity to control the response thereto
and the defense thereof; provided further, however, that the Indemnitee will
have the right to participate in any legal proceeding and to be represented by
legal counsel of its choosing, all at such Indemnitee's cost and expense.
14.6.2 The indemnitor shall not be obligated for any settlement
or compromise made without its consent. The Indemnitee agrees to cooperate in
good faith with the indemnitor at the request and expense of the indemnitor.
ARTICLE 15
FORCE MAJEURE; DISASTER RECOVERY; SERVICE INTERRUPTION
15.1 FORCE MAJEURE. Except for the obligations to make payments
hereunder for amounts actually due and owing as of such date, each party shall
be relieved of the obligations hereunder to the extent that performance is
delayed or prevented by any cause beyond its reasonable control, including,
without limitation, acts of God, public enemies, war, civil disorder,
telecommunications failures, fire, flood, explosion, labor disputes or strikes
or any acts or orders of any governmental authority, failures or fluctuations in
electrical power, heat, light, air conditioning or telecommunications equipment.
15.2 DISASTER RECOVERY. TSG will develop an interim disaster recovery
plan ("DRP") for Customer for the Implementation. TSG will also provide, by
October 31, 1998, a comprehensive DRP which will consist of TSG's usual and
customary disaster recovery procedures implemented for similar customers. The
DRP shall be maintained for Customer and will be designed to minimize disruption
to Customer's data processing operations caused by natural or man-made
disasters. Customer will have the right to review the DRP and recommend changes
before it goes into effect. TSG will provide Customer 48 hours' written notice
of any tests of the DRP procedures it
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plans to perform. For any disaster recovery services requested by Customer
which are in addition to the agreed upon DRP, Customer will pay TSG for such
additional services as a New or Additional Service.
15.3 SERVICE INTERRUPTION. Either party shall immediately notify the
other of any outage, interruption, failure, cable out, degradation or other loss
of any Remote Database Access Services ("SERVICE INTERRUPTION"). Either TSG or
Customer (depending on which is a party to the contract with the third party
vendor) will promptly notify the applicable third party vendor of such Service
Interruption. Resolution of the Service Interruption shall be handled in
accordance with the applicable tariff, regulation or third party vendor
agreement. Customer's exclusive remedies and TSG's exclusive liabilities for
any service problems relating to the Remote Database Access Services provided by
the telecommunications network provider will be the remedies set forth in the
applicable tariff, regulations or third party vendor agreement.
ARTICLE 16
DISPUTE RESOLUTION
16.1 PERFORMANCE REVIEW. The TSG Client Service Representative and
the Customer Contract Manager will meet as often as shall reasonably be
requested by either party to review the performance of either party's
obligations under this Agreement. The TSG Client Service Representative and the
Customer Contract Manager shall each have appropriate authority to make
decisions on behalf of its entity, and to resolve any dispute, controversy or
claim. Such representatives will discuss the dispute, controversy or claim and
negotiate a resolution in good faith, without the necessity of any formal
proceeding relating thereto. Any changes made as a result of such resolutions
shall be placed in writing and signed by the appropriate management
representative of each party.
16.2 DISPUTE RESOLUTION. All disputes between the parties not
resolved by the means described above shall first be resolved by arbitration
pursuant to the terms below.
16.2.1 If no agreement has been reached after such good faith
discussions, then either party, upon thirty (30) days prior written notice to
the other party identifying with particularity those areas in dispute, may
submit such dispute to arbitration. Any such arbitration shall be held at
Dallas, Texas, under the Rules of Commercial Arbitration of the American
Arbitration Association, as amended or supplemented from time to time. The
arbitration panel shall consist of three arbitrators. The parties shall each
nominate an arbitrator within thirty (30) days of the written notice submitting
the dispute to arbitration and the nominated arbitrators shall agree on the
third arbitrator within thirty (30) days after the both of them have been
nominated.
16.2.2 The parties agree that the award of the arbitration shall
be the sole and exclusive remedy between the parties regarding any claims,
counterclaims, issues or accounting presented to the arbitrators; that the award
must be consistent with the
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terms and conditions of this Agreement; that it shall be made and shall be
payable in accordance with the award in U.S. Dollars free of any tax,
deduction or offset; and that any costs, fees or taxes incident to enforcing
the award shall, to the maximum extent permitted by law, be charged against
the party resisting such enforcement.
16.3 CONTINUED PERFORMANCE. Unless (a) an action under this ARTICLE
16 involves a claim by TSG for nonpayment by Customer, or (b) this Agreement has
been terminated in accordance with other provisions of this Agreement, TSG shall
continue to perform its obligations under this Agreement during the arbitration
proceedings and Customer shall continue to make payments to TSG in accordance
with this Agreement.
ARTICLE 17
TERMINATION
17.1 TERMINATION FOR BREACH.
17.1.1 If either party materially defaults in the performance
of any of its obligations under this Agreement (excluding a default by Customer
in its obligation to pay TSG, which is explained in ARTICLE 17.1.2 below), which
default shall not be substantially cured within ninety (90) days after written
notice is given to the defaulting party specifying the default, or, with respect
to any default which cannot reasonably be cured within ninety (90) days, if the
defaulting party fails to proceed within thirty (30) days to commence curing
said default and thereafter to proceed with all due diligence to substantially
cure that default, then the party not in default, by giving written notice to
the defaulting party, may terminate this Agreement as of a date specified in the
notice of termination. In such event, Customer shall pay TSG all amounts due
under this Agreement for the TSG Services actually provided. 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. A "MATERIAL DEFAULT" in the case of
TSG shall be defined as a breach of this Agreement which constitutes a
continuous failure by TSG to perform one or more of the TSG Services, which
failure prevents Customer from providing the Customer products or services to
the New or Existing Hotels.
17.1.2 Upon Customer's breach of its obligation to pay TSG in
accordance with this Agreement, TSG may terminate this Agreement upon ninety
(90) days prior written notice to Customer of TSG's intent to terminate and
Customer's failure to cure its failure to pay within such ninety (90) days.
Customer shall still be responsible for paying TSG any outstanding
Implementation or startup costs which are not fully recognized by TSG as of such
date of termination (collectively, the "TERMINATION LIQUIDATED DAMAGES"). TSG
shall provide Customer with reasonably documented and detailed invoices
regarding such costs, including hours worked and services provided.
17.1.3 If either party (i) is adjudicated bankrupt or insolvent
by a court of competent jurisdiction, (ii) substantially ceases to do business
as currently conducted, (iii) fails to pay its debts generally as they become
due, or (iv) takes steps to declare
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bankruptcy, wind up, dissolve or liquidate (in each case, other than for the
purposes of an amalgamation, restructuring, or reconstruction pursuant to
which the surviving entity becomes bound by or assumes the obligations under
this Agreement), or a receiver, trustee or similar officer is appointed over
(or a lien holder takes possession of) all or substantially all of such
party's property or assets, or anything similar to any of the foregoing
occurs in relation to such party under the laws of any jurisdiction, the
non-defaulting party may terminate this Agreement on notice to the defaulting
party. In the case of (ii) above, Customer shall pay TSG all amounts due
under this Agreement for the TSG Services actually provided and the
Termination Liquidated Damages.
17.2 TERMINATION FOR CONVENIENCE.
17.2.1 TERMINATION BY CUSTOMER. At any time upon or after
January 1, 2003, Customer may terminate this Agreement; provided, that
Customer has given TSG at least six (6) months written notice prior to the
proposed termination date. In the event of such termination, Customer shall
pay TSG all amounts due under this Agreement for the TSG Services actually
provided and the Termination Liquidated Damages. The parties agree that if
Customer exercises its right to terminate pursuant to this ARTICLE 17.2.1,
the losses, expenses and damages suffered by TSG would be uncertain and
difficult to calculate. Therefore, the parties agree that the Termination
Liquidated Damages are not a penalty, and are a reasonable estimate by both
parties of such losses, expenses and damages. Customer shall pay the
Termination Liquidated Damages within thirty (30) days of receipt of an
invoice from TSG. TSG shall provide Customer with reasonably documented and
detailed invoices regarding such Termination Liquidated Damages, including
hours worked and services provided.
17.2.2 TERMINATION BY TSG. At any time upon or after January 1,
2003, TSG may terminate this Agreement; provided, that TSG has given Customer at
least six (6) months written notice prior to the proposed termination date. In
the event of such termination, Customer shall pay TSG all amounts due for the
TSG Services actually provided under this Agreement up to the date of
termination.
17.3 EVENTS UPON TERMINATION.
17.3.1 If this Agreement is terminated by TSG for convenience or is
terminated by Customer for a Material Default by TSG, TSG will grant Customer,
for the remainder of the Term, effective as of such applicable termination date,
and at no additional cost, a nontransferable, nonexclusive right to use and
access the SPIRIT source code and the SPIRIT database, and to use the TSG
Software to process the Customer Data only, subject to Customer and TSG entering
into a license agreement, in form and substance mutually acceptable to TSG and
Customer, containing such terms and conditions as may be appropriate, including
terms and conditions protecting the confidentiality of the software. In the
event that Customer wishes to have a perpetual source code license to SPIRIT
beyond the Term, Customer shall pay TSG the sum of US$[TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] for such license upon expiration of the
Term, subject to Customer and TSG entering into a license agreement, in form
and substance mutually acceptable to TSG and Customer,
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containing such terms and conditions as may be appropriate, including terms and
conditions protecting the confidentiality of the software. In the event of (i)
TSG's termination for convenience as provided in ARTICLE 17.2.2, (ii) Customer's
termination for a Material Default of TSG, or (iii) expiration or nonrenewal of
this Agreement, and if Customer either has assigned or will assign the Agreement
to an entity which, in TSG's reasonable opinion, is a competitor of TSG in the
hospitality, transportation and/or travel technology industries, TSG shall have
the discretion to decide whether or not to provide the source code to such
assignee or proposed assignee.
17.3.2 If this Agreement is terminated by Customer for
convenience, is terminated by TSG for a Material Default by Customer or breach
of payment obligations by Customer, or expires, Customer's right to use and
access SPIRIT and the SPIRIT database shall cease, effective as of such
applicable termination date or the Expiration Date.
ARTICLE 18
TERMINATION ASSISTANCE SERVICES; SURVIVAL
18.1 TERMINATION ASSISTANCE SERVICES. Upon expiration or termination
of this Agreement for any reason except termination for Material Default by
Customer or breach of payment obligations by Customer, TSG will provide to
Customer such termination assistance services, in addition to a winddown of the
TSG Services, as may be reasonably requested by Customer to enable Customer to
replace the TSG Services (collectively, the "TERMINATION ASSISTANCE SERVICES").
Except in the event of termination by TSG for convenience, the Termination
Assistance Services shall be provided by TSG at an additional charge, to be
agreed in advance by the parties and set forth in writing. Such Termination
Assistance Services may include, without limitation, the following:
18.1.1 Developing a plan for the orderly transition of Customer
data processing and Remote Database Access Services from TSG to Customer.
18.1.2 Except in the case of expiration of the Agreement,
providing reasonable training to Customer's personnel in the performance of the
TSG Services then being performed by TSG.
18.1.3 Even in the case of termination for Material Default by
Customer or breach by Customer of its payment obligations, furnishing Customer
with duplicates of magnetic tapes or print-outs of Customer's data base or
providing Customer with the Customer Data in a form deemed appropriate by TSG.
18.2 TERMINATION ASSISTANCE PERIOD. TSG shall not be required to
perform the Termination Assistance Services for a period in excess of ninety
(90) days from and after the termination date or the Expiration Date.
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18.3 SURVIVAL. The terms set forth in ARTICLE 4 of this Agreement
regarding use of software shall survive any termination or expiration of this
Agreement and shall apply to any license granted to Customer hereunder as of
such date of termination.
ARTICLE 19
MISCELLANEOUS
19.1 COMPLIANCE WITH APPLICABLE LAW. Each party will comply with all
applicable laws, rules, regulations and ordinances governing its business,
facilities and assets. On the Effective Date, each party, at its own expense,
will have obtained all necessary approvals from governmental, regulatory or
other authorities with jurisdiction over its business, facilities and assets to
enter into and perform its obligations under this Agreement.
19.2 IMPORT, EXPORT, EXCHANGE CONTROLS.
19.2.1 Customer will be responsible for obtaining any necessary
government approvals, consents, licenses and/or permits to enable Customer to
(a) export any products or technical data required for TSG's performance under
this Agreement from the United States or any other country of origin, (b) import
such products and technical data into any other country, and (c) pay TSG all
amounts in U.S. Dollars as required by this Agreement. Upon request, TSG will
promptly provide Customer with any end-user certificates, affidavits regarding
re-export or other certificates and documents as are reasonably available to TSG
and required from TSG for Customer to obtain any such approvals, consents,
licenses and/or permits. TSG shall not be required to perform any portion of
the TSG Services which is in contravention of the U.S. export laws. Each party
shall bear all costs, fees and expenses associated with obtaining such
approvals, consents, certificates, affidavits and other items for which it is
responsible under this Agreement, and upon request will provide to the other
evidence that any such items have been obtained and all fees have been paid.
19.2.2 Notwithstanding anything in this Agreement to the
contrary, Customer shall not directly or indirectly export (or re-export) any
TSG Software, the TSG Services, and any other technical assistance provided by
TSG (collectively, the "TECHNICAL DATA"), or permit transshipment of same (a) to
any country or destination for which the United States government or a United
States government agency requires an export license or other approval for export
without first having obtained such license or other approval, or (b) if
otherwise contrary to United States law. This obligation shall survive the
expiration or termination of this Agreement.
19.3 BINDING NATURE AND ASSIGNMENT. This Agreement shall be binding
on Customer and TSG and their respective successors and assigns. This Agreement
may not be assigned by either party without the prior written consent of the
other party, which consent shall not be unreasonably withheld. Customer may not
merge with or into another entity, except for another affiliate of AMR
Corporation, without the prior
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written consent of TSG, which consent shall not be unreasonably withheld.
TSG shall have the right to subcontract any of its obligations under this
Agreement to a third party without the consent of Customer; provided,
however, that if the data center operations are subcontracted by TSG to a
subcontractor other than CSC or TSG's SABRE Technology Solutions division,
TSG may do so, only with Customer's prior written consent, which consent
shall not be unreasonably withheld. TSG shall pay all costs incurred in any
such change in subcontractors.
19.4 NOTICES. Wherever under this Agreement one party is required or
permitted to give written notice to the other, such notice shall be deemed given
the third day after its mailing by one party, postage prepaid, to the other
party addressed as follows:
In the case of TSG:
President
The SABRE Group, Inc.
MD 4462
Box 619616
DFW Airport, TX 75261-9616
Fax number: (817) 967-9763
In case of Customer:
President
TeleService Resources, Inc.
4201 Cambridge Road
Fort Worth, TX 76155
Fax number: (817) 355-8599
Any notice that shall be mailed pursuant to the foregoing shall also be
delivered by hand or transmitted by fax and shall be effective when first
received by the addressee. Either party may from time to time specify as its
address or fax number for purposes of this Agreement any other address or fax
number upon giving ten (10) days prior written notice thereof to the other
party.
19.5 COUNTERPARTS. This Agreement may be executed in several
counterparts, all of which taken together shall constitute one single agreement
between the parties.
19.6 HEADINGS. All article and schedule titles or captions in this
Agreement are for convenience only. They shall not be deemed part of this
Agreement and in no way define, limit, extend, or describe the scope or intent
of any of its provisions.
19.7 RELATIONSHIP OF PARTIES. TSG shall be and act as an independent
contractor hereunder and no employee of either party shall be deemed to be an
employee of the other for any purpose whatsoever. Each party shall comply, at
its own expense, with the provisions of all applicable state and municipal
requirements and with all state and federal laws applicable to it as an employer
and otherwise.
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19.8 NO SOLICITATION. Except for the transition of employees as
described in ARTICLE 4.1 hereof, during the Term of this Agreement and for a
period of two (2) years thereafter, unless otherwise agreed by the parties,
neither party shall solicit for employment or otherwise retain the services of
any current or former employees of the other party, who either were involved in
providing or receiving the TSG Services, unless such former employees have not
provided or received services on behalf of such party for a period of one (1)
year.
19.9 SAVINGS CLAUSE. In the event any provision of this Agreement is
held to be invalid or unenforceable, such provision shall be deemed modified to
the extent necessary to become valid and enforceable.
19.10 APPROVALS. Where agreement, approval, acceptance, consent or
similar action by either party is required by any provision of this Agreement,
such action shall not be unreasonably delayed or withheld.
19.11 WAIVER. No delay or omission by either party hereto to exercise
any right or power hereunder shall impair such right or power or be construed to
be a waiver thereof. A waiver by either party of any of the covenants to be
performed by the other or any breach of a covenant shall not be construed to be
a waiver of any succeeding breach or of any other covenant contained in this
Agreement.
19.12 ATTORNEYS' FEES. If any legal action or other proceeding is
brought for the enforcement of an award under ARTICLE 16.2, the prevailing party
shall be entitled to recover reasonable attorneys' fees and expenses and other
costs incurred in that action or proceeding, in addition to any other relief to
which it may be entitled.
19.13 MEDIA RELEASES. All media releases, public announcements and
public disclosures by either party relating to this Agreement or its subject
matter, including, without limitation, promotional or marketing material (but
not including any announcement intended solely for internal distribution by the
disclosing party or any disclosure required by legal, accounting or regulatory
requirements beyond the reasonable control of the disclosing party) shall be
coordinated with and approved by the other party prior to the release thereof.
19.14 NO THIRD PARTY BENEFICIARY. Except as otherwise provided herein,
nothing in this Agreement may be relied upon or shall benefit any party other
than Customer or TSG. Without limiting the foregoing, nothing in this
Agreement, either expressed or implied, will confer upon any employee of
Customer or TSG any right or remedy, including, without limitation, any right to
employment or continued employment for any specified period of time.
19.15 ENTIRE AGREEMENT. This Agreement, including any Schedules
referred to herein and attached hereto, each of which is incorporated in this
Agreement for all purposes, constitutes the entire agreement between the parties
with respect to the subject matter of this Agreement and there are no
representations, understandings or
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agreements relating to this Agreement that are not fully expressed herein.
No amendment, modification, waiver or discharge of this Agreement shall be
valid unless agreed in writing and signed by an authorized representative of
the party against which such amendment, modification, waiver or discharge is
sought to be enforced.
19.16 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas, regardless of conflict of
laws rules.
19.17 WAIVER OF CLAIMS. As of the date of complete execution of this
Agreement, TSG and Customer each, for itself and on behalf of its present and
former directors, officers, representatives, employees, attorneys, advisors,
agents, affiliates and associates, and their respective predecessors, heirs,
executors, administrators, successors and assigns, and all persons acting in
concert with any such person (the "REPRESENTED PARTIES"), hereby releases and
discharges the other party and each of the Represented Parties from any and all
liabilities, obligations, claims, demands, actions, causes of action, damages,
debts, costs and expenses of every kind and nature whatsoever (except for (i)
payment obligations due with respect to any of the TSG Services, Remote Database
Access Services, New or Additional Services or any other services provided under
this Agreement, or (ii) any Indemnifiable Losses provided in ARTICLES 14.1 (to
the extent of the express representations and warranties set forth in ARTICLE
12.1), 14.2, 14.3, 14.4 OR 14.5 of this Agreement, at law or in equity, known or
unknown, suspected or unsuspected, which either party now has, owns or holds,
ever had or may have owned or held, or hereafter could or shall have, own or
hold against the other party, by reason of any fact, matter, cause, omission or
thing relating to or arising from any dispute or claim occurring or existing at
any time whatsoever (the "CLAIMS") from the beginning of time up to the date of
complete execution of this Agreement. TSG and Customer each agrees that it and
its affiliates and associates will not institute, prosecute or pursue before any
federal, state or other governmental or regulatory authority, domestic or
foreign, any claim at law or in equity, which either has been asserted or could
have been asserted in connection with such Claims.
19.18 WAIVER OF CLAIMS IN EVENT OF ASSIGNMENT. If this Agreement is
assigned to a third party by either TSG or Customer, then, as of such date of
assignment, TSG and Customer each, for itself and on behalf of its Represented
Parties, hereby releases and discharges the other party and each of the
Represented Parties from any and all Claims (except for (i) payment obligations
due with respect to any of the TSG Services, Remote Database Access Services,
New or Additional Services or any other services provided under this Agreement,
or (ii) any Indemnifiable Losses provided in ARTICLES 14.1 (to the extent of the
express representations and warranties set forth in ARTICLE 12.1), 14.2, 14.3,
14.4 OR 14.5 of this Agreement, from the beginning of time up to the date of
assignment of this Agreement. TSG and Customer each agrees that it and its
affiliates and associates will not institute, prosecute or pursue before any
federal, state or other governmental or regulatory authority, domestic or
foreign, any claim at law or in equity, which either has been asserted or could
have been asserted in connection with such Claims. For purposes of this Article
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19.18, an assignment will include any sale of stock or other transaction in
which Customer and TSG become disaffiliated.
IN WITNESS WHEREOF, TSG and Customer have each caused this Agreement to
be signed and delivered by its duly authorized officer, all as of the Effective
Date.
TELESERVICE RESOURCES, INC. THE SABRE GROUP, INC.
By: By:
--------------------------- ---------------------------------
Name: J. G. Gunn Name: Thomas M. Cook
Title: President, AMR Global Title: President, SABRE Technology
Services, Inc.
Solutions Division
Date: Date:
------------------------- -------------------------------
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<PAGE>
AGREEMENT FOR INFORMATION
TECHNOLOGY SERVICES
BETWEEN
TELESERVICE RESOURCES, INC.
AND
THE SABRE GROUP, INC.
DATED AS OF
JULY 1, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS AND SCHEDULES. . . . . . . . . . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Term of Agreement. . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Extensions of the Term.. . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 3. TSG SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1 Base Services. . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2 New or Additional Service. . . . . . . . . . . . . . . . . . . . 2
3.3 TSG Rights to Manage TSG Resources . . . . . . . . . . . . . . . 2
3.4 Service Levels.. . . . . . . . . . . . . . . . . . . . . . . . . 2
3.5 Remote Database Access Services. . . . . . . . . . . . . . . . . 3
3.6 Marketing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 4. EMPLOYEES AND IMPLEMENTATION . . . . . . . . . . . . . . . . . 3
4.1 Transitioned Employees.. . . . . . . . . . . . . . . . . . . . . 3
4.2 Salary and Benefits. . . . . . . . . . . . . . . . . . . . . . . 3
4.3 Implementation of Software.. . . . . . . . . . . . . . . . . . . 4
4.4 Restrictions on Software.. . . . . . . . . . . . . . . . . . . . 5
4.5 Implementation of SPIRIT . . . . . . . . . . . . . . . . . . . . 6
4.6 Ongoing Responsibilities.. . . . . . . . . . . . . . . . . . . . 6
ARTICLE 5. CUSTOMER RESPONSIBILITIES AND DUTIES . . . . . . . . . . . . . 6
5.1 Customer Employees.. . . . . . . . . . . . . . . . . . . . . . . 6
5.2 Customer Facilities and Related Services.. . . . . . . . . . . . 7
5.3 Minimum Transaction Volume.. . . . . . . . . . . . . . . . . . . 7
5.4 Remote Database Access Services. . . . . . . . . . . . . . . . . 8
5.5 Customer Contract Manager. . . . . . . . . . . . . . . . . . . . 8
5.6 Assistance.. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.7 Priorities.. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.8 Use of TSG Services. . . . . . . . . . . . . . . . . . . . . . . 8
5.9 Training of Customer Personnel.. . . . . . . . . . . . . . . . . 8
5.10 Provision of Source Data and Transfer of GNRs. . . . . . . . . . 9
5.11 Inspection.. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.12 Governmental Approvals.. . . . . . . . . . . . . . . . . . . . . 9
5.13 Software.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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ARTICLE 6. TSG RESPONSIBILITIES AND DUTIES. . . . . . . . . . . . . . . . 9
6.1 Changes to Service Levels. . . . . . . . . . . . . . . . . . . . 9
6.2 Year 2000 Warranty.. . . . . . . . . . . . . . . . . . . . . . . 9
6.3 TSG Equipment. . . . . . . . . . . . . . . . . . . . . . . . . .10
6.4 Retention and Safeguarding of Customer Data. . . . . . . . . . .10
6.5 Remote Database Access Services. . . . . . . . . . . . . . . . .10
6.6 TSG Client Service Representative. . . . . . . . . . . . . . . .11
6.7 Users Groups.. . . . . . . . . . . . . . . . . . . . . . . . . .11
6.8 Training.. . . . . . . . . . . . . . . . . . . . . . . . . . . .11
6.9 Maintenance and Other Support. . . . . . . . . . . . . . . . . .11
6.10 SPIRIT Functionality and Enhancements. . . . . . . . . . . . . .11
ARTICLE 7. FEES AND CHARGES . . . . . . . . . . . . . . . . . . . . . . .12
7.1 Monthly Base Charge. . . . . . . . . . . . . . . . . . . . . . .12
7.2 Net Reservation Fee. . . . . . . . . . . . . . . . . . . . . . .12
7.3 Remote Database Access Services Charges. . . . . . . . . . . . .12
7.4 New or Additional Service Charges. . . . . . . . . . . . . . . .13
7.5 Adjustments to Charges.. . . . . . . . . . . . . . . . . . . . .13
7.6 Travel Expenses. . . . . . . . . . . . . . . . . . . . . . . . .13
ARTICLE 8. INVOICES AND PAYMENT . . . . . . . . . . . . . . . . . . . . .13
8.1 Monthly Base Charge. . . . . . . . . . . . . . . . . . . . . . .13
8.2 Other Charges. . . . . . . . . . . . . . . . . . . . . . . . . .13
8.3 Payment and Outstanding Charges. . . . . . . . . . . . . . . . .13
ARTICLE 9. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
9.1 Responsibility for Certain Taxes. . . . . . . . . . . . . . . . .14
9.2 Property Taxes. . . . . . . . . . . . . . . . . . . . . . . . . .14
9.3 Cooperation.. . . . . . . . . . . . . . . . . . . . . . . . . . .14
9.4 Definition of Taxes.. . . . . . . . . . . . . . . . . . . . . . .14
ARTICLE 10. PROPRIETARY RIGHTS . . . . . . . . . . . . . . . . . . . . . .15
10.1 TSG Proprietary Information. . . . . . . . . . . . . . . . . . .15
10.2 Customer Data. . . . . . . . . . . . . . . . . . . . . . . . . .15
ARTICLE 11. CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . . .15
11.1 Confidential Information.. . . . . . . . . . . . . . . . . . . .15
11.2 Residual Knowledge.. . . . . . . . . . . . . . . . . . . . . . .16
ARTICLE 12. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . .16
12.1 Mutual Warranties. . . . . . . . . . . . . . . . . . . . . . . .16
12.2 No Other Representations or Warranties.. . . . . . . . . . . . .17
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ARTICLE 13. LIMITATIONS OF LIABILITY . . . . . . . . . . . . . . . . . . .17
13.1 Intended Allocation of Risks.. . . . . . . . . . . . . . . . . .17
13.2 Gross Negligence or Willful Misconduct.. . . . . . . . . . . . .17
13.3 Consequential Damages. . . . . . . . . . . . . . . . . . . . . .18
13.4 Limitation on Damages .. . . . . . . . . . . . . . . . . . . . .18
13.5 Time for Claims. . . . . . . . . . . . . . . . . . . . . . . . .19
13.6 Warranties.. . . . . . . . . . . . . . . . . . . . . . . . . . .19
13.7 Equitable Relief.. . . . . . . . . . . . . . . . . . . . . . . .19
13.8 Exclusive Remedies.. . . . . . . . . . . . . . . . . . . . . . .19
13.9 Noncumulative Remedies.. . . . . . . . . . . . . . . . . . . . .19
ARTICLE 14. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . .19
14.1 Representations and Warranties . . . . . . . . . . . . . . . . .19
14.2 Existing or New Hotels.. . . . . . . . . . . . . . . . . . . . .20
14.3 Employment Related Matters.. . . . . . . . . . . . . . . . . . .20
14.4 Infringement.. . . . . . . . . . . . . . . . . . . . . . . . . .21
14.5 Telecommunications Network.. . . . . . . . . . . . . . . . . . .21
14.6 Indemnification Procedures.. . . . . . . . . . . . . . . . . . .21
ARTICLE 15. FORCE MAJEURE; DISASTER RECOVERY; SERVICE INTERRUPTION . . . .22
15.1 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . .22
15.2 Disaster Recovery. . . . . . . . . . . . . . . . . . . . . . . .22
15.3 Service Interruption.. . . . . . . . . . . . . . . . . . . . . .22
ARTICLE 16. DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . . . . .23
16.1 Performance Review.. . . . . . . . . . . . . . . . . . . . . . .23
16.2 Dispute Resolution.. . . . . . . . . . . . . . . . . . . . . . .23
16.3 Continued Performance. . . . . . . . . . . . . . . . . . . . . .23
ARTICLE 17. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . .24
17.1 Termination for Breach.. . . . . . . . . . . . . . . . . . . . .24
17.2 Termination for Convenience. . . . . . . . . . . . . . . . . . .24
17.3 Events upon Termination. . . . . . . . . . . . . . . . . . . . .25
ARTICLE 18. TERMINATION ASSISTANCE SERVICES; SURVIVAL. . . . . . . . . . .26
18.1 Termination Assistance Services. . . . . . . . . . . . . . . . .26
18.2 Termination Assistance Period. . . . . . . . . . . . . . . . . .26
18.3 Survival.. . . . . . . . . . . . . . . . . . . . . . . . . . . .26
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ARTICLE 19. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . .26
19.1 Compliance with Applicable Law.. . . . . . . . . . . . . . . . .26
19.2 Import, Export, Exchange Controls. . . . . . . . . . . . . . . .27
19.3 Binding Nature and Assignment. . . . . . . . . . . . . . . . . .27
19.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
19.5 Counterparts.. . . . . . . . . . . . . . . . . . . . . . . . . .28
19.6 Headings.. . . . . . . . . . . . . . . . . . . . . . . . . . . .28
19.7 Relationship of Parties. . . . . . . . . . . . . . . . . . . . .28
19.8 No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . .28
19.9 Savings Clause.. . . . . . . . . . . . . . . . . . . . . . . . .28
19.10 Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . .28
19.11 Waiver.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
19.12 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . .29
19.13 Media Releases.. . . . . . . . . . . . . . . . . . . . . . . . .29
19.14 No Third Party Beneficiary.. . . . . . . . . . . . . . . . . . .29
19.15 Entire Agreement.. . . . . . . . . . . . . . . . . . . . . . . .29
19.16 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . .29
19.17 Waiver of Claims.. . . . . . . . . . . . . . . . . . . . . . . .29
19.18 Waiver of Claims in Event of Assignment. . . . . . . . . . . . .30
iv
<PAGE>
SCHEDULE 3.1
BASE SERVICES
1. - Conversion/Implementation of all the Existing Hotels commencing as
of the Effective Date of this Agreement
2. - "Train the trainers" level of application training
3. - Train the database administrators
4. - An additional 10 days of training each year for Customer employees.
Customer will specify the target group to be trained together with
a class syllabus at least one month prior to commencement of the
training. Customer will bear the cost of the TSG instructor's T&I.
5. - GNR Conversion/Cutover Support
6. - Operation of the SPIRIT system within agreed service levels. TSG
shall only be responsible for maintaining the agreed upon service
levels in the operation of SPIRIT between the TSG Data Center and
either the Customer router or the router of any location of any New
or Existing Hotel which has a direct connection to the TSG Data
Center; provided, that such connection shall contain TSG's network
engineering and technology is already available to such location.
7. - Maintenance of the SPIRIT application, pursuant to SCHEDULE 6.9
herein
8. - Account management and third level application problem resolution
9. - Implementation of CRSVIEW and QIK-ACCESS, pursuant to the terms
contained in this Agreement
10. - Technical support help desk maintained twenty-four hours per day,
seven days per week, including call logging and reporting
11. - Programmatic conversion of the Existing Hotels customer's GNRs and
rates database where practical. It may be more appropriate to
manually build rate tables in SPIRIT as part of customer training,
supported by TSG, dependent upon the specific Existing Hotel and
the structure of the rates in ACTION. This will be subject to
Customer and the client's approval of an acceptable solution on a
case by case basis.
12. - With the exception of [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED], each of the Existing Hotels will be provided with GDS
connectivity via WIZCOM, in SPIRIT, equal to the level
<PAGE>
available in ACTION when the client is cutover. The availability
at cutover will require support from WIZCOM and the GDSs, and will
be subject to the availability of their support.
13. - The list of PMS interfaces listed below will be available at
cutover, subject to PMS vendor cooperation and support.
PMS INTERFACES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PMS VENDOR PRODUCT TYPE CLIENT
Hotel Data Systems Xenon 2 Way [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
2 Way [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED](2)
Hotel Information CRO 400 1 Way [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
McDonnel Information Hornet 1 Way [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
M Corp ImagInn 1 Way [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
[TEXT OMITTED -
CONFIDENTIAL
TREATMENT REQUESTED] Proprietary 1 Way [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
MAI/CLS C-Res 1 Way [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
</TABLE>
- ------------------------------
(1) Note: Feed inventory and availability only
(2) Note: Not yet implemented
ii.
<PAGE>
SCHEDULE 3.1.1
SERVICE LEVELS AND SYSTEM PERFORMANCE
- - Central site hardware and software shall be maintained by TSG, twenty-four
hours per day, seven days per week, subject to SPIRIT downtime referred to
as "SCHEDULED DOWNTIME" and "ADDITIONAL SCHEDULED DOWNTIME", each as
defined below.
- - TSG may from time to time schedule the Scheduled Downtime for system
maintenance and software modifications, between the hours of 000 and 0500
CT on Sundays. TSG shall give Customer not less than forty-eight hours
notification of the Scheduled Downtime and expected duration. In addition,
TSG may schedule additional Scheduled Downtime for operational necessity
("ADDITIONAL SCHEDULED DOWNTIME"). Such Additional Scheduled Downtime may
be scheduled by TSG for up to two (2) hours per month during the Term, on
any day of the week, between 0000 and 0200 CT. TSG shall give Customer not
less than forty-eight hours notification of the Additional Scheduled
Downtime and expected duration. Such Additional Scheduled Downtime taken
each month shall be deducted from the Scheduled Downtime allowed on the
following Sunday.
- - The MASL for SPIRIT application availability, not including any Scheduled
Downtime or Additional Scheduled Downtime, shall be a monthly average of
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]%. The measurement of
this MASL shall begin on the MASL Date.
- - If, within five (5) working days from the end of any calendar month in
which TSG is unable to meet the MASL of [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED]%, TSG is not able to restore the MASL of [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED]% during any twenty-four (24)
hour period between 0001 CT of one day and 2400 CT of the same day,
Customer may set off [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
percent ([TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]%) of the
Monthly Base Charge invoiced by TSG for such month, as well as
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] percent ([TEXT OMITTED
- CONFIDENTIAL TREATMENT REQUESTED]%) of Customer's share of recurring
circuit charges for such month.
- - In no event shall the aggregate monthly amount set-off by Customer for any
one month exceed [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] percent
([TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]%) of the total monthly
fees billed by TSG for such month.
The average application performance response time MASLs from SPIRIT to
either the Customer router or the router of any location of any New or
Existing Hotel which has a direct connection to the TSG Data Center
(provided that such connection shall contain TSG's network engineering and
technology is already available to such location) shall be as follows:
<TABLE>
<CAPTION>
<S> <C>
General Information System (GIS) Display: Less than [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
Second Night Availability Display: Less than [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
Single Property Weekly Availability Display: Less than [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
</TABLE>
iii.
<PAGE>
- - TSG will provide the TSG Data Center with disaster avoidance features,
including, but not limited to:
- Perimeter Security
- Computer Room Security
- Off-site File Storage
- UPS w/ Two Power Grids
The MASL for reservation delivery, not including any Scheduled Downtime,
shall be the following monthly averages:
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] percent ([TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED]%) of all reservations
made for all New and Existing Hotels to be sent within [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED] ([TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED]) minutes, for reservations made
for check-in for the current day or the next day
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] percent ([TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED]%) of all reservations
made shall be sent no later than [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED] ([TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED]) hours of being made, regardless of the date of
check-in, unless predetermined delivery times have been stated
by Customer
iv.
<PAGE>
SCHEDULE 3.5
SHARED CIRCUITS
One (1) T1 Frame Relay Circuit connecting the SPIRIT router at CentrePort IV to
SITA's frame relay node (COSMACC ID # 2391291)
One (1) 56Kbps SITA Fax Circuit connecting the SPIRIT router to SITA's X25
network (COSMACC ID# 2448375). Note: this circuit will no longer be in use
after the host/fax application replaces the SITA Fax Circuit in its entirety.
Two (2) 56Kbps Inbound Circuits connecting from SITA's X25 network to the SPIRIT
router, allowing NUI dialup capability from hotel customers (COSMACC ID#
2484458).
Two (2) T1 Circuits connecting the host/fax servers to two equivalent servers at
MCI (COSMACC ID#s 2511577 and 251577). Note: one of the two circuits will no
longer be in use shortly after the Effective Date of this Agreement.
v.
<PAGE>
SCHEDULE 3.6
MARKETING
1. The parties agree to jointly market the SPIRIT multihost hotel
reservation system and the SPIRIT Functionality together with Customer's call
center operations ("VOICE RESERVATION SERVICES") and/or GDS services ("GDS
SERVICES"), which shall be known collectively as the Private Label Services (the
"PRIVATE LABEL SERVICES"), as set forth below in this Schedule, and agree to
jointly market the SPIRIT Multihost Services. The "SPIRIT MULTIHOST SERVICES"
shall be defined as Customer providing access to SPIRIT to any Existing Hotel or
Potential Client (as hereinafter defined) for the processing of reservations in
such hotel's own internal operations.
2. Either TSG or Customer may contract with a potential customer
("POTENTIAL CLIENT") for the Private Label Services, subject to the terms set
forth below. In such case, the party that contracts with the Potential Customer
shall be the prime contractor for such services and the other party shall be the
subcontractor unless otherwise agreed. In the case where either party is the
prime contractor, such party shall determine the cost of its own services within
its discretion. Customer shall give TSG cost data for the GDS Services/Voice
Reservation Services to include in TSG's proposal to any Potential Client where
TSG is the prime contractor.
3. TSG and Customer may agree to the following joint marketing scenarios,
as described in this ARTICLE 3.
(a) EXISTING HOTELS: If Customer presently offers Voice Reservation
Services or GDS Services to an Existing Hotel, Customer may provide the Private
Label Services as well as the SPIRIT Multihost Services, and Customer shall pay
TSG the charges set forth in ARTICLE 7 of this Agreement.
(b) POTENTIAL CLIENTS:
(i) If Customer contracts with a Potential Client for both Voice
Reservation Services and GDS Services, Customer may provide the Private
Label Services as well as the SPIRIT Multihost Services. In such event,
Customer shall pay TSG the charges set forth in ARTICLE 7 of this
Agreement.
(ii) If Customer contracts with a Potential Client for EITHER Voice
Reservation Services OR GDS Services, Customer may provide the Private
Label Services. In such event, Customer shall pay TSG the charges set
forth in ARTICLE 7 of this Agreement. Customer may provide the SPIRIT
Multihost Services, at a price per Net Reservation to be determined by
TSG.
(iii) If Customer contracts with a Potential Client for ONLY the SPIRIT
Multihost Services, Customer may provide such SPIRIT Multihost Services.
In such event, the price per Net Reservation shall be determined by TSG.
Customer shall also
vi.
<PAGE>
pay the Remote Database Access Services Charges as specified in
ARTICLE 7.3 of this Agreement.
(iv) The following table outlines the charge per Net Reservation that
will be charged to Customer for a Potential Client, subject to the terms
and conditions of this Agreement:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
SERVICE PRICE FOR TSR
--------------------------------------------------------------------------------------------------
PRIVATE LABEL
----------------- PRIVATE LABEL SPIRIT MULTIHOST
SCENARIO VOICE GDS MULTIHOST SERVICES SERVICES
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
A No No No N/A N/A
B YES No No $[TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] N/A
C YES YES No $[TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] N/A
D YES YES YES $[TEXT OMITTED - $[TEXT OMITTED - CONFIDENTIAL
CONFIDENTIAL TREATMENT REQUESTED] TREATMENT REQUESTED]
E No YES No $[TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] N/A
F No YES YES $[TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] $TBD by TSG
G No No YES N/A $TBD by TSG
H YES No YES $[TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] $TBD by TSG
- --------------------------------------------------------------------------------------------------------------
</TABLE>
4. TSG agrees to hire a full time salesperson for multihost hotel
reservation system marketing to Potential Clients. Customer, in its marketing
efforts, may demonstrate SPIRIT, but may not give access to, disclose, or allow
Potential Clients to evaluate SPIRIT, unless a nondisclosure agreement that is
acceptable to TSG is executed between Customer and the Potential Client.
5. In the event that Customer provides the SPIRIT Multihost Services to
Potential Clients under ARTICLE 3, Customer shall do so under the terms of this
Agreement, unless otherwise agreed to by TSG, which agreement will not be
unreasonably withheld. Such SPIRIT Multihost Services shall be subject to
Potential Client's internal use only and subject to the restrictions contained
in this Agreement regarding Customer's use of SPIRIT.
vii.
<PAGE>
6. The terms and conditions for the provision by Customer of the SPIRIT
Multihost Services to any Potential Client shall be agreed to in writing between
TSG and Customer as a work order to this Agreement, prior to communicating in
writing to the Potential Client.
7. TSG will give Customer product pricing by January 31st of each year for
products that can be multihosted other than SPIRIT (such as the Hyatt Software
or the TSG hospitality-based software). The current price for Potential Clients
is US$[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] per Net Reservation
for SPIRIT Multihost Services, unless otherwise agreed to by TSG.
Implementation and development services would be performed by TSG at an
additional charge on a time and materials basis, unless otherwise agreed in
writing.
8. Each party will provide the other with quarterly marketing reviews and
joint targeting plans for marketing of the Private Label Services during the
upcoming quarter.
9. No royalties shall be given to either party for the marketing by the
other of the Private Label Services. Customer may charge, in its discretion,
any amount for the GDS Services and/or the Voice Reservation Services which are
provided in conjunction with the SPIRIT Multihost Services as described above.
viii.
<PAGE>
SCHEDULE 4.1
EMPLOYEES
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
ix
<PAGE>
SCHEDULE 4.3
SPIRIT FUNCTIONALITY
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
x.
<PAGE>
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
xi.
<PAGE>
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
NON-SPIRIT APPLICATIONS
HYATT SOFTWARE
RMS/DFI REVENUE MANAGEMENT FUNCTIONALITY: Revenue management application
developed for Hyatt by DFI. TSG does not have any rights to market the
application.
ENVISION GROUP SALES (NOW REFERRED TO AS RESERVE ENVISION-TM-): Group sales
application for hotel chains and marketing organizations that have a central or
regional sales force.
FUNCTION BOOK EVENT PLANNING: Application to manage meeting room inventory,
plan and track catering events and generate forecasts at a property level.
Fully integrated with the ENVISION application.
ENCORE PROPERTY MANAGEMENT SYSTEM: Hyatt PMS that is not marketed by TSG.
xii.
<PAGE>
TSG SOFTWARE
HIRO REVENUE MANAGEMENT: UNIX based revenue management application developed by
TSG for Holiday Inn. Installed/operated at a central location for hotel
companies.
HARPS/HARPS PLUS REVENUE MANAGEMENT (NOW REFERRED TO AS RESERVE MAX-TM-):
PC-based revenue management application developed by TSG. Designed as a
stand-alone, property-based application for forecasting and automating inventory
controls.
REWARD FREQUENT GUEST (NOW REFERRED TO AS RESERVE REWARD-TM-): PC-based
frequent guest application used to create and maintain customer loyalty by
offering recognition awards and incentives. Tracks frequent guest accounts,
manages bonuses and promotions, and performs marketing analysis on guest
preferences.
CRSVIEW (NOW REFERRED TO AS RESERVE LINK-TM-): A distribution analysis system
that distributes and monitors hotel information and helps to improve the data's
presentation and accuracy.
QIK-ACCESS-TM-: A product line of PC-based software products that transform
complicated transaction-based host environments into versatile, user-friendly
systems by providing easily configurable user interfaces. The software helps
deliver fast and efficient host entries, reduces costs, improves customer
service, and customizes online information prompts.
xiii.
<PAGE>
SCHEDULE 4.3.1
EXISTING HOTELS
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
xiv.
<PAGE>
SCHEDULE 4.5.1
IMPLEMENTATION ROLES AND RESPONSIBILITIES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
TSG CUSTOMER
- ---------------------------------------------------------------------------------------------------------
INITIAL ROLES & RESPONSIBILITIES INITIAL ROLES & RESPONSIBILITIES
(IMPLEMENTATION) (IMPLEMENTATION)
- ---------------------------------------------------------------------------------------------------------
<S> <C>
PROJECT MANAGEMENT: PROJECT MANAGEMENT:
- ---------------------------------------------------------------------------------------------------------
Identify Scope of Project Maintain Internal Customer Project Plan
- ---------------------------------------------------------------------------------------------------------
Create & Maintain Project Plan Coordinate Implementation Activities between
Customer and Existing Hotels
- ---------------------------------------------------------------------------------------------------------
Coordinate Implementation Conduct Regular Status Meetings with the various
Activities between Customer and TSG Customer Groups involved in the Implementation
- ---------------------------------------------------------------------------------------------------------
Conduct Weekly Internal Status Conduct Regular Status Meetings with the Existing
Meetings with the various Groups identify/resolve any outstanding issues
- ---------------------------------------------------------------------------------------------------------
Conduct Weekly Status Meetings
with Customer to identify/resolve any
outstanding issues
- ---------------------------------------------------------------------------------------------------------
COMMUNICATIONS: COMMUNICATIONS:
- ---------------------------------------------------------------------------------------------------------
Network: Network:
- ---------------------------------------------------------------------------------------------------------
Order, Install & Test Circuits
between Customer's Reservations Office
and TSG Data Center as required
- ---------------------------------------------------------------------------------------------------------
Configure Network to receive
Customer Res traffic
- ---------------------------------------------------------------------------------------------------------
Verify Customer Network between
Reservation Center and Properties are
configured prior to cutover
- ---------------------------------------------------------------------------------------------------------
Verify Network Connectivity
between Existing Hotels & Customer
- ---------------------------------------------------------------------------------------------------------
Verify Network Connectivity
between Existing Hotels & TSG
- ---------------------------------------------------------------------------------------------------------
Hardware: Hardware:
- ---------------------------------------------------------------------------------------------------------
Verify Customer Hardware Load SPIRIT software on workstations
Compatibility with SPIRIT and make
hardware recommendations
- ---------------------------------------------------------------------------------------------------------
Verify Customer Hardware is
compatible with SPIRIT
- ---------------------------------------------------------------------------------------------------------
Coordinate Ordering, Shipment and
Installation of Hardware, are required
- ---------------------------------------------------------------------------------------------------------
Existing Hotel Connectivity:
Obtain Sita IDs for Existing
Hotels accessing
- ---------------------------------------------------------------------------------------------------------
SPIRIT via Dial up
- ---------------------------------------------------------------------------------------------------------
Create Dial up Diskettes for
Existing Hotels accessing
- ---------------------------------------------------------------------------------------------------------
SPIRIT via modem
- ---------------------------------------------------------------------------------------------------------
Create Fax File for Existing
Hotels receiving bookings via
- ---------------------------------------------------------------------------------------------------------
fax machine
- ---------------------------------------------------------------------------------------------------------
DATABASE CREATION: DATABASE CREATION:
- ---------------------------------------------------------------------------------------------------------
Create Database for Existing Compile Data to Populate Databases for
Hotels all Existing Hotels
- ---------------------------------------------------------------------------------------------------------
Test Databases for all Existing Hotels Populate Databases for Existing Hotels
- ---------------------------------------------------------------------------------------------------------
Activate Databases & turn over to General Maintenance Section
Customer for population
- ---------------------------------------------------------------------------------------------------------
Existing Hotel Maintenance Section
- ---------------------------------------------------------------------------------------------------------
xv.
<PAGE>
APPLICATION TRAINING: APPLICATION TRAINING:
- ---------------------------------------------------------------------------------------------------------
Customize Training Material Conduct Internal Training for Reservations Agents
- ---------------------------------------------------------------------------------------------------------
Provide Training Material to Conduct Training for Existing Customer Hotels
- ---------------------------------------------------------------------------------------------------------
Conduct Database Training
- ---------------------------------------------------------------------------------------------------------
Conduct Train the Trainer
Reservations Training
- ---------------------------------------------------------------------------------------------------------
Assist with Client (Property)
Training for [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED].
- ---------------------------------------------------------------------------------------------------------
Train first and second level support Train third level support
- ---------------------------------------------------------------------------------------------------------
GNR CONVERSION/CUTOVER: GNR CONVERSION/CUTOVER:
- ---------------------------------------------------------------------------------------------------------
Develop Automated GNR Conversion Provide GNR tapes/data files to TSG for
Program from Action conversion testing
- ---------------------------------------------------------------------------------------------------------
Test GNR Conversion Program Determine Cutover Support to deploy at Customer &
Existing Hotel site
- ---------------------------------------------------------------------------------------------------------
Determine GNR exception processing Provide Support at Customer & Existing Hotel sites
- ---------------------------------------------------------------------------------------------------------
Upload Customer GNRs (tape or data file) Complete Database Requirements for Seamless
Connectivity and verify data is correct
- ---------------------------------------------------------------------------------------------------------
Convert Customer GNRs
- ---------------------------------------------------------------------------------------------------------
Process Exceptions to GNR conversion
- ---------------------------------------------------------------------------------------------------------
Test GDS Connectivity (Type A & Type B traffic)
- ---------------------------------------------------------------------------------------------------------
Coordinate Seamless Interface Connectivity
- ---------------------------------------------------------------------------------------------------------
Test Seamless Interface (as available)
- ---------------------------------------------------------------------------------------------------------
Determine Cutover Support (heads & locations)
- ---------------------------------------------------------------------------------------------------------
Deploy Cutover support at TSG and Customer
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 4.6
ONGOING RESPONSIBILITIES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
TSG CUSTOMER
ONGOING ROLES & RESPONSIBILITIES ONGOING ROLES & RESPONSIBILITIES
- ---------------------------------------------------------------------------------------------------------
<S> <C>
PROJECT MANAGEMENT: PROJECT MANAGEMENT:
Provide Project Management for New Hotels Coordinate Implementation Plan for New Hotel
Implementations
- ---------------------------------------------------------------------------------------------------------
DATABASE CREATION: DATABASE CREATION:
- ---------------------------------------------------------------------------------------------------------
Create, Test & Activate Databases Compile Database Information for
for New Hotels each New Hotel
- ---------------------------------------------------------------------------------------------------------
Populate Database for each New Hotel
- ---------------------------------------------------------------------------------------------------------
COMMUNICATIONS:
- ---------------------------------------------------------------------------------------------------------
Hotel Connectivity:
- ---------------------------------------------------------------------------------------------------------
Obtain Sita IDs for New Hotels accessing
SPIRIT via Dial up
- ---------------------------------------------------------------------------------------------------------
Create Dial up Diskettes for
New Hotels accessing SPIRIT via modem
- ---------------------------------------------------------------------------------------------------------
Create Fax File for New Hotels
receiving bookings via fax machine
- ---------------------------------------------------------------------------------------------------------
TRAINING: TRAINING:
Maintenance and updating of Update/Customize Training Materials, as needed
standard SPIRIT Training Materials
- ---------------------------------------------------------------------------------------------------------
Train Customer Database Maintenance for each New Hotel
- ---------------------------------------------------------------------------------------------------------
Train Customer & Hotel Reservation Agents
- ---------------------------------------------------------------------------------------------------------
Setup Property Communication for Dial up hotels
- ---------------------------------------------------------------------------------------------------------
GNR CONVERSION/CUTOVER: GNR CONVERSION/CUTOVER:
- ---------------------------------------------------------------------------------------------------------
Modify & Test GNR Conversion Program* Provide Cutover Support at New Hotel Locations
- ---------------------------------------------------------------------------------------------------------
Third Level Support First and Second Level Support
- ---------------------------------------------------------------------------------------------------------
Upload & Convert GNRs Provide GDS tape/data file to TSG for conversion
testing
- ---------------------------------------------------------------------------------------------------------
Process Exception GNRs from GNR Conversion
- ---------------------------------------------------------------------------------------------------------
Test GDS Connectivity (Type A and B Traffic)
- ---------------------------------------------------------------------------------------------------------
Coordinate and Test Seamless Image Interface
- ---------------------------------------------------------------------------------------------------------
Provide Cutover Support at TSG HDQ/TSG Data
Center
- ---------------------------------------------------------------------------------------------------------
ACCOUNT MANAGEMENT: ACCOUNT MANAGEMENT:
Identify & resolve any issues that may Identify & resolve any issues that may arise with
arise with Customer New Hotels
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Conversion of records from any CRS other than ACTION and HDS will be billed
as a New or Additional Service as defined in ARTICLE 7.4.
xvii.
<PAGE>
SCHEDULE 6.8
TRAINING
TRAINING MATERIALS: Training for the central reservation agents, administrative
personnel and the properties is of critical importance. TSG will provide all of
the training materials it uses to introduce employees to the SPIRIT system, and
which are system-related, including keystroke procedures and function
explanations. Materials for modifications made to the SPIRIT system will be
provided by TSG as they are released. Training materials, including COMWARE for
the following areas will be provided:
- Help Desk Reports
- Data Application
- Subject Matter Experts
- Reservation Application
- Database Administrators
- Agents
INITIAL SYSTEM FAMILIARIZATION: In order to become productive in terms of
determining how best to implement and utilize SPIRIT, key users, administrators,
trainers, and technical personnel need the benefit of in depth training. This
process will also give Customer personnel the necessary skills to begin
identifying areas where the application may need to be changed. TSG suggests
that initial familiarization for this core group be divided into two sessions
with a follow-on session devoted to train the trainer course development. (It
is suggested that those responsible for user training go through all three
training classes).
DATABASE MAINTENANCE: This course is designed to provide the participants with
a background on how to take advantage of the flexibility of the SPIRIT database.
Those attending the class will develop a complete understanding of how the
system manages data and the various ways hotels may be represented. A complete
overview of all the database maintenance, inventory, and rates functions are
included as part of this class. These skills and information will be critical
as Customer decides how SPIRIT will be implemented in its environment.
Initially, TSG will train up to eight (8) participants who will attend ten days
of classes.
xviii.
<PAGE>
TRAINING DEVELOPMENT/TRAIN THE TRAINER: Working with an experienced SPIRIT
trainer, participants will develop a comprehensive training program to
familiarize the users with SPIRIT. These participants will become the trainers
for Customer and be responsible for conducting all user training.
GENERAL APPLICATION TRAINING: With SPIRIT database skills as the foundation,
general application training is more meaningful and much easier. Through the
use of exercises, the participants will acquire the necessary skills to use the
system for reservation processing and will then be able to identify necessary
changes.
Initially, TSG will train up to eight participants who will attend five (5) days
of classes. TSG will also provide one (1) week of training support for each
Existing Hotel.
xix.
<PAGE>
SCHEDULE 6.9
MAINTENANCE
CHANGES IN TECHNICAL ENVIRONMENT
TSG shall make any and all changes to SPIRIT which may be required from time to
time by changes or upgrades to the operating system, network infrastructure,
hardware, or database, all as set forth below.
TECHNICAL SUPPORT
TSG shall make available its maintenance and development personnel as required
to assist Customer in resolving problems and answering end user questions, and
providing other technical support and assistance, all as set forth below.
SPRS, PSRS AND SRS
- - TSG will record and track all System Problem Reports ("SPRS"), Preliminary
Service Requests ("PSRS") and Service Requests ("SRS"), and will report on
the status monthly.
- - TSG and Customer will agree on formal notification and escalation
procedures.
SPRS
- - LEVEL 1 ERRORS - System is either inaccessible, incapable of being put into
productive use, or operates but has severely impaired functionality and/or
performance. These problems have the highest priority for correction and
are immediately assigned to the appropriate resource(s) for correction.
TSG will contact Customer upon correction of the problem. This type of
critical application problem will be classified as Level 1. TSG will
commence work on a correction immediately and will propose its resolution
for fixing such Level 1 errors within two (2) hours of receipt of notice
from Customer of the nature of such Level 1 Error.
- - LEVEL 2 ERRORS - If a problem does not prevent the productive use of
SPIRIT, but impacts business functions which are not related to revenue or
immediate customer service (i.e. inability to access the reports database,
brochure delivery down, reports/archive not being updated or queues purged,
issues within database maintenance), the problem will be classified as a
Level 2 Error. TSG will respond to the report of a Level 2 Error no later
than the next business day.
- - LEVEL 3 ERRORS - If the reported problem does not indicate that the SPIRIT
xx.
<PAGE>
application has failed to operate according to specifications, it will be
classified as a Level 3 Error. These problems will be forwarded to the
Product Manager who will determine if it is a system problem or is
functioning as designed. If it is a system problem, the correction will be
prioritized and the fix will be performed through either a generic
enhancement release or as an interim correction. Level 3 Errors include
but are not limited to system bugs which do not impact system usability and
can be worked around. These problems would be resolved with either the
next release or earlier (as determined by TSG development).
- - BASIC LEVEL SUPPORT - will be provided by TSG 24 hours a day, 7 days a week
(including holidays). All calls will be logged by TSG's Customer Service
department. All other problems identified as not impacting normal system
operations will be forwarded to a business manager who will determine if it
is a system problem or is functioning as designed. If it is a system
problem, the correction will be prioritized and the fix will be performed
through either a generic enhancement release or as an interim correction.
SRS AND PSRS
- - When requests for programming services are made, TSG will respond within
ten (10) business days with a Preliminary Service Request, containing a
project scope categorization according to the following three categories:
- Small: Less than 300 hours
- Medium: Between 300 and 1,000 hours
- Large: More than 1,000 hours
Project scopes will include an estimate of the number of hours which may be
required to develop a Service Request. When Customer approves project
scope, TSG will proceed with a detailed project plan for the SR, to be
performed on a time and materials basis. TSG will start project work
within thirty (30) days of Customer's approval of the project scope, and
will be based upon the prioritization of the work and the development
already in progress and/or scheduled.
- - TSG and Customer will develop an escalation table that clearly outlines the
responsible party for specific problems, including telephone and fax
numbers and a priority scale.
xxi.
<PAGE>
SCHEDULE 6.10.1
SPIRIT ENHANCEMENTS
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
xxii.
<PAGE>
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
xxii.
<PAGE>
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
xxiv.
<PAGE>
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
xxv.
<PAGE>
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
xxvi.
<PAGE>
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
xxvii.
<PAGE>
THIS AGREEMENT HAS CONFIDENTIAL PORTIONS OMITTED, WHICH PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED
PORTIONS ARE INDICATED IN THIS AGREEMENT WITH "[TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED]."
PROGRAM LEASE AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
GENERAL PROVISIONS 4
1. DEFINITIONS 5-11
2. SALE OF EQUIPMENT 11
3. TERM OF LEASE 12
3.1 Term of Agreement 12
3.2 Term of Equipment Schedules 12
3.3 Extension 12
3.4 Termination For Convenience 13
3.5 Inclusion or Deletion Date 14
4. MONTHLY RENTAL and ADJUSTMENTS TO MONTHLY RENTAL 14
4.1 Rental Amount and Payment Terms 14
4.2 Net Lease 15
4.3 Taxes 15
4.4 Monthly Rental Adjustments Related to Additions and Removals 18
4.5 Reconciliation Account 22
4.6 Invoices 22
4.7 Withhold Vendor Payments 23
4.8 Audits 24
4.9 Late Payment 24
5. INSTALLATION AND USE OF EQUIPMENT 24
5.1 Delivery and Installation 24
5.2 Use of Equipment 25
5.3 Acquiring Growth and Refresh Equipment 25
5.4 Swapping Equipment 26
5.5 Other Equipment 27
5.6 Short-Time Procurements 28
5.7 Relocation of Equipment 28
5.8 Reconfiguration 29
5.9 CPU Generational Upgrades 30
5.10 Sublease 31
6. MAINTENANCE AND REPAIRS 31
6.1 Equipment Condition 31
6.2 Maintenance Contract 31
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7. EQUIPMENT RETURN 32
7.1 Purchase Rights 32
7.2 Condition of Equipment 33
7.3 Requirements for Return of Equipment 33
8. ASSIGNMENT 34
8.1 Assignment of Monthly Rental 34
8.2 Other Assignments 35
9. OWNERSHIP - TITLE 36
9.1 Comdisco Warranty 36
9.2 SABRE Obligations 36
9.3 Comdisco Inspection 36
9.4 Notice of Damage 36
10. WARRANTIES 37
10.1 Enforcement 37
10.2 Warranty and Disclaimer 37
10.3 Indemnity 37
10.4 Mutual Representations and Warranties 37
10.5 Comdisco's Warranties and Representations 38
10.6 Additional Representation and Warranties of SABRE's 39
11. INSURANCE AND RISK OF LOSS 39
11.1 Risk of Loss; SABRE's Obligations to Maintain Insurance 39
11.2 Damage to Equipment 40
11.3 Comdisco Obligation to Maintain Insurance 40
12. DEFAULT AND REMEDIES 41
12.1 Default By SABRE 41
12.2 Remedies on SABRE's Default 42
12.3 Default By Comdisco 43
12.4 Inadvertent Failure to Perform 45
13. DISPUTE RESOLUTION PROCESS 46
13.1 Resolve Disputes 46
13.2 Escalation Provision 46
13.3 General Resolution Procedures 47
14. QUIET ENJOYMENT 47
15. BREACH OF COVENANT OF QUIET ENJOYMENT BY COMDISCO 47
16. CONFIDENTIALITY 47
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17. INDEMNIFICATION 48
18. FORCE MAJEURE 48
19. GENERAL 49
19.1 Governing Law 49
19.2 Advertising 49
19.3 No Waiver 49
19.4 Notices 49
19.5 Consent 50
19.6 Documents 50
19.7 Reports 50
19.8 Licensed Products 50
19.9 Modification, Amendment, Supplement or Waiver 50
19.10 Export Administration 51
19.11 Independent Contractor 51
19.12 Captions 51
19.13 Severability 51
19.14 Entire Agreement 51
19.15 Survival 51
19.16 Operative Agreements, Schedules, Attachments and Order of
Precedence 52
19.17 Counterparts 53
19.18 Minority/Women Owned Business Enterprises 53
</TABLE>
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<PAGE>
PROGRAM LEASE AGREEMENT
This PROGRAM LEASE AGREEMENT ("Agreement") is made this 30th day of
September, 1998 (hereafter the "Effective Date"), by and between Comdisco,
Inc., a Delaware corporation, with its principal office at 6111 N. River
Road, Rosemont, IL 60018, as Lessor ("Comdisco"), and The SABRE Group, Inc.,
a Delaware corporation, with its principal office at 4255 Amon Carter Blvd.,
Dallas/Fort Worth, Texas 76155, as Lessee ("SABRE").
GENERAL PROVISIONS
Comdisco has established a Global Technology Program (the "Program") for
SABRE's global technology environment. The Program initially includes
mainframe Equipment as listed in the applicable Equipment Schedules to the
Agreement is now or hereafter attached hereto as Attachment A (and shall be
consecutively numbered A-1 through A-__, as applicable), but, upon SABRE's
written notice to Comdisco can be expanded to include midrange and/or other
equipment, as further provided herein. The Program also includes a suite of
services provided by Comdisco to SABRE in accordance with the terms of this
Agreement, and the Services Schedule attached as Schedule 1 and made part of
the Operative Agreement (as defined below). Additionally, in order to assist
SABRE in the acquisition, management and deployment of its technology,
Comdisco shall purchase a portion of SABRE's equipment and/or take over
payment responsibility for, a portion of SABRE's current third party leases
(as applicable) as provided for herein and in the Operative Agreements.
As part of the Program, SABRE has the ability to remove Equipment from
the Program, and at SABRE's option, replace and/or augment the Equipment with
a supply of Growth Equipment and Refresh Equipment under the terms of this
Agreement and the Operative Agreements. [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED]. The total scope of this Program is to provide up to the equivalent
of US $[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] of Growth Equipment
and Refresh Equipment to SABRE over the Term (as defined in Section 3.1) of
this Agreement. This amount can be increased upon agreement of the parties.
The parties intend and agree that the provisions of the Program are intended
to be applicable regardless of the country or jurisdiction in which Equipment
is located or proposed to be located or relocated, or in which Equipment
Services (as defined herein) are or are proposed to be performed. If either
Comdisco or SABRE deems it advisable to undertake any of the activities
contemplated in connection with the Program in a country other than the
United States through a subsidiary or affiliate, it agrees that it will cause
such a subsidiary or affiliate, to the extent the party has the power to
cause such subsidiary or affiliate to act, to do so in accordance with the
terms and conditions of this Agreement and the Operative Agreements. The
parties further agree that to the extent additional Operative Agreements are
required in connection with the addition of Equipment or the provision of
Equipment Services, the terms and conditions of such Operative Agreements
will be consistent with the terms and conditions of the Agreement, except as
may be mutually agreed or as provided herein.
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 4
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<PAGE>
If the application of the terms and conditions of this Agreement in a
particular country or jurisdiction would, in the reasonable opinion of one of
the parties, result in a substantially adverse tax, accounting or other
financial consequences to one of the parties, or if one party is unable to
cause a subsidiary or affiliate to provide such term or condition or be
prohibited by law in such country or jurisdiction, the parties agree to
negotiate in good faith to enter into such additional Operative Agreements
under terms and conditions which provide substantially the same economic
benefits for each of the parties as would otherwise be provided but for such
adverse consequences or limitation. Comdisco specifically acknowledges and
agrees, however, that SABRE is entering into this Agreement and the Operative
Agreements in reliance upon and in consideration of Comdisco's agreements
with respect to the Program on a global basis, but not limited to, the
Equipment Services, and the rights and duties of the parties with respect
thereto.
1. DEFINITIONS
Unless otherwise defined in this Agreement, all words and phrases defined
in the Operative Agreements shall have the same meaning in this Agreement.
In addition to the terms defined elsewhere in this Agreement the following
terms shall have the following meanings.
1.1 "ACCEPTANCE DATE" means the date when SABRE accepts a Unit of
Equipment. Unless otherwise provided for in an Equipment Schedule,
the acceptance shall occur on such date that such Unit has been
installed and has successfully passed the acceptance test(s) mutually
agreed upon by the supplier of the Equipment and SABRE, and qualified
for a manufacturer's standard warranty coverage (if available) or is
otherwise operating in accordance with its specifications. SABRE
shall notify Comdisco of the Acceptance Date by promptly delivering a
letter of acceptance in a form reasonably acceptable to Comdisco.
1.2 "ADDITIONAL FEATURE" means any feature or model changes SABRE adds to
any Equipment covered by an Equipment Schedule.
1.3 "ALL BUT NOT LESS THAN ALL" means any full configuration of serial
numbered Equipment, and for tape silos, an automated tape subsystem or
individual tape drives attached to a tape silo system, and for direct
access storage devices, a subsystem.
1.4 "ASSIGNEE" has the meaning given to it in Section 8.1 herein.
1.5 "CASUALTY VALUE" means a predetermined amount of money as to a Unit
that SABRE guarantees Comdisco shall receive in the event of an
Equipment casualty loss during the Initial Term or any Extension
Period, and which is an amount expressed as a percentage of original
cost. The value varies depending on when during the Initial Term or
any Extension Period the loss occurs, and such Casualty Value is
further denoted on Attachment D to the applicable Equipment Schedule.
1.6 "CHRONIC PAYMENT DEFAULT" has the meaning given to it in Section 5.3
herein.
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 5
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<PAGE>
1.7 "COMMENCEMENT DATE" means with respect to an Equipment Schedule, the
start date, which date is set forth on such Equipment Schedule.
1.8 "CONFIDENTIAL INFORMATION" has the meaning given to it in Section 16
herein.
1.9 "COST PER MIPS" means an amount equal to Equipment Cost divided by the
MIPS rating for the Unit for full CPU systems, and shall be equal to
Equipment Cost divided by the incremental MIPS rating associated with
CPU Generational Upgrades for CPU Generational Upgrades.
1.10 "CPU GENERATIONAL UPGRADES" means equipment meeting the following
conditions: (a) upgrades to existing CPU class Equipment as
identified on Attachment B; (b) adding at least the minimum additional
capacity established by the manufacturer to qualify for generational
upgrade treatment; (c) upgrades the performance and official rating of
the Equipment by the manufacturer for purposes of maintenance,
software and remarketing to the next generation of processor, such as
IBM 9672-R45 to IBM 9672-R36; and (d) in SABRE's reasonable commercial
business judgement the Cost per MIPS for the upgrade shall be no more
than [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]% higher than
the Cost per MIPS SABRE and Comdisco would be able to acquire a full
CPU system of equivalent size as the Equipment being upgraded plus
the upgrade. MIPS ratings for purposes of calculating Cost per MIPS
and relative size of CPU class Equipment and related upgrades will be
based on the current published Comdisco MIPS Card or its replacement.
1.11 "CUSTOMER" means any third party customer of SABRE's or its
subsidiaries' information technology services or data processing
services.
1.12 "DISPUTED AMOUNT" has the meaning given to it in Section 4.6(b)
herein.
1.13 "DISTRIBUTED SYSTEMS EQUIPMENT" means microprocessor based equipment
supporting Windows/DOS, Windows 95, Windows NT and Unix operating
systems (and their successors) in a stand-alone or networked
environment and all PBX telecommunications equipment.
1.14 "DELIVERY DATE" means the date on which a Unit is delivered to SABRE
or, at SABRE's direction, Customer.
1.15 "EARLY TERMINATION DATE" means the date on which SABRE terminates an
Equipment Schedule or this Agreement and all Operative Agreements
prior to the expiration of the Initial Term or any Extension Period,
pursuant to the terms and conditions of Section 3.4 this Agreement.
1.16 "EARLY TERMINATION VALUE" means, with respect to an Equipment
Schedule, a sum equal to the present value of the remaining Monthly
Rental payments, less the then applicable portion thereof attributable
to the Services as defined in the Services Schedule (referred to as
Schedule 1) attached to this Agreement, due under the Initial Term or
any Extension
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 6
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<PAGE>
Period for the applicable Equipment Schedule, discounted at the
lesser of: (1) the rate at which Comdisco has nonrecourse
financing for the Equipment Schedule from an Assignee plus any
prepayment penalties actually charged by the Assignee, or (2) the then
existing rate of the U.S. Treasury bill with a maturity equal to the
remaining months of the Initial Term or any Extension Period then in
effect plus [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] basis
points.
1.17 "EQUIPMENT" means collectively, SABRE Equipment under this Program, as
well as Growth Equipment and Refresh Equipment. Managed Equipment is
specifically excluded under this definition.
1.18 "EQUIPMENT COST" means the cost from a vendor for Growth Equipment or
Refresh Equipment, or the Equipment cost as identified on the
applicable Equipment Schedule for any SABRE Equipment listed thereon.
1.19 "EQUIPMENT SERVICES" means the services Comdisco is required to
perform under the terms of this Agreement and the Operative Agreements
related to the Refresh Pool, Growth and Refresh Equipment, Swap
Events, termination services and relocation services.
1.20 "EQUIPMENT SCHEDULE(S)" means the list(s) setting forth the Equipment
leased under this Agreement and the special terms, conditions, and
Monthly Rental stated therein, as may from time to time be added to
this Agreement and which incorporates, by definition, the terms and
conditions of this Agreement, and when entered into between the
parties shall be attached hereto as Attachment A and consecutively
number A-1 through A-_, as applicable.
1.21 "EVENT OF DEFAULT" means an event set forth in Section 12 of this
Agreement.
1.22 "EXPECTED RENTALS" means (i) for Growth and Refresh Equipment, the
gross Monthly Rentals attributable to a Unit for the greater of
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] months or the
Minimum Commitment Period for such Unit, or (ii) for SABRE Equipment,
in aggregate, the gross Monthly Rentals attributable to the SABRE
Equipment based on the expected return schedule as described in
Paragraph B, "Rent Adjustments" of the Special Terms section of each
Equipment Schedule.
1.23 "EXTENSION PERIOD" means that number of months after the expiration of
the Initial Term or any renewal thereof of any Equipment Schedule that
SABRE may extend such Initial Term or any renewal thereof.
1.24 "FAIR MARKET VALUE" means the value upon which a willing buyer/user
and a willing seller/lessor would agree to buy, sell or lease the
Equipment, as appropriate, for the term involved, each respectively
under no compulsion, in the condition required under this Agreement
with market demand being considered. Unless otherwise indicated "Fair
Market Value" shall mean "retail Fair Market Value". In the event
that mutual agreement
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<PAGE>
as to such amounts cannot be reached, such amounts shall be
determined as provided for below.
If the parties cannot agree on such amount within the five (5) day
period as provided for in Section 7, the Fair Market Value shall be
derived as the average of three appraisals, prepared by three
"Qualified Independent Appraisers" (as defined herein), one selected
and paid for by each of SABRE and Comdisco and one selected by the two
appraisers and the cost of the third appraiser shall be equally shared
by SABRE and Comdisco. The three appraisals shall be delivered to
both Comdisco and SABRE within ten (10) days following non-agreement.
"Qualified Independent Appraiser" shall mean an appraiser who is
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
1.25 "FUNDING FACTOR" has the meaning given to such term in an Equipment
Schedule and is used in the determination of the Monthly Rental due
under such Equipment Schedule. Such Funding Factor is also used to
determine adjustments made to the Monthly Rental resulting from the
adding or removing of Equipment as provided for herein and in an
Equipment Schedule.
1.26 "GROWTH EQUIPMENT" means any Qualified Equipment that SABRE adds to
the Equipment under this Agreement, excluding Managed Equipment and
Refresh Equipment.
1.27 "INADVERTENT PAYMENT LAPSE" has the meaning given to it in Section 5.3
herein.
1.28 "INITIAL TERM" means that period of time from the Commencement Date of
an Equipment Schedule through September 30, [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] unless this Agreement or the
Operative Agreement is terminated or extended as provided for
pursuant to the terms of the Agreement and any Operative Agreement.
1.29 "INVESTMENT GRADE" means, with respect to a party, that the senior
debt of such party has an actual or implied rating by Moody's Investor
Services, or any successor thereto ("Moody's") as Baa3 or higher or by
Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, Inc., or any successor thereto ("S&P") as a BBB- or higher.
On the Effective Date, SABRE shall be deemed to be Investment Grade
and shall continue to be Investment Grade unless and until Moody's or
S & P shall issue an actual or implied rating or below Baa3 or BBB-,
respectively.
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 8
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1.30 "LESSEE" OR "SABRE" means The SABRE Group, Inc.
1.31 "LEVEL 3" has the meaning given to it in Section 13.2 herein.
1.32 "MAINTENANCE ORGANIZATION" means the Equipment Manufacturer or an
organization other than the Equipment Manufacturer that provides
service or maintenance for Equipment and who is certified by the
Manufacturer to perform the Manufacturer's service or maintenance.
1.33 "MANAGED EQUIPMENT" means equipment which is owned or leased by SABRE
and which is not Equipment under an Equipment Schedule, and for which
Comdisco shall provide the Services set forth in the Services Schedule
(referred to as Schedule 1) attached to this Agreement.
1.34 "MANUFACTURER" means the manufacturer of one or more Units of
Equipment.
1.35 "MINIMUM COMMITMENT PERIOD" means the minimum period of use for
Equipment by SABRE before it is eligible for return or replacement
with Refresh Equipment. The Minimum Commitment Period for Growth and
Refresh Equipment shall be [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] ([TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]) months,
unless otherwise mutually agreed by Comdisco and SABRE.
1.36 "MIPS" means and is expressed in millions of instructions per second,
and is calculated as the aggregate of the MIPS Capacity of a
particular piece of Equipment.
1.37 "MONTHLY RENTAL" means the rent that SABRE shall pay under an
Equipment Schedule in the amount set forth on such Equipment Schedule
and collectively all amounts due under all Equipment Schedules and as
amended from time to time pursuant to the Rent Adjustments Section of
such Equipment Schedule(s) and the Refresh Pool Mechanics Section of
this Agreement plus all other amounts due to Comdisco under this
Agreement, and the Equipment Schedule(s). If provided for in an
Equipment Schedule, rent may be paid on a quarterly basis, and in such
event "Monthly Rental" shall mean "Quarterly Rental" where used in
this Agreement and the Equipment Schedule(s).
1.38 "NON QUALIFIED EQUIPMENT" means equipment that does not meet the
conditions to be Qualified Equipment. Non Qualified Equipment can be
incorporated into the Program as Qualified Equipment at a mutually
agreeable Minimum Commitment Period and Funding Factor.
1.39 "NON-U.S. EQUIPMENT SCHEDULE" means an Equipment Schedule which covers
Equipment located outside a state of the United States or the District
of Columbia.
1.40 "OPERATIVE AGREEMENT(S)" means this Agreement as well as the schedules
and attachments incorporated herein by reference including those
listed in Section 19.16 and subject to the orders of precedence stated
in such Section.
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1.41 "PRESENT VALUE" means the present worth of a future stream of payments
calculated by discounting the future payments at an agreed interest
rate.
1.42 "PROJECT MANAGER" has the meaning given to it in the Services Schedule
attached hereto.
1.43 "QUALIFIED EQUIPMENT" means mainframe related technical assets of a
make and model currently manufactured by a vendor at the time of
acquisition or so manufactured no more than six (6) months prior to
the acquisition date, manufactured with respect to mainframes by
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]; with respect to
DASD by [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]; and with
respect to tape by [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED],
and shall be priced consistently with other similar transactions of
SABRE's under similar terms and conditions, if applicable. If SABRE
has not engaged in the acquisition of said (qualified equipment)
type, then pricing shall be consistent with pricing received by SABRE
on similar type of equipment under similar acquisition conditions.
All hardware pricing shall be net of any software costs. From time
to time SABRE or Comdisco may add or delete additional manufacturers
to and/or from the above list upon the mutual consent of SABRE and
Comdisco, which mutual consent shall not unreasonably be withheld.
Notwithstanding the above, SABRE shall have the right and option to
add [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] as Qualified
Equipment to replace the original [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED] leased under this Agreement or [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] which has replaced such original
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
1.44 "REFRESH EQUIPMENT" means any Qualified Equipment which SABRE adds to
the Equipment under the Program that replaces Equipment currently
under the Program and is not Managed Equipment.
1.45 "REMARKETING COSTS" means all reasonable and necessary expenses
incurred by Comdisco in obtaining a re-lease of the Equipment, and a
financing commitment with respect thereto, including, but not limited
to, reasonable commissions not to exceed fees incurred in locating
subsequent users and a financing commitment.
1.46 "RENTAL PAYMENT DATE" means the last date of each calendar month,
unless otherwise specifically agreed by Comdisco and SABRE.
1.47 "RESIDUAL VALUE" means the value of leased Equipment at the end of the
Initial Term or any Extension Period.
1.48 "SABRE" or "THE SABRE GROUP, INC." means The SABRE Group, Inc. In the
event a SABRE affiliate is operating in a specific country in which an
Equipment Schedule is to be entered into, then such definition shall
be altered to provide for such affiliate in such country.
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 10
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1.49 "SABRE EQUIPMENT" means equipment more fully described on the US
Equipment Schedule, as of the date of such Equipment Schedule which
(i) is owned by SABRE and which Comdisco will purchase from SABRE
pursuant to a separate purchase agreement and lease back to SABRE
under such Equipment Schedule, (ii) is on lease by SABRE under Third
Party Leases and for which Comdisco will assume payment responsibility
pursuant to the terms of such Equipment Schedule, and/or (iii) is on
lease by SABRE from Comdisco which leases will be terminated in order
for such Equipment to be leased under such Equipment Schedule. If
applicable, the SABRE Equipment under an Equipment Schedule may
initially be confirmed on or about the Commencement Date of such
Equipment Schedule, through a physical inventory performed by Comdisco
under a separate agreement.
1.50 "SERVICES" means the services detailed in the Services Schedule
(referred to as Schedule 1) attached hereto and incorporated herein to
be performed pursuant to this Agreement and Schedule 1 attached
hereto.
1.51 "SUBLEASE" means the re-lease by SABRE of Equipment that is on lease
to SABRE.
1.52 "SWAP EQUIPMENT" has the meaning given to it in Section 5.4 herein.
1.53 "SWAP EVENT" has the meaning given to it in Section 5.4 herein.
1.54 "TERMINATION FOR CONVENIENCE" has the meaning given to it in Section
3.4 herein.
1.55 "THIRD PARTY LEASE(S)" has the meaning given to it in Special Terms,
Section E of the US Equipment Schedule.
1.56 "UNIT" means an item of Equipment listed on an Equipment Schedule.
2. SALE OF EQUIPMENT
Subject to the consummation of the transactions contemplated by this
Agreement, SABRE hereby agrees to sell, transfer and convey to Comdisco and
Comdisco agrees to buy all of SABRE's right, title and interest to the
Equipment listed on the US Equipment Schedule as SABRE-owned under the
Program. The SABRE Equipment to be sold to Comdisco on the Effective Date
shall be sold and transferred pursuant to the terms of the sale and
leaseback agreement attached hereto as Attachment C. Any subsequent
purchases will be made pursuant to the terms and conditions of a sale and
leaseback agreement mutually agreed to between Comdisco and SABRE at the
time.
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<PAGE>
3. TERM OF LEASE
3.1 TERM OF AGREEMENT. This Agreement shall commence on the Effective
Date and continue for a term of [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED] ([TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED]) months unless terminated prior to that time as provided
for herein and in the Operative Agreements, or extended by the
parties as provided herein (the "Term"). The Initial Term of each
Equipment Schedule shall be coterminious with the Term of this
Agreement, and any early termination thereof shall be as provided for
herein. In the event SABRE fails to return the Equipment as provided
for in any of the Operative Agreements, then such Operative Agreement
shall continue as provided for in such Operative Agreement.
3.2 TERM OF EQUIPMENT SCHEDULES. The term of the Equipment Schedule with
respect to each Unit shall commence upon the later of (i) Commencement
Date for the applicable Equipment Schedule on which such Unit appears
or (ii) the Acceptance Date for such Unit and shall continue for the
remainder of the Initial Term as provided in the Equipment Schedule,
unless the Program shall, by its terms, have been otherwise earlier
terminated or unless the Term is extended as provided in this
Agreement. After the Initial Term, if SABRE does not exercise its
extension option as described in 3.3 below, the term of the Equipment
Schedule for such Unit shall be deemed to continue on a month-to-month
basis at the same rate unless and until terminated by SABRE or
Comdisco giving to the other party not less than [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] ([TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED]) days prior written notice. Any such
termination shall be effective only on the last day of the Initial
Term or the last day of any Extension Period or the last day of the
month following the 30th day after the [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED] day prior written notice is received by a party,
as applicable. If SABRE gives proper written notice of termination
but fails to make the Equipment available for pick up by Comdisco or
its carrier within ten (10) days after the expiration date of the
Initial Term, or any extension thereof, the Equipment Schedule shall
continue in full force and effect and SABRE shall be required to
provide an additional [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] ([TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]) days
written notice of termination. Such termination shall be effective
at the end of the month or quarter (as applicable) in which the last
day of the [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] ([TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED]) day notice requirement
occurs. The Monthly Rental shall continue at the current rate until
the effective date of the written notice of termination and the
Equipment is properly returned.
3.3 EXTENSION. As long as SABRE is not then in default in the performance
of a material obligation under this Agreement or an Operative
Agreement (which default has not been cured or otherwise excused),
SABRE will have [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
([TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]) options to elect
to extend the Term of this Agreement and the Operative Agreements
hereunder for additional [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] ([TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]) year
periods under the terms and conditions provided herein and the then
current terms and conditions under such Equipment Schedules. To
exercise an option, SABRE shall provide Comdisco at least one
hundred eighty (180) days notice prior to the expiration of the
Initial Term of this Agreement or any Extension Period and the Term
shall be so extended.
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 12
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<PAGE>
3.4 TERMINATION FOR CONVENIENCE. As long as all amounts then due and
owing (other than a Disputed Amount) are paid by SABRE and SABRE gives
Comdisco at least [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
([TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]) days prior
written notice, SABRE may terminate all or any Equipment Schedule(s)
with respect to all, but not less than all, of the Equipment listed
on such Equipment Schedule or may elect to terminate this Agreement
and the Operative Agreements (and such shall be defined as
"Termination for Convenience") effective on [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] or upon the expiration of any
calendar year thereafter as specified in the termination notice
(which when elected by SABRE such date shall be the "Early
Termination Date") as follows:
(a) [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED];
(b) [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]; and
(c) [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 13
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<PAGE>
Examples of Early Termination For Convenience are attached as
Attachment D.
In addition, SABRE shall have the option to exercise this Termination
for Convenience option as provided for above [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED].
3.5 INCLUSION OR DELETION DATE. For purposes of this Program, Equipment
which has an Acceptance Date or a Pick Up Date from and including the
1st through and including the 15th of a month shall be deemed to have
an Acceptance Date or a Pick Up Date as of the 1st day of such month,
while Equipment which has an Acceptance Date or a Pick Up Date from
and including the 16th through and including the last day of a month
shall be deemed to have an Acceptance Date or a Pick Up Date as of the
1st day of the following month.
4. MONTHLY RENTAL AND ADJUSTMENTS TO MONTHLY RENTAL
4.1 RENTAL AMOUNT AND PAYMENT TERMS. SABRE agrees to pay Comdisco the
Monthly Rental which is listed on an applicable Equipment Schedule,
plus applicable taxes that SABRE is required to pay pursuant to
Section 4.3, 5.7 and 7.1 of this Agreement (or as otherwise provided
for in a Non-US Equipment Schedule), as adjusted as provided herein.
As Equipment is added (Growth Equipment), deleted, or replaced
(Refresh Equipment) under such Equipment Schedule, the Monthly Rental
shall be adjusted monthly (or as otherwise provided under the
Operative Agreements) as provided for under this Agreement and the
Operative Agreements. Except as otherwise provided in Section 4.6,
the Monthly Rental (other than a Disputed Amount) will be due and
payable in arrears on the last day of each month of the Initial Term,
subject to the terms and conditions hereof. If the last day of a
month occurs on a Saturday, Sunday or legal holiday (as denoted by the
government of the country in which payment is required to occur) then
such payment shall be due and payable on the next business day.
Payments of Monthly Rental shall be made at the location(s) and in the
currency(s) specified in the applicable Equipment Schedule.
The Monthly Rental due under the U.S. Equipment Schedule is comprised
of, with respect to Equipment, a fixed portion (the "Fixed Equipment
Portion") and a variable portion (the "Variable Equipment Portion"),
and with respect to Services, a separate portion (the "Services
Portion"). As of the start of the Initial Term, the Monthly Rental is
as provided
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 14
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<PAGE>
below, plus applicable taxes (if any) that SABRE is required to pay
pursuant to Section 4.3, 5.7 and 7.1 hereof or as otherwise provided
for in a Non-US Equipment Schedule, of which $[TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] is the Fixed Equipment Portion,
$[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] is the Variable
Equipment Portion, and $[TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] is the Services Portion.
4.2 NET LEASE. Except as required by law or as otherwise provided
for in the Agreement, each Equipment Schedule constitutes a net
lease. [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
4.3 TAXES.
(a) ALLOCATION OF RESPONSIBILITY FOR TAXES. SABRE shall be
responsible for, and shall indemnify Comdisco for, state and local
sales and use taxes and value added taxes (including penalty and
interest) imposed on, based on, or measured by any payments of Monthly
Rental pursuant to this Agreement. Where permitted by law, Comdisco
shall be responsible for claiming a resale exemption for state and
local sales taxes and use taxes and value added taxes imposed on,
based on, or measured by any amounts paid for Comdisco's acquisition,
ownership, or use of property or services to Comdisco to be resold to
SABRE. Comdisco shall indemnify SABRE for such taxes (including
penalty and interest), if Comdisco's failure to properly claim this
exemption results in additional taxes imposed on SABRE. With respect
to sales, use and value added taxes imposed by those states and local
jurisdictions that do not provide a resale exemption, Comdisco shall
pay the applicable tax due and SABRE shall reimburse Comdisco for such
tax to the extent such tax is imposed on property sold or leased to
SABRE by Comdisco. Except as provided for in the preceding sentence,
Comdisco shall be responsible for and shall indemnify SABRE for state,
and local sales and use taxes and value added taxes (including penalty
and interest) imposed on, based on, or measured by any amounts paid
for Comdisco's acquisition, ownership, or use of property or services,
or the transfer or provision of property or services to Comdisco. Each
of SABRE and Comdisco shall be responsible for taxes based on or
measured by its own net or gross income, net or gross receipts (except
for state and local sales and use taxes and value added taxes),
capital, net worth, and for franchise and similar taxes. If a party
incurs any taxes based on or measured by the other party's net or
gross income, net or gross receipts (except for state and local sales
and use taxes and value added taxes), capital, net worth, and for
franchise and similar taxes of the other party, then such other party
shall indemnify the party incuring the taxes.
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 15
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<PAGE>
(b) PROPERTY TAXES. SABRE 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 and Comdisco shall be responsible for the
filing of such tax returns on Comdisco owned property. SABRE shall
reimburse Comdisco for ad valorem taxes on property leased by Comdisco
to SABRE pursuant to this Agreement if SABRE has been provided with
all the rights and opportunities to contest such taxes, including the
right to contest the valuation upon which such taxes are based, that
would have been available to SABRE if SABRE had been the owner of the
Equipment instead of the lessee.
(c) CONTESTS AND CLAIMS FOR REFUNDS. If Comdisco or SABRE receives
notice from any taxing authority with respect to an assessment or
potential assessment or imposition of any tax that the other party
("Tax Indemnifying Party") would be responsible for pursuant to this
Section 4, then Comdisco or SABRE, as the case may be, shall notify
the Tax Indemnifying Party in writing of such notice so as to allow
the Tax Indemnifying Party sufficient time prior to the expiration of
any period during which contests may be filed to file a contest of the
tax, and shall, at the Tax Indemnifying Party's written request,
contest or permit the Tax Indemnifying Party to contest such proposed
tax at its own expense. The Tax Indemnifying Party may require the
other party to apply, at the expense of the Tax Indemnifying Party,
for a refund of taxes otherwise subject to reimbursement or
indemnification under this Section 4. In lieu of pursuing such a
refund claim, Comdisco or SABRE, as the case may be, may assign its
rights to a refund claim to the Tax Indemnifying Party. SABRE and
Comdisco shall cooperate in good faith in any contest or claim for
refund pursuant to this Section 4.
(d) REFUNDS. Comdisco or SABRE, as the case may be, shall promptly
pay over to the other party, an amount equivalent to any refund,
credit, offset or abatement (including interest thereon) received by
Comdisco or SABRE, as the case may be, of taxes, to the extent such
refunds, credits, offsets, or abatements are of amounts that were paid
by the other party to either Comdisco or SABRE, as the case may be, or
to a taxing authority pursuant to this Section 4.
(e) COOPERATION. Each party shall provide the other with such
cooperation as such other party may reasonably request in minimizing
taxes incurred in connection with this Agreement. In the case of
SABRE, such cooperation shall include providing Comdisco any
applicable resale certificates; information regarding out-of-state use
of materials, services, or sales; or other exemption certificates. In
the case of Comdisco, such cooperation shall include providing SABRE
applicable information regarding out-of-state delivery or use of
materials, services or sales; providing prompt notice of the
occurrence of any condition or event which causes, SABRE to be liable
to pay any amount under this Section 4, and at the request of SABRE,
taking steps reasonably available to Comdisco to minimize taxes; such
steps shall include (but not be limited to) (i) providing itemized (or
non-itemized) invoices or billing, (ii) separating (or combining)
services provided pursuant to this Agreement, (iii) changing the
location at which services or property are delivered, provided or used
pursuant to this Agreement, (iv) permitting SABRE to assign to an
affiliate all or part of its rights under this Agreement, including
the right to take delivery of services or property and (v) using
commercially reasonable efforts to require any third party to take
steps reasonably available to such party to minimize taxes. In the
case of
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 16
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<PAGE>
SABRE and Comdisco, such cooperation shall also include providing
its value added registration numbers to the other party for any
jurisdiction for which recoverable value added taxes were paid,
maintaining records as reasonably necessary for tax purposes; 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 as
reasonably necessary in connection with the preparation of any tax
returns or any audit or tax contest or refund claim.
(f) SALES AND USE TAXES. Notwithstanding anything to the contrary in
this Agreement or any other agreement between Comdisco and SABRE,
SABRE shall not be responsible for or obligated to indemnify Comdisco
for, and Monthly Rental shall not include, (a) any taxes other than
sales or use or value added taxes imposed on or with respect to the
transfer of Equipment or services from Comdisco to SABRE or (b) any
sales or use taxes or value added taxes with respect to any item of
Equipment to the extent such taxes exceed the amount of such taxes for
which SABRE would have been responsible if either (x) it had purchased
or leased the item of Equipment directly from a third party vendor or
(y) with respect to items of equipment that are sold to Comdisco by
SABRE pursuant to a sales agreement, if it had not sold the items of
equipment to Comdisco.
(g) EXCLUSIONS. Notwithstanding anything to the contrary in this
Agreement or any other agreement (including Section 17 of this
Agreement) between Comdisco and SABRE, neither party shall be
responsible for, or required to indemnify the other party ("Tax
Indemnified Party") for: (i) taxes resulting from the willful
misconduct or gross negligence of the Tax Indemnified Party; (ii)
taxes either not yet due or payable, or taxes being contested in
accordance with the provisions of this Section 4; (iii) any
withholding taxes imposed on the net or gross income of the Tax
Indemnified Party; (iv) taxes that result from any failure of the Tax
Indemnified Party to file timely reports or returns or to pay any
taxes when due, or to comply with any certification, information,
documentation, reporting or similar requirements required to obtain or
establish refund or exemption from such taxes; and (v) penalties and
interest with respect to such taxes to the extent such penalties or
interest are imposed as a result of any of the factors listed in
clauses (i) through (iv) of this section, or as a result of tax return
positions of the Tax Indemnified Party that are unrelated to this
Agreement. The parties further agree that the indemnity provisions in
Section 10.3 and Section 17 of this Agreement and in any other
agreement, do not apply to taxes, it being the intent of the parties
that this Section 4 state the parties' indemnification obligations
with respect to taxes.
(h) TAX CHARACTERIZATIONS. Unless otherwise stated therein, each
Equipment Schedule hereunder shall be entered into on the basis that
Comdisco intends to claim as allowed by the Internal Revenue Code such
deductions for depreciation, interest on purchase money, and other tax
benefits as are provided to an owner of equipment. Comdisco is solely
liable for any tax or other characterizations of law or regulation
regarding such deductibility.
4.4 MONTHLY RENTAL ADJUSTMENTS RELATED TO ADDITIONS AND REMOVALS.
(a) [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
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<PAGE>
(b) [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 18
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<PAGE>
For example, assume the following:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------
1998 1999 2000
- ----------------------------------------------------------------------------
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------
</TABLE>
Under this example, [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
For example, using the numbers in the table above:
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 19
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<PAGE>
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
c. REFRESH POOL.
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
REFRESH POOL MECHANICS:
i) Adding Growth Equipment and Refresh Equipment:
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
ii) Removing Equipment:
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 20
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<PAGE>
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
iii) End of Term:
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
iv) [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
For example:
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
The examples attached as Attachment D illustrates these
formulas:
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 21
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<PAGE>
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
4.5 RECONCILIATION ACCOUNT. SABRE shall have the option to utilize a
Reconciliation Account more fully described in an Equipment Schedule
to accumulate changes in the Monthly Rental made pursuant to the
Refresh Pool Mechanics described herein and in the Equipment Schedule
which will be reconciled on the Settlement Dates set forth in the
Equipment Schedule. Additional Settlement Dates can be called (i) by
either party if the accumulated adjustment amount exceeds $[TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED] accumulated across all
active Equipment Schedules; (ii) by the non-defaulting party if a
party shall have defaulted in the performance of a material
obligation under this Agreement or an Operative Agreement and not
otherwise excused or cured during the applicable cure period; (iii)
by Comdisco if SABRE shall not be Investment Grade; (iv) by SABRE if
Comdisco shall not be Investment Grade; or (v) by either party if a
notice of termination has been given, and at SABRE's option the use
of the Reconciliation Account can be discontinued in which case the
Monthly Rental shall be adjusted as provided herein. Notwithstanding
the above, either party may at any time, at its sole option, pay the
other party a cash payment to reduce or eliminate the balance in the
Reconciliation Account. SABRE has the ability to transfer all or
part of the Reconciliation Account balance from one Equipment Schedule
to another Equipment Schedule under this Agreement. Upon notice from
SABRE, Comdisco shall cause such amounts to be transferred between
Equipment Schedules. If the two Equipment Schedules are denominated
in different currencies, then the amounts being transferred will be
converted to the currency of the destination Equipment Schedule at
the then current foreign exchange rate for the relevant currencies as
quoted in the Spot Close Value New York Composite Rate by Bloomberg
as of the close of business (US Eastern Time) as of the date of such
notice.
4.6 INVOICES.
(a) Comdisco shall provide all invoices in the form and media, and
with the level of detail as mutually agreed to between the
parties during the completion of the Life-Cycle Process Analysis
and Optimization and Optional Implementation task period
described in the Services Schedule. The parties agree to conduct
a test or (if required) series of tests encompassing an exchange
of the agreed upon invoice data between the parties, such test to
occur on or about the thirtieth day after this Agreement is
executed by the parties. In the event such test fails, the
parties shall diligently pursue avenues to remedy such failure.
From time to time, SABRE and Comdisco may agree to changes in the
form, media and structure of invoices. Upon the successful
completion of the aforementioned tests, an invoice that does not
comply in all material respects with the requirements as to form
and content that was agreed upon by the parties shall not be
deemed presented. Upon successful completion of the
aforementioned tests, Comdisco shall prepare and send to SABRE an
invoice with the level of detail agreed upon for receipt by SABRE
on or before the 22nd day of each month reflecting all changes
received by Comdisco on or before the 15th of that month. In the
event SABRE receives such invoice on or before the 23rd day of a
given month, then SABRE shall pay such invoice on or before the
last day of such
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 22
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<PAGE>
month. In the event SABRE receives an invoice after the 23rd
day of a given month, then one day for each day after the 23rd
that SABRE receives such invoice shall be added to the date SABRE
is required to pay such invoice. Until such time as the parties
agree as to form, media, and detail to be contained on the
invoice and the successful completion of the aforementioned
tests, or SABRE receives an invoice that does not comply with
the agreed upon detail, SABRE's obligation to pay any such
invoice shall be within 30 days of receipt of such invoice,
however, SABRE shall endeavor to make payments earlier than such
30 days. Comdisco shall promptly credit to SABRE any undisputed
credits due SABRE under this Agreement and any payments made to
Comdisco which Comdisco is not entitled hereunder. Comdisco
shall refund by check, instead of issuance of credits, when
SABRE's accounts are current. [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED].
(b) [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
4.7 WITHHOLD VENDOR PAYMENTS. If after SABRE's acceptance of any
Equipment, SABRE provides Comdisco with written notice to withhold
payment of the purchase price for such Equipment from an Equipment
vendor or supplier, Comdisco shall withhold such payment until SABRE
provides Comdisco with an additional written notice instructing
Comdisco to pay such purchase price; provided, however, SABRE shall
indemnify Comdisco against any claims and for all costs and expenses
directly related to such non-payment.
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 23
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<PAGE>
4.8 AUDITS.
(a) SABRE may, from time to time, at its own expense review
Comdisco's books and records for the purpose of evaluating the
accuracy of Comdisco's invoices for Monthly Rental, Services
rendered and Taxes. SABRE may employ such assistance as it deems
desirable to conduct such reviews, including an independent
accounting firm or consultants.
(b) Comdisco shall cooperate in any SABRE review, providing
reasonable access to any and all Comdisco employees and all
Comdisco books, records and other documents reasonably necessary
to assess the accuracy of Comdisco's invoices as provided above.
Any disputes concerning the results of a review shall be referred
to the parties Project Managers (as defined in the Services
Schedule) for resolution. If these individuals cannot resolve
the dispute within 30 days after the referral, the dispute(s)
shall be escalated as set forth in Section 13 herein. Any
billing errors shall be promptly corrected, including making
refund of any overpayment by SABRE as provided in Section 4.6(a)
above and making payment of any underpayments by SABRE. In the
event SABRE's audit shows a material error which is defined as in
excess of [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
percent ([TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]%)
then Comdisco shall be required to reimburse SABRE for the
reasonable cost of such audit. Such [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED]% error rate shall be exclusive of monthly
fluctuations resulting from Monthly Rental adjustments made
pursuant to the Program.
4.9 LATE PAYMENT. If any scheduled payment by SABRE is not made within
thirty (30) days following its due date (other than a Disputed
Amount), interest on such delinquent payment shall accrue from the due
date until paid at the prime rate as established by Citibank, N.A.
plus [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] percent ([TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED]%) and shall be payable
by SABRE. Comdisco shall be obligated to provide SABRE with prompt
written notice of non-receipt of a payment. If Comdisco fails to
provide such notice then interest charges shall not accrue on the
non-Assigned Amount until such date as written notice is provided.
5. INSTALLATION AND USE OF EQUIPMENT
5.1 DELIVERY AND INSTALLATION. SABRE shall be responsible for the cost of
delivery and installation of all Equipment to the SABRE designated
delivery location. Upon the expiration or termination of an Equipment
Schedule or the early return of any items of Equipment thereunder as
provided for herein, SABRE shall pay all transportation charges
(including in-transit insurance) associated with the return of the
Equipment for a distance equal to the distance between the Equipment
location and the greater Chicago metropolitan area for locations in
the U.S. For locations outside the U.S. SABRE shall pay all
transportation charges (including in-transit insurance) associated
with the return of the Equipment for a distance equal to the distance
between the Equipment location and Comdisco's equipment return
location in such country, or if there is no Comdisco location in such
country, then the closest Comdisco equipment return location to such
Equipment. Comdisco shall make arrangements for its carrier to pick
up the Equipment. Risk of loss of the Equipment shall transfer to
Comdisco at the time SABRE tenders the Equipment to Comdisco or its
carrier at the Equipment location for return to Comdisco.
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<PAGE>
5.2 USE OF EQUIPMENT. SABRE shall be entitled to unlimited usage of the
Equipment for its benefit and/or the benefit of its parents,
affiliates and Customers, during the Initial Term or any Extension
Period without extra charge by Comdisco.
5.3 ACQUIRING GROWTH AND REFRESH EQUIPMENT.
(a) As agreed to herein and in the Operative Agreements, in the event
the Growth or Refresh Equipment is newly manufactured equipment,
upon SABRE's request, Comdisco shall actively participate in
negotiations with SABRE including participation in meetings of
the negotiating team and with suppliers and providing information
for an acquisition price for such equipment by providing SABRE
with Comdisco's market watch information based on Comdisco's
knowledge about recent transactions for such equipment. Upon
agreement of an acquisition cost between SABRE and an equipment
supplier, and if SABRE elects to add such equipment to the
Program as Growth or Refresh Equipment, SABRE will assign to
Comdisco its right to purchase such equipment. In the event the
Growth or Refresh Equipment is used equipment, Comdisco will
provide SABRE with the following information: (i) Comdisco's
market watch information for such equipment; (ii) whether
Comdisco has such equipment available in its inventory and if so,
the related Comdisco supply price; and (iii) other equipment
suppliers who may have such equipment. SABRE shall provide
Comdisco the opportunity to supply such used equipment to SABRE
and SABRE agrees to acquire such equipment from Comdisco if
Comdisco's acquisition price and other terms and conditions of
the proposal are, based on SABRE's commercially reasonable
business judgment, equal to or better than the proposals obtained
from other third parties. In the event SABRE acquires used
equipment from a third party, and if SABRE elects to add such
equipment to the Program, SABRE will assign to Comdisco its right
to purchase such equipment. SABRE is not under any obligation to
include equipment it may purchase or lease from others under this
Program. Further, SABRE may elect to add equipment it purchases
or leases from others under this Program as Managed Equipment and
Comdisco shall provide asset tracking services for such Managed
Equipment at no additional charge (unless mutually agreed to in
the Services Schedule) pursuant to the terms of this Agreement
and the limitation of [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] assets (as defined in the Services Schedule) as
further provided in the Services Schedule.
(b) In addition to the other conditions of this Agreement and the
Operative Agreements, if SABRE shall have (i) [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED]; (ii) [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED]; or (iii) [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED]
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 25
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<PAGE>
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
5.4. SWAPPING EQUIPMENT. [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED]
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 26
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<PAGE>
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
In addition, SABRE agrees to pay to Comdisco (i) [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED], and (ii) [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED].
Notwithstanding the above, [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED]. Further, Comdisco shall accept return of the Duplicate
Equipment as provided for herein, and SABRE shall have the same
obligations with respect thereto, including payment of the amounts
described in (i) and (ii). In the event that one, or both, of the
parties do not have a legal presence in a country with which SABRE
desires to put Equipment, the parties will work together in good
faith to establish such legal presence so as to be able to enter into
an Equipment Schedule in such country.
5.5 OTHER EQUIPMENT. In the event SABRE shall elect to exercise its right
to include other equipment (such as midrange, PC's, or
telecommunications equipment) under the terms of this Agreement, SABRE
shall notify Comdisco at least sixty (60) days prior notice and
provide a list of other equipment that shall be included under the
Agreement. In such event, the parties shall meet in good faith to
agree on the Minimum Commitment Period, Monthly Rental, Funding Factor
and Equipment Cost for such other equipment, as well as
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the Refresh Pool credit for such other equipment. Any other
equipment initially included in such election shall be deemed as
SABRE Equipment under this Agreement.
5.6 SHORT-TIME PROCUREMENTS. Comdisco understands that from time to time
and under certain circumstances SABRE must act on a shorter timeframe
than has been determined to be necessary under this Agreement.
Notwithstanding any timeframe by which Comdisco is allowed to respond,
or SABRE is required to give notice under this Agreement or any
Operative Agreement, if in SABRE's commercially reasonable business
judgement, SABRE is required to shorten or not comply with such
timeframe due to an event of operational necessity or emergency, then
SABRE shall have the right to operate its business in its best
interest and any Refresh Equipment or Growth Equipment acquired or any
other action taken shall not affect the right of SABRE to include such
Equipment under the Program or delete such Equipment from the Program,
and SABRE shall have the right to include or delete such Equipment as
if such notice had been given or time had elapsed.
5.7 RELOCATION OF EQUIPMENT. SABRE shall, at its own risk, cost, and
expense, have the right to relocate the Equipment from the location
stated in the applicable United States or Non-U.S. (as the case may
be) Equipment Schedule to other locations as follows: a) if SABRE
wishes to relocate the Equipment to another country and be relieved of
its obligations as lessee under the applicable Equipment Schedule for
such Equipment, then SABRE may move the Equipment outside of the
United States or foreign country by terminating and removing the
Equipment from its existing Equipment Schedule and adding it to an
existing Equipment Schedule for the country where the Equipment is to
be relocated (or if none exists, under a new Equipment Schedule for
such country) with SABRE or the applicable local SABRE affiliate for
that country for an Initial Term equal to the remainder of the
original Initial Term and for a Monthly Rental which is equivalent to
the current Monthly Rental for such Equipment with local currencies
and interest rates being considered; or b) if SABRE wishes to relocate
the Equipment to another country or within the country in which the
Equipment was originally located, then SABRE may move the Equipment
outside of the United States or foreign country or within the country,
provided, however, that (i) no such relocation relieves SABRE of its
obligation under the applicable Equipment Schedule, and (ii) upon the
expiration or termination of the Equipment Schedule, SABRE returns the
Equipment to the country where the Equipment was originally installed
(unless otherwise agreed to by Comdisco). Whether SABRE elects a) or
b), SABRE shall pay any reasonable and actual additional costs and
expenses (including property taxes, sales and use taxes, and customs
and duties (including import and export taxes), but no other taxes
except those described in Section (iii) below) resulting from such
relocation, and (iii) SABRE may move the Equipment outside the United
States or foreign country (as the case may be) only after giving
Comdisco written notice (addressed to the Director of Taxes), at
least thirty (30) days prior to the date such Equipment is to be
moved; that SABRE intends to move the Equipment outside the United
States or foreign country. If, within twenty-one (21) days of receipt
of such notice, Comdisco delivers written notice to SABRE (addressed
to the Project Manager as defined under this Agreement) certifying
that moving the Equipment outside the United States or the foreign
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country would have an adverse impact on Comdisco's federal income tax
liability or on any other tax liability other than property taxes,
sales and use taxes, and customs and duties (including import and
export taxes), then SABRE may (x) keep the Equipment in the United
States or the foreign country, (y) move the Equipment outside the
United States or foreign country if it agrees to return the Equipment
to the country where the Equipment was originally installed (unless
otherwise agreed to by Comdisco) and to indemnify Comdisco, on terms
reasonably acceptable to Comdisco for (a) any increase in Comdisco's
federal tax liability and (b) such other taxes, if any, that the
parties agree to, based on good faith negotiation, or (z) remove the
Equipment from the Equipment Schedule in accordance with the Refresh
Pool Mechanics described in the Agreement. SABRE shall provide to
Comdisco written notice of all relocations performed within the
country in which the Equipment was originally installed. In the event
of a relocation as specified in (a) above, the portion of the Refresh
Pool set out in the Equipment Schedule for which the Equipment is
being terminated and removed shall be decreased as provided in the
Refresh Pool Mechanics in Section 4.4(c), and the portion of the
Refresh Pool set out in Equipment Schedule to which the Equipment is
being added shall be increased as provided in the Refresh Pool
Mechanics in Section 4.4(c). The Minimum Commitment Period for such
Equipment shall not change due to such relocation.
5.8 RECONFIGURATION. Upon prior written notice to Comdisco, SABRE may
reconfigure and install Attachments on the Equipment. In the event of
such a Reconfiguration or Attachment which SABRE has purchased and
retained ownership of, SABRE shall, upon return of the Equipment, at
its expense, restore the Equipment to the original configuration
specified on the Equipment Schedule or a "higher level configuration"
in accordance with the manufacturer's specifications and in the same
operating order, repair and appearance as when installed (normal wear
and tear excluded). For purposes hereof, "higher level configuration"
means (a) an equal or better configuration with respect to main
memory, cache channels or other features, and of the same manufacturer
as the original configuration, and (b) that such upgrades will have
megabyte capacity for DASD and Tape, and a MIPS rating for processors
that is equal or higher than the original capacity and of the same
manufacturer as the original configuration. In the event of such a
Reconfiguration or Attachment which SABRE has financed with Comdisco
as provided for below, SABRE shall return the Equipment with such
Reconfiguration or Attachment. If any parts are removed from the
Equipment during the Reconfiguration or Attachment, the restoration
shall include, at SABRE's option, the installation of either the
original removed parts or Like Parts. Alternately, with Comdisco's
prior written consent which shall not be unreasonably withheld, SABRE
may return the Equipment with any Attachment or upgrade. If any parts
of the Equipment are removed during a Reconfiguration or Attachment,
Comdisco may require SABRE to provide additional security, reasonably
satisfactory to Comdisco and SABRE, in order to ensure performance of
SABRE's obligations set forth in this subsection. Neither Attachments
nor parts installed on Equipment in the course of Reconfiguration nor
software, applications or data installed by SABRE shall be required to
be returned with the Equipment. The Manufacturer or Maintenance
Organization may incorporate engineering changes, safety changes, or
make temporary alterations to the Equipment. All items returned to
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Comdisco with the Equipment, except software, applications or data not
owned by Comdisco shall become the property of Comdisco. For purposes
of this subsection, "Attachment" means any accessory, equipment or
device and the installation thereof that does not impair the original
function or use of the Equipment and is capable of being removed
without causing material damage to the Equipment and is not an
accession to the Equipment; "Like Part" means a substitute part which
is lien free and of the same manufacturer and part number as the
removed part, and which when installed on the Equipment shall be
eligible for maintenance coverage with the Manufacturer of the
Equipment; "Reconfiguration" means any change to the Equipment that
would upgrade or downgrade the performance capabilities of the
Equipment in any way.
However, if at the time of the Reconfiguration such Reconfiguration
(i) is not capable of being removed without causing material damage to
the Equipment; or (ii) if at the time of the Reconfiguration the
Manufacturer does not offer on a commercial basis a means for the
removal of the additonal items; then such Reconfiguration is subject
to the prior written consent of Comdisco, which shall not be
unreasonably withheld. Notwithstanding the above, if such
Reconfiguration is included as Growth or Refresh Equipment under this
Agreement and the Operative Agreements, then Comdisco's consent to
such Reconfiguration is not required. Notwithstanding anything to the
contrary contained herein, for any upgrades, attachments and
modifications comprising such Reconfiguration or Attachment or
otherwise added (whether new or used) to any Equipment leased by SABRE
under an Equipment Schedule, SABRE shall have the right to purchase
and retain ownership of any such upgrades, attachments and
modifications, or finance any such upgrades, attachments and
modifications with Comdisco. In no event shall SABRE have the right
to finance any such upgrades, attachments and modifications with a
party other than Comdisco. In addition, SABRE shall provide Comdisco
any commercially reasonable opportunity to supply any such upgrades,
attachments and modifications to the Equipment leased under an
Equipment Schedule that are available in the used marketplace.
5.9 CPU GENERATIONAL UPGRADES. In the event SABRE elects to add a CPU
Generational Upgrade to an item of Equipment under this Program, such
CPU Generational Upgrades shall be added to the Program and the
following events will occur:
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]:
A. [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED];
B. [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]:
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(i) [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]; or
(ii) [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
(iii) [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
Notwithstanding the above, any item of Equipment can be upgraded
using the CPU Generational Upgrade mechanics as described above
no more than once every [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] calendar months and the Minimum Commitment Period for
the item of Equipment being upgraded and all attached upgrades
will be extended to the later of a new [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] month period or the end of the
current Minimum Commitment Period for that Equipment.
5.10 SUBLEASE. Provided all amounts then due and owing (other than a
Disputed Amount) are paid by SABRE, SABRE shall be entitled without
Comdisco's consent to sublease any or all of the Equipment, or any
part thereof, to, or permit their use by, any person or entity (except
to an entity affiliated with the Manufacturer of such Equipment),
including without limitation any subsidiary or affiliate of SABRE,
incorporated and located in the United States of America, but in all
cases only upon and subject to terms and conditions at least as
restrictive as those contained in this Agreement. No such sublease or
assignment shall relieve SABRE of any liability or obligations
hereunder except if Comdisco consents, in writing, based upon the
credit-worthiness of such sublessee or assignee and the terms and
conditions of the assignment or sublease, which consent shall not be
unreasonably withheld or delayed, to relieve SABRE of such obligation.
SABRE's rights under this Section are subject to Comdisco's right to
match any sublease proposed by a third party (except one proposed by
any subsidiary, affiliate or outsourcing Customer of SABRE). Except
for offers from subsidiaries, affiliates or outsourcing Customers of
SABRE, SABRE shall provide Comdisco with the terms of the third party
offer and Comdisco shall have three (3) days to match the offer and
SABRE shall sublease the Equipment to Comdisco if Comdisco has timely
matched the third party offer.
6. MAINTENANCE AND REPAIRS
6.1 EQUIPMENT CONDITION. SABRE shall, during the Initial Term or any
Extension Period, at its own expense, keep the Equipment in good
working order and condition and make all necessary adjustments,
repairs, and replacements thereto, reasonable wear and tear excepted.
SABRE shall not use or permit the Equipment to be used for any purpose
for which the Equipment is not reasonably suited.
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6.2 MAINTENANCE CONTRACT. SABRE may, during the Initial Term or any
Extension Period, at its own expense, enter into a maintenance
contract with the Manufacturer or a Maintenance Organization selected
by SABRE, or may provide for maintenance itself. SABRE is at all
times responsible for maintenance of the Equipment.
7. EQUIPMENT RETURN
7.1 PURCHASE RIGHTS. At the termination or early termination of an
Equipment Schedule as provided for herein, SABRE shall have the option
to tender to Comdisco or its carrier at the Equipment location for
return to Comdisco the same serial numbered Equipment listed on such
Equipment Schedule. In addition, at the termination or early
termination of an Equipment Schedule, upon SABRE's notice at least
sixty (60) days prior to such termination, SABRE shall have the right
to elect to purchase the Equipment. The parties shall meet personally
or telephonically to attempt to agree, in good faith, on the Fair
Market Value for the Equipment. In the event the parties fail to
agree on the Fair Market Value for the Equipment within five (5) days
of such notice provided above, then the parties shall engage the
appraisal process described in Section 1.24. [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED]. Upon pick up of SABRE owned
Replacement Equipment by Comdisco or its carrier, SABRE shall transfer
ownership of the Replacement Equipment to Comdisco, and Comdisco
shall transfer ownership for the Equipment being replaced to SABRE.
At least ninety (90) days prior to the expiration of the Initial
Term, Comdisco agrees to provide SABRE with notice that SABRE's
notices shall be due to terminate the Equipment Schedule and either
return the Equipment or purchase the Equipment. If SABRE elects to
terminate the Equipment Schedule, then the Equipment Schedule shall
terminate in accordance with Section 3 herein. If SABRE elects to
purchase the Equipment and if SABRE (i) fails to provide such notice
to Comdisco in the time frame indicated, or (ii) a) provides such
notice to Comdisco but fails to purchase the Equipment for a mutually
agreed upon Fair Market Value within three (3) days following the end
of such term or any extension, and b) fails to make available for
pick up by Comdisco or its carrier the Equipment or Replacement
Equipment if the parties are unable to agree upon a Fair Market Value
within ten (10) days following the end of such term or extension, then
the Equipment Schedule shall continue in full force and effect as
provided for in Section 3, retroactive to the date of termination or
early termination until
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such time as the conditions listed in (i) or (ii) are met.
Notwithstanding the foregoing, upon the termination or early
termination of an Equipment Schedule, SABRE shall have the right to
make available for pick up by Comdisco or its carrier for return to
Comdisco Replacement Equipment in lieu of items of personal
computer Equipment provided it is understood that whether SABRE
returns items of personal computer Equipment or items of personal
computer Replacement Equipment, Comdisco shall process the return
based on the number of units returned per location and shall not
process the return by serial number.
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
Notwithstanding the foregoing, in the event the Initial Term has
expired and the Equipment Schedule has continued on a month to month
basis, in the event Comdisco provides SABRE with notice to terminate,
SABRE shall have the right to provide notice within two (2) business
days of receiving such notice that it elects to purchase the
Equipment. In the event of such election, Comdisco's right to
terminate shall not be in effect for sixty (60) days to allow for the
procedure set forth in this Section 7 to occur. In the event the
parties do not reach agreement for SABRE to purchase the Equipment,
SABRE shall give notice to terminate such Equipment Schedule as
provided for in Section 3 above.
Upon Termination for Convenience of the Agreement or an applicable
Equipment Schedule, as provided herein or in the Operative Agreements,
the time provided in this provision shall be extended to provide an
orderly winddown and return or purchase of Equipment, as may
reasonable and necessary and not to exceed six (6) months as per
Section 3.4 herein.
7.2 CONDITION OF EQUIPMENT. The Equipment and/or Replacement Equipment
returned to Comdisco, shall at the time it is disconnected from its
then location, be in the same condition and working order as when
delivered to SABRE, reasonable wear and tear excepted, and shall be
certified eligible for maintenance by the Manufacturer. In addition,
the Equipment shall be at the then current Manufacturer's release,
revision and engineering change levels which were provided to SABRE by
the Manufacturer at no cost throughout the Initial Term or any
Extension Period under the Manufacturer's standard maintenance
contract. Notwithstanding the foregoing, in the event SABRE uses a
party other than the Manufacturer to maintain the Equipment, the
Equipment shall be at the then current Manufacturer's release,
revision and engineering changes levels which would have been provided
to SABRE by the Manufacturer at no cost throughout the Initial Term or
any Extension Period had SABRE entered into a standard maintenance
contract with the Manufacturer. SABRE shall at its expense, have the
Equipment deinstalled and certified by the Manufacturer, and packed in
accordance with the Manufacturer's guidelines.
7.3 REQUIREMENTS FOR RETURN OF EQUIPMENT. If Comdisco is no longer
providing Services under the Program, then SABRE and Comdisco will
appoint a principal contact person
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(the "Contact") with responsibility for coordinating delivery and
return of Equipment to one centralized shipping location. SABRE's
Contact will provide Comdisco ten days written notice of the
Equipment's availability for pick-up, but in no event prior to
SABRE's notice of termination pursuant to Section 3 and/or 7 of this
Agreement.
Comdisco will make arrangements for its transportation carrier to
contact SABRE's Contact to coordinate the return of the Equipment.
Comdisco's transportation carrier will be responsible for packing
Distributed Systems Equipment on site on the Pick Up Date. Risk of
loss for all Equipment shall pass to Comdisco once the Equipment has
been tendered to Comdisco or its carrier for return at the Equipment
location.
SABRE will be responsible, and will be invoiced, for any damaged,
non-functional and/or missing Equipment or Equipment parts based on
its Fair Market Value at the time the Equipment is tendered to
Comdisco or its carrier for return.
8. ASSIGNMENT
8.1 ASSIGNMENT OF MONTHLY RENTAL. The terms and conditions of each
Equipment Schedule have been fixed by Comdisco in order to permit
Comdisco to assign its right to receive the Fixed Equipment Portion of
the Monthly Rental, subject to SABRE's interest herein, and grant a
security interest in each Equipment Schedule and/or the Equipment to a
non-affiliated third party ("Assignee") for purposes of securing
nonrecourse financing, subject to SABRE's rights hereunder and under
the Operative Agreements [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED]. [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]. Any such Assignee
shall agree in writing that (a) it will only further assign the Fixed
Equipment Portion of the Monthly Rental to an entity which is (i)
"investment grade" (as defined below); (ii) not a competitor of SABRE;
(iii) not currently involved with litigation with SABRE; and (iv) such
entity agree to these same limits to its right to further assign;
(b) Assignee shall not disturb SABRE's quiet use and enjoyment of the
Equipment so long as SABRE is not in default (and after such
applicable cure period) of the payment of the Fixed Equipment Portion
of the Monthly Rental so assigned; and (c) SABRE's costs,
obligations, liability and risks shall not be increased nor its
rights or benefits diminished as a result of such assignment.
However, any such assignment by Comdisco shall not relieve Comdisco of
its obligations to SABRE, and shall not change SABRE's duties or
increase the burden, except as specifically provided for herein and in
the Operative Agreements or risks imposed on SABRE, except change
SABRE's obligation to pay the Assignee. Notwithstanding, SABRE shall
have the option to pay directly to Comdisco such assigned amounts in
lieu of paying the Assignee directly,
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in which case Comdisco shall indemnify SABRE from and against any
loss or damage (i) due to the failure of Comdisco to pay such
assigned amounts to the Assignee, or (ii) for any late payment
charges due to Comdisco's failure to pay such Assignee in a timely
manner. Further, SABRE shall acknowledge such assignments in a
written notice which shall be given by Comdisco to SABRE thirty (30)
days prior to the date SABRE is required to make payments to the
Assignee. SABRE also agrees that: (a) the Assignee shall be entitled
to exercise all of Comdisco's rights, but shall not be obligated to
perform any of the obligations of Comdisco, provided that Assignee
agrees to release any security interest in any Equipment if and to
the extent required in connection with SABRE's exercise of SABRE's
rights with respect to such Equipment; (b) the Assignee shall not
disturb SABRE's quiet and peaceful possession and unrestricted use
of the Equipment so long as SABRE is not in default (and such default
remains uncured during the cure period) and the Assignee continues to
receive the Fixed Equipment Portion of the Monthly Rental so assigned
payable under the Equipment Schedule; (c) SABRE shall pay all of the
Fixed Equipment Portion of the Monthly Rental so assigned (subject to
any withholding required by law, for purposes of this Section only)
to the Assignee subject to SABRE's rights hereunder and under the
Operative Agreements despite any defense or claim which it has against
Comdisco (SABRE reserves its rights to have recourse directly against
Comdisco for any defense or claim); and (d) subject to and without
impairment of SABRE's leasehold rights in the Equipment, SABRE holds
the Equipment for the Assignee to the extent of the Assignee's rights
in that Equipment. For purposes hereof, "investment grade" shall be
defined as any of the following: (1) a US Bank Domestic Long Term
Deposits Rating of Baa3 or better as published in Moody's Bond Record,
(2) a senior Corporate Credit Rating of Baa3 or better as published in
Moody's Bond Record, or (iii) a senior credit rating by another rating
agency other than found in Moody's Bond Record that is considered
"investment grade" in the domestic financial community. In the event
there are ratings found in Moody's Bond Record and another rating
agency, the Moody's rating shall prevail.
8.2 OTHER ASSIGNMENTS. Except for Comdisco's rights under Section 8.1
above, no part of this Agreement may be assigned directly or
indirectly, by Comdisco without SABRE's prior written approval, which
may be withheld in its sole discretion. Comdisco shall notify SABRE in
writing, and SABRE may immediately terminate this Agreement and the
Operative Agreements without liability therefor, if Comdisco dissolves
or is liquidated. SABRE may assign this Agreement to its Affiliates
or any successor in interest to all or any part of SABRE's operations,
without Comdisco's consent, so long as (i) such assignee's credit
standing is equal to or better than SABRE's credit standing, but not
less than "Investment Grade" and (ii) the assignee agrees in writing
to be bound by the terms and conditions of this Agreement and the
applicable Operative Agreements. If the assignee's credit standing is
less than Investment Grade, then such assignment shall be subject to
the prior written consent of Comdisco and may result in a change in
Monthly Rental. SABRE shall not act as a guarantor of the assignee's
obligations under this Agreement.
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9. OWNERSHIP - TITLE
9.1 COMDISCO WARRANTY. Comdisco warrants that, as of the Commencement
Date of each Equipment Schedule and throughout the term thereof,
Comdisco shall have good and valid title to, or the power and
authority to lease, the Units leased pursuant to such Equipment
Schedule. Nothing contained in this Agreement or any Equipment
Schedule shall give or convey to SABRE any right, title or interest in
or to any Unit, except for the leasehold interest and other rights set
forth in the terms of this Agreement and the applicable Equipment
Schedule. SABRE does not indemnify Comdisco or any third party from
any claims, actions, suits, proceedings, costs, expenses, damages, or
liability at law or in equity, including attorney's fees arising out
of, connected with, or resulting should this Agreement or associated
transaction(s) be deemed to be other than a true lease. Comdisco shall
indemnify SABRE for any loss or damage due to a breach of Comdisco's
warranty of quiet use and enjoyment of the Equipment that arises as a
result of any encumbrance placed on the Equipment by or through
Comdisco.
9.2 SABRE OBLIGATIONS. Except for any claim arising from the acts,
omissions, or negligence of Comdisco, SABRE shall at its own expense
protect and defend the respective interests in the Equipment of
Comdisco against all persons claiming against SABRE, at all times keep
the Equipment free and clear from any legal process or other
encumbrance arising by or through SABRE, give Comdisco prompt written
notice thereof and indemnify Comdisco from any loss caused by such an
encumbrance.
9.3 COMDISCO INSPECTION. Comdisco or its agent shall have reasonable
access to the Equipment during reasonable business hours for the
purpose of inspection, provided however, that SABRE has been notified
in writing at least ten (10) business days in advance and SABRE has
agreed to the time and date of access. While on SABRE's premises,
Comdisco and its agents shall observe all security regulations, as
well as rules and procedures governing conduct as SABRE require. The
inspection of Equipment is a physical inspection only, Comdisco shall
not review SABRE's data nor log onto SABRE's system, during such
inspection.
9.4 NOTICE OF DAMAGE. SABRE shall promptly notify Comdisco of all details
concerning any material damage or loss arising out of the improper
manufacture, functioning or operation of the Equipment.
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10. WARRANTIES
10.1 ENFORCEMENT. At the request and expense of SABRE, Comdisco shall, at
SABRE's option: (1) enforce for the benefit of SABRE any rights which
Comdisco may enforce against the Equipment Manufacturer or supplier of
Comdisco with respect to the Equipment, including but not limited to
remedies, if any, provided by the Manufacturer or the supplier of
Comdisco for breach of warranty or patent, copyright or trade secret
infringement or otherwise, and remedies and/or recovery of damages
otherwise provided by law or in equity and/or any recovery of refunds
or price adjustments or other claims arising under the equipment
purchase contract; or (2) to the extent assignable, make a full or
partial assignment to SABRE, as SABRE shall request, of any such
rights described above enforceable by Comdisco against the Equipment
Manufacturer or supplier of Comdisco with respect to the Equipment.
10.2 WARRANTY AND DISCLAIMER. Except as to warranty of title or as
otherwise specifically provided herein or in the Agreement, COMDISCO
SUPPLIES THE EQUIPMENT AS IS AND NOT BEING THE MANUFACTURER OF THE
EQUIPMENT, MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR
IMPLIED, AS TO THE EQUIPMENT'S MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, OR AS TO PATENT INFRINGEMENT OR THE LIKE, it being
agreed that all such risks, as between Comdisco and SABRE, are to be
borne by SABRE. SABRE acknowledges that it has selected the Equipment
and disclaims any reliance upon statements made by Comdisco. Comdisco
warrants that used Equipment Comdisco is supplying from its inventory
shall, upon delivery to the SABRE designated delivery location, be in
good working order, eligible for the Manufacturer's standard
maintenance contract, and at the Manufacturer's then current release,
revision and engineering change levels, unless as otherwise provided
for in an Equipment Schedule or other agreement between Comdisco and
SABRE.
10.3 INDEMNITY. SABRE agrees to defend, indemnify and hold Comdisco
harmless against any and all claims, actions, liabilities and expenses
(including court cost and reasonable attorney's fees, except for
attorney's fees incurred by Comdisco in monitoring a claim) arising
during the term of this Agreement and related to or arising out of the
ownership (for strict liability in tort only), the design,
manufacture, use, or operation of the Equipment, with the exception of
any claims resulting from Comdisco's negligence or willful misconduct.
SABRE shall promptly notify Comdisco upon receipt of notice or
knowledge of any event which may give rise to a claim. SABRE's
obligations under this Section shall survive the termination or
expiration of this Agreement and the Operative Agreements.
10.4 MUTUAL REPRESENTATIONS AND WARRANTIES. SABRE and Comdisco represent
and warrant, each to the other, as follows:
a. DUE ORGANIZATION, ETC. It is a corporation duly organized,
validly existing and in good standing under the laws of its state
of incorporation.
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 37
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b. POWER AND AUTHORITY FOR THIS AGREEMENT. It has the full power
and lawful authority to carry out and perform the undertakings
and obligations as provided herein and to own and operate its
assets, properties and business as contemplated by this
Agreement.
c. COMPLIANCE WITH LAWS. It is now in compliance with, and shall,
for the duration of this Agreement comply with, in all material
respects, all foreign and domestic laws, statutes, ordinances,
rules, regulations and orders applicable and material to this
Agreement and the Services provided hereunder. It shall not do
or perform any act, or omit to do or perform any act, that it
should reasonably know would place the other party in violation
of any local, state or federal (foreign or domestic) statute,
rule or regulation.
d. NO CONFLICT. The execution and delivery of this Agreement, the
performance of its obligations hereunder and the consummation of
the transactions contemplated hereby shall not (i) result in any
breach of any material terms or conditions of, or constitute a
default under, its Articles of Incorporation or By-Laws or any
material contract, agreement, license or other instrument or
obligation to which it is now a party or by which its properties
or assets may be bound or affected; or (ii) result in any
material violation of any law or any rule or regulation or
administrative agencies or governmental body or any order,
injunction or decree of any court, administrative agency or
governmental body.
e. ENFORCEABILITY. This Agreement has been duly authorized,
executed and delivered by it and is a legal and valid obligation
enforceable against it in accordance with its terms.
10.5 COMDISCO'S WARRANTIES AND REPRESENTATIONS. Comdisco represents and
warrants as follows:
AUTHORITY. Comdisco has full power and authority to carry out
and perform the undertakings and obligations herein and in the
Operative Agreements in the United States. Comdisco's affiliates
listed on Attachment E with respect to the country(ies) denoted
by such affiliate can enter into an Equipment Schedule(s) with
SABRE or SABRE's affiliate for such applicable country for
Equipment located outside the United States and such Comdisco
affiliate(s) has the authority to enter into such Operative
Agreement(s) and carry out and perform the undertakings and
obligations herein and in the Operative Agreements except as
modified as per Section 19.17 hereof.
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 38
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<PAGE>
10.6 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SABRE. Solely for real
estate law purposes and not for tax purposes, SABRE represents and
warrants to Comdisco that the Equipment is personal property, and when
subjected to use by SABRE or their subsidiaries or affiliates, shall
not be or become fixtures under applicable law, unless specifically
provided in a Non US Equipment Schedule.
EXCEPT FOR BREACH OF CONFIDENTIALITY, OR BREACH OF QUIET ENJOYMENT BY
COMDISCO OR CLAIMS MADE PURSUANT TO SECTION 17, UNLESS THE PARTIES
SPECIFICALLY AGREE IN WRITING OTHERWISE, IN NO EVENT SHALL EITHER PARTY
HERETO, OR THEIR ALLOWED SUCCESSORS OR ASSIGNS, BE LIABLE TO THE OTHER
PARTY OR THE SUCCESSORS OR ASSIGNS, FOR ANY SPECIAL, COLLATERAL,
INCIDENTAL, OR CONSEQUENTIAL DAMAGES FOR BREACH OF ANY OF THE PROVISIONS OF
THIS AGREEMENT AND THE OPERATIVE AGREEMENTS EVEN IF SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
EXCEPT FOR ANY WARRANTIES THAT ARE CONTAINED IN THIS AGREEMENT OR ANY OF
THE OPERATIVE AGREEMENTS, COMDISCO AND SABRE EXCLUDE ALL WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
11. INSURANCE AND RISK OF LOSS.
11.1 RISK OF LOSS; SABRE'S OBLIGATIONS TO MAINTAIN INSURANCE. Beginning on
the Delivery Date and continuing until the Equipment is tendered to
Comdisco or its carrier at the Equipment location for return to
Comdisco, SABRE relieves Comdisco of responsibility for all risks of
physical damage to, or loss or destruction of, the Equipment while in
SABRE's possession. During the term of lease as to each Equipment
Schedule, SABRE shall at its own expense keep in effect public
liability insurance in amounts and against risks customarily insured
against by SABRE on equipment owned by it, and property damage
insurance covering the Equipment designated in such Equipment Schedule
for an amount not less than its Casualty Value. All policies for
property damage insurance shall list Comdisco and its Assignee as
additional insured and loss payee, and shall provide for at least
thirty (30) days prior written notice to Comdisco of cancellation or
expiration. Evidence of such insurance coverage shall be furnished to
Comdisco upon demand. Notwithstanding the foregoing provisions,
provided SABRE is Investment Grade, or if SABRE's credit standing is
not rated or implied by an independent rating agency, the credit
quality of SABRE is reasonably deemed by Comdisco to be "Investment
Grade", SABRE may elect to self-insure with respect to damage to the
Equipment or third party personal and property damage, or both
provided that such self-insurance is consistent with SABRE's normal
business practices with respect to other similar equipment it leases,
rents, or owns.
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 39
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<PAGE>
11.2 DAMAGE TO EQUIPMENT. If any Unit is rendered unusable as a result of
any physical damage to, loss, or destruction of the Unit, SABRE shall
give Comdisco prompt notice thereof and the applicable Equipment
Schedule shall continue in full force and effect without any abatement
of rental fees. SABRE shall attempt to determine, within thirty (30)
days after the date of occurrence of such loss, damage, or
destruction, whether such Unit can be repaired. In the event SABRE
determines that such Unit can be repaired, SABRE, at its expense,
shall cause such Unit to be promptly repaired; or in the event SABRE
determines that the Unit was lost or cannot be repaired, SABRE shall,
at Comdisco's option, either: (1) at its expense, promptly replace
such Unit if available, with Equipment which is lien free and of same
manufacture, model, and features as the lost, damaged, or destroyed
Unit and convey title to such replacement to Comdisco free and clear
of all liens and encumbrances, and the applicable Equipment Schedule
shall continue in full force and effect as though such loss, damage,
or destruction had not occurred; or (2) terminate the applicable
Equipment Schedule with respect to such Unit and pay Comdisco an
amount equal to the Casualty Value indicated in the applicable
Equipment Schedule as of the date of the loss, damage, or destruction
of the Unit.
11.3 COMDISCO'S OBLIGATION TO MAINTAIN INSURANCE.
a) For the Services provided under this Agreement and the Operative
Agreements, Comdisco shall procure at its own expense and
maintain in full force and effect during the term of the
Agreement, policies of insurance with the types and the minimum
amounts of coverage stated below. The policies shall be with
responsible insurance carriers duly qualified in the
jurisdictions in which the products and services are to be
delivered and performed, and shall cover the operations and
obligations of Comdisco under the Agreement.
<TABLE>
<CAPTION>
TYPES OF INSURANCE LIMITS OF LIABILITY
<S> <C>
One Person-One Occurrence
Comprehensive or Commercial General
Liability (specifically including contractual Total combined limit of
liability); Personal Injury (including bodily and excess coverage in
injury) and Third Party Property Damage; the amount of [TEXT OMITTED -
Errors and Omissions Coverage CONFIDENTIAL TREATMENT
REQUESTED] Million Dollars
($[TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED]) each
and every loss overall
Comprehensive or Business Automobile Same as above
Liability (covering claims arising from all
owned, hired and unowned vehicles);
Personal Injury (including bodily injury)
and Third Party Property Damage
Workers' Compensation Statutory limitations
Employer's Liability $[TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED]
</TABLE>
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 40
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<PAGE>
b) Except for Worker's Compensation, Errors and Omissions Coverage,
and Employer's Liability, SABRE shall be named as an additional
insured in such policies and they shall contain standard cross
liability clauses. Comdisco shall cause the liability it assumed
under this Agreement to be specifically insured under the
contractual liability section of the liability insurance
policies. The liability policy shall be primary without right of
contribution from any insurance by SABRE. Such policies shall
require that SABRE be given not less than thirty (30) days prior
written notice of any material change or cancellation therein.
c) Comdisco shall provide SABRE with certificates of insurance
evidencing all of the above coverage, including all special
requirements specifically noted above. Comdisco shall provide
SABRE with certificates of insurance evidencing material changes,
renewal or substitution of such insurance thirty (30) days prior
to the effective date of same.
d) The provisions herein as to maintenance of insurance shall not be
construed as limiting in any way the extent to which Comdisco may
be held liable for payment for damages to persons or property
resulting from its activities under the Agreement, the activities
of any it its employees, or other person(s) for which Comdisco is
otherwise responsible shall maintain throughout the term of this
Agreement insurance coverage for itself.
12. DEFAULTS AND REMEDIES.
12.1 DEFAULT BY SABRE. The occurrence of any one of the following
constitutes an Event of Default and a material breach of this
Agreement and an Equipment Schedule:
(a) SABRE shall fail to pay Monthly Rental and other amounts (other
than a Disputed Amount or due to an Inadvertant Payment Lapse)
pursuant to Section 4 of this Agreement which failure has not
been cured within thirty (30) days after SABRE's receipt of
written notice of same from Comdisco.
(b) SABRE attempts to remove, sell, transfer, encumber, sublet or
part with possession of the Equipment or any items thereof,
except as expressly permitted herein, and such failure shall
continue uncured for thirty (30) days after SABRE's receipt of
written notice of default from Comdisco.
(c) SABRE fails to observe or perform any of the other material
obligations of SABRE hereunder, and such failure shall continue
uncured for thirty (30) days after receipt of written notice
which specifically describes the Event of Default to SABRE, and
provided, however, if within said 30 day period SABRE has
dilligently commenced the curing of the Event of Default, but
cannot complete curing of same within such 30 day period, SABRE
shall be entitled to such additional time as is reasonably
necessary to complete the curing of the Event of Default; or
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<PAGE>
(d) SABRE: ceases to do business as a going concern; makes a general
assignment for the benefit of, or enters into any arrangement
with creditors in lieu thereof; is unable or admits in writing
its inability to pay its debts as they become due; is insolvent,
bankrupts or the subject of receivership; authorized, applies
for, or consents to the appointment of a trustee or liquidator of
all or a substantial part of its assets or has proceedings
seeking such appointment commenced against it which are not
terminated within 60 days after such commencement; files a
voluntary petition under any bankruptcy or insolvency laws or
files a voluntary petition under the reorganization or
arrangement provisions of the laws of the United States
pertaining to bankruptcy or any similar law of any jurisdiction
or has proceedings under any such law instituted against it which
are not terminated within 30 days after such commencement; or has
any substantial part of its property become subject to any levy,
seizure, assignment or sale for or by any creditor or
governmental agency without said, levy, seizure, assignment or
sale being released, lifted, reversed or satisfied within 10 days
thereafter.
12.2 REMEDIES ON SABRE'S DEFAULT.
(a) Subject to the provisions of Section 12.4, upon the occurrence of
an Event of Default hereunder, Comdisco may, at its option, and
in compliance with the terms of this Agreement, the other
Operative Documents, and all applicable laws, by reasonable prior
written notice to SABRE, require SABRE to [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED].
(b) Subject to the provisions of Section 12.4, upon the occurrence of
an Event of Default hereunder, provided that (i) Comdisco shall
have made demand upon SABRE as provided in (a) above, and (ii)
SABRE shall have failed to take the actions and make the payments
required pursuant to the provisions of (a) above, Comdisco may,
at its option, and in compliance with the terms of this
Agreement, the other Operative Documents, and all applicable
laws, do any or all of the following: (1) [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED]; (2) [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED]
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 42
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<PAGE>
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]; (3) [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED], and (4) [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
(c) An Event of Default solely with respect to an Equipment Schedule
shall not constitute a default under any other Equipment
Schedule(s) in effect. The waiver by Comdisco of any breach of
any obligation of SABRE shall not be deemed a waiver of such
obligation or of any subsequent breach of the same or any other
obligation.
12.3 DEFAULT BY COMDISCO.
(a) TERMINATION FOR CAUSE BY SABRE. Subject to the provisions of
Section 12.4, in the event of a Substantial Material Breach by
Comdisco (as defined below) which Comdisco does not cure within
thirty (30) days after the required notice from SABRE, then SABRE
may at its option terminate this Agreement, including such
Operative Agreements, as provided above under the Termination for
Convenience provision in Section 3.4 above; provided however,
such Termination for Cause may occur at any time after the
Effective Date. Upon such termination, SABRE shall have the
right to a credit against any amounts which may be owed by SABRE
hereunder or under the Operative Agreements in the amounts
provided for as follows: [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED]
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<PAGE>
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]. Such
credits shall be referred to as "Comdisco's Termination Fee".
For purposes of Termination for Cause, a "Substantial Material
Breach" shall mean (i) a breach of SABRE's or SABRE's Customer's
Confidential Information in a manner which has caused or could
cause substantial harm to SABRE or SABRE's Customer; (ii)
Comdisco's total or substantial failure to perform the Services
provided under this Agreement or the Operative Agreements as and
when required; (iii) failure to perform its obligations under
this Agreement or the Operative Agreements with respect to the
acquisition of Growth and Refresh Equipment and to Swap Events,
as and when required, which then requires SABRE to perform such
services itself or through a third party; (iv) chronic failure to
pay Third Party Leases (which is the failure to make [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED] or more monthly
payments over the prior [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] ([TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED])
months) which failures were cured during the applicable cure
period; (v) failure to pay Third Party Leases which failure is
continuing after the applicable cure period; (vi) Breach of
SABRE's quiet use and enjoyment of the Equipment by Comdisco or
its Assignee or (vii) Comdisco:
A. ceases to do business as a going concern;
B. makes a general assignment for the benefit of, or enters
into any arrangement with creditors in lieu thereof;
C. is unable or admits in writing its inability to pay its
debts as they become due;
D. is insolvent, bankrupt or the subject of receivership;
E. authorized, applies for, or consents to the appointment of a
trustee or liquidator of all or a substantial part of its
assets or has proceedings seeking such appointment commenced
against it which are not terminated within 60 days after
such commencement;
F. files a voluntary petition under any bankruptcy or
insolvency laws or files a voluntary petition under the
reorganization or arrangement provisions of the laws of the
United States pertaining to bankruptcy or any similar law of
any jurisdiction or has proceedings under any such law
instituted against it which are not terminated within 30
days after such commencement; or
G. has any substantial part of its property become subject to
any levy, seizure, assignment or sale for or by any creditor
or governmental agency without said, levy, seizure,
assignment or sale being released, lifted, reversed or
satisfied within 10 days thereafter.
In the event of a Substantial Material Breach under (i), (ii),
(vi) and (vii) above SABRE shall be entitled both to receive
Comdisco's Termination Fee as described above and pursue any
other right or remedies against Comdisco; provided, however, in
the event of a Substantial Material Breach under (ii), Comdisco's
liability to SABRE arising from the pursuit of any other right or
remedies shall not in any event
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 44
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<PAGE>
exceed [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
In the event of a Substantial Material Breach under (iii), (iv)
or (v) above SABRE shall be entitled, [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED].
SABRE further agrees that it will not exercise its right
hereunder until it has complied with Section 12.4 below.
Comdisco shall not be considered in Substantial Material Breach
of (ii) above in the event SABRE shall fail to perform its
obligations under the Services Schedule (referred to as Schedule
1) and as a result of such failure, Comdisco is unable to perform
its obligations thereunder. In the event of SABRE's total or
substantial failure to perform its obligations under the Services
Schedule, Comdisco shall (after such thirty (30) day notice and
opportunity to cure) have the right to terminate its obligations
to provide such Asset Management Services without further
obligation or liability with respect thereto and the Monthly
Rental shall be reduced as provided for under such Services
Schedule.
(b) Subject to the provisions of Section 12.4, Comdisco shall be in
default and there shall be a material breach of this Agreement if
Comdisco fails to perform any of its material obligations herein,
including, but not limited to, its obligations under Sections 12,
14 and 15 and such failure shall continue uncured for thirty days
after written notice thereof to Comdisco by SABRE. Except as
expressly limited herein or an Operative Document, in the event
of Comdisco's default hereunder, SABRE's remedies shall not be
limited to the remedies specifically provided in this Agreement
but shall be in addition to any rights or remedies provided by
any other Operative Agreement, or by law or equity including
reasonable attorney's fees, provided, however, that it is the
understanding of the parties that, subject to the terms of this
Agreement, except for a violation of Comdisco's warranty of quiet
use and enjoyment as set forth in Section 14 hereof, no default
by Comdisco, or the exercise of the remedies provided for herein
by SABRE shall relieve SABRE of its obligations to make payments
of Monthly Rental except as provided herein. The waiver by SABRE
of any breach of any obligation of Comdisco shall not be deemed a
waiver of such obligation or of any subsequent breach of the same
or any other obligation.
12.4 INADVERTENT FAILURE TO PERFORM. Both parties recognize that due to
the complex structure of this transaction that there may be times that
a party is in inadvertent default under the terms of this Agreement
and/or the Operative Agreements despite their good faith efforts to
comply to all of such terms and conditions. Therefore,
notwithstanding anything contained herein both parties hereby agree
that they will not exercise their remedies provided for in this
Agreement or Operative Agreement, or place the other party in default
hereunder, if in their good faith commercially reasonable business
judgment a default is
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 45
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<PAGE>
due to an inadvertent failure to perform on the part of the other
party. The parties further agree that prior to exercising any rights
of termination arising out of a default granted under this Agreement
or any of the Operative Agreements, that they will proceed through
Level Three of the Dispute Resolution Process but not including Court
as outlined in Section 13 herein, and make a good faith effort to
settle the dispute in that manner.
13. DISPUTE RESOLUTION PROCESS
13.1 RESOLVE DISPUTES. Except as indicated below, in the event of
disputes, controversies or claims arising under this Agreement
(including disputes as to the existence of any breach of this
Agreement which would give rise to a right to terminate this Agreement
or right or obligations of a party hereunder or under an Operative
Agreement) (each, a "Dispute"), the parties shall (unless otherwise
provided in this Agreement or the Operative Agreements) resolve
Disputes in accordance with this Section. Notwithstanding this
Section or any other provision of this Agreement nor the Operative
Agreements, the parties agree that the fact that either party may take
action without resorting to dispute resolution when it believes it is
in its best interests to safeguard its business operations or assets
and shall not, in and of itself, constitute a breach of this
Agreement.
13.2 ESCALATION PROVISION. SABRE and Comdisco agree to utilize the
following procedures to resolve Disputes:
(a) LEVEL ONE. If either party identifies a Dispute that requires
resolution, it will give prompt written notice thereof to the
other party's Project Manager. The Project Managers will then
negotiate in good faith on a regular and frequent basis to
resolve the Dispute as expeditiously as feasible. If the Project
Managers are unable to resolve the Dispute within 10 days the
Project Managers will refer the Dispute to a Vice President of
SABRE and a Vice President of Comdisco (the "Vice Presidents"),
and each Project Manager will provide to both Vice Presidents a
written statement (a "Dispute Statement") describing in detail
his or her position related to the Dispute.
(b) LEVEL TWO. Promptly after receiving the Dispute Statements, the
Vice Presidents will negotiate in good faith on a regular basis
to resolve the Dispute as expeditiously as feasible. If the Vice
Presidents are unable to resolve the Dispute within 15 days,
either Vice President may state in writing to the other that they
will not be able to resolve the remaining Dispute through
continued negotiation. Promptly thereafter, each Vice President
will refer the Dispute to a Sr. Vice President of SABRE and the
Sr. Vice President of Comdisco, or if no longer such a title, the
equivalents of such (the "Officers") and each party's respective
management team will prepare any revisions to their respective
Dispute Statements. Both of the Dispute Statements, as revised,
will be submitted to each of the Officers.
(c) LEVEL THREE. Promptly after receiving the revised Dispute
Statements, the Officers will negotiate in good faith on a
regular and frequent basis to resolve the Dispute within 20 days.
Either party may submit any issues that remain unresolved to a
court of competent jurisdiction ("Court").
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<PAGE>
13.3 GENERAL RESOLUTION PROCEDURES.
(a) SABRE and Comdisco agree that they will refrain from referring
the Dispute to a Court, and no Court shall be competent to
address any Dispute properly addressed in this fashion, until
either party's Officer provides a written notice to the other
that he or she has concluded in good faith that amicable
resolution through continued negotiation of the Dispute does not
appear likely after the conclusion of the Level Three resolution
process described above.
(b) The purpose of preparing and submitting the Dispute Statements
described above is to facilitate the resolution process.
However, the Dispute Statements will not limit either party from
identifying any additional relevant issues during the resolution
process, nor will the Dispute Statements constitute a waiver of,
or prejudice or limit either party's rights or remedies with
respect to, the issue(s) addressed therein.
14. QUIET ENJOYMENT
Comdisco hereby agrees and covenants that unless and until Comdisco
actually terminates an applicable Equipment Schedule or this Agreement
pursuant to Section 12.2 hereof, SABRE is entitled to and shall be able to
enjoy quiet possession and use of each Unit leased pursuant to an Equipment
Schedule during the term thereof without interruption by Comdisco or any
person claiming under or through Comdisco whether such be the holder of a
lien or otherwise.
15. BREACH OF COVENANT OF QUIET ENJOYMENT BY COMDISCO
Effective at any time following the Commencement Date of any Equipment
Schedule executed pursuant to this Agreement, in the event that Comdisco or
any person claiming under or through Comdisco shall be in default in
respect of its covenant of quiet enjoyment under this Agreement with
respect to any Equipment covered by an applicable executed Equipment
Schedule, then SABRE may demand immediate replacement of the Equipment
covered by such Schedule, in addition to any damages resulting from the
disruption, and may in addition pursue any other remedies available at law
or in equity including termination of this agreement.
16. CONFIDENTIALITY
Each party agrees that it may disclose to the other party ("Receiving
Party"), during the course of this Agreement, business or technical
information of a confidential nature which has a great value to the
disclosing party or a third party (either, a "Disclosing Party"), or which
the Disclosing Party has a legal or operational obligation to protect from
disclosure ("Confidential Information"). Additionally either party may
have Confidential Information of, or obtained from, a third party Customer
or other third parties. Each party agrees to make a good faith effort to
mark or otherwise identify Confidential Information as such. Each party
agrees not to use or disclose the Confidential Information for its own
benefit, or for the benefit of any third party, except as may be required
in its performance under this Agreement. The Confidential Information
shall not be treated as confidential if: i) it is or becomes available to
the public without confidentiality restrictions through no unauthorized act
of the Receiving Party and is not information which is otherwise protected
hereunder; ii) is received from a third party who is not under an
obligation of confidence to the Disclosing Party; or iii) is independently
developed by employees or contractors of the Receiving Party who did not
use the relevant Confidential Information of the other party in
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<PAGE>
the development. If Confidential Information is required to be disclosed
pursuant to a requirement of a governmental agency or law, the Receiving
Party shall not be in breach of this Confidentiality Provision so long as
the Receiving Party provides the Disclosing Party with timely notice of
such requirement.
17. INDEMNIFICATION
In addition to any indemnification provided for under the Operative
Agreements, each party (the "Indemnifying Party") agrees to indemnify,
defend and hold the other party (the "Indemnified Party"), and its
officers, directors, employees, agents and Customers harmless from and
against any and all liabilities, damages, losses, expenses, claims,
demands, suits, fines or judgments, including reasonable attorney fees,
costs and expenses incidental thereto, which may be suffered by, accrued
against, charged to or recoverable from said parties by reason of bodily
injuries, loss, claim, or damage or physical destruction of property
arising out of or in connection with any negligent act, error or omission,
or misconduct of the Indemnifying Party and its officers, directors,
employees, subcontractors, and agents, during their performance under this
Agreement.
18. FORCE MAJEURE
Neither party shall be liable for delays or any failure to perform under
this Agreement due to causes beyond its reasonable control.
Notwithstanding the above, no delay or other failure to perform shall be
excused pursuant to this Section (i) by the acts or omissions of a party's
subcontractors or other third persons providing products or services to
such party unless such acts or omissions are themselves the product of a
Force Majeure Condition (defined below); and (ii) unless such delay or
failure and the consequences thereof are beyond the reasonable control and
without the fault or negligence of the party claiming excusable delay or
other failure to perform. A "Force Majeure Condition" is defined as to
include, but not limited to, those caused by, fire, explosion, flood or
other natural catastrophe, governmental legislation, acts, orders, or
regulation (which could not be known to the party prior to the delay),
strikes or labor difficulties, to the extent not occasioned by the fault or
negligence of the delayed party. Any such excuse for delay shall last only
as long as the event remains beyond the reasonable control of the delayed
party. However, the delayed party shall use its best efforts to minimize
the delays caused by any such event beyond its reasonable control. The
delayed party must notify the other party promptly upon the occurrence of
any such event, or performance by the delayed party will not be considered
excused pursuant to this Section, and inform the other party of its plans
to resume performance.
Notwithstanding the above, even though the performance times under this
Agreement (but not the term of the Agreement) shall be extended for a
period of time equivalent to the time lost because of any failure to
perform that is excusable under this Section, if any Force Majeure
Condition prevents Comdisco from providing the Services within the
timeframe required hereunder or under the Operative Agreements, SABRE shall
have the right to obtain the applicable Service through another method or
from another supplier and Comdisco shall be liable for the reasonable costs
of the substitute Service if SABRE is required to contract for such Service
to prevent a breach by SABRE of a SABRE contract with a third party. In
connection with acquiring Growth Equipment or Refresh Equipment or
performing a Swap Event, then such Growth Equipment or Refresh Equipment or
such Swap Equipment shall become a part of an Equipment Schedule under
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<PAGE>
this Agreement as if it had acquired as otherwise provided herein.
Notwithstanding anything to the contrary contained herein SABRE shall not
be relieved of its obligations under the Operative Agreements to make
payments which arise during the Force Majeure event provided however SABRE
shall not be considered in breach of the Operative Agreements if SABRE is
unable to make such payments due to the Force Majeure event.
19. GENERAL
19.1 GOVERNING LAW. This Agreement and its Equipment Schedules shall be
governed by and construed in accordance with the laws of the State of
Texas. Both parties hereby consent and submit to the jurisdiction of
the courts in the State of Texas in all questions and controversies
arising out of this Agreement. NO RIGHTS OR REMEDIES REFERRED TO IN
ARTICLE 2A SECTIONS 508-532 OF THE UNIFORM COMMERCIAL CODE SHALL BE
CONFERRED ON EITHER PARTY EXCEPT AS EXPRESSLY GRANTED IN THE AGREEMENT
OR AN OPERATIVE AGREEMENT.
19.2 ADVERTISING. Comdisco shall not use the name of or refer to SABRE or
any of its affiliates directly or indirectly in any advertisement,
news release or professional or trade publication without receiving
prior written approval from SABRE.
19.3 NO WAIVER. The failure of either party at any time to require
performance by the other party of any provision of this Agreement
shall in no way affect that party's right to enforce such provisions,
nor shall the waiver by either party or any breach of any provision of
this Agreement be taken or held to be a waiver of any further breach
of the same provision.
19.4 NOTICES. Unless otherwise stated in this Agreement, all notices shall
be in writing and, any notices or other communications required or
permitted to be given hereunder shall be sufficiently given if
delivered personally or by certified mail, postage pre-paid or by
pre-paid overnight express service to the following:
TO SABRE Group: To Comdisco:
Manager, Supply Management 6111 N. River Road
4000 N. Mingo Road,MD 322 Rosemont, IL 60018
Tulsa, OK 74116 Attn: Don Frantz
With a copy to:
Project Manager
4000 N. Mingo Road, MD 391
Tulsa, OK 74116
Any party may from time to time designate another address or other
addresses by notice to the other parties in compliance with this
Section. Any notice or other communication shall be deemed given when
received.
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 49
CONFIDENTIAL
<PAGE>
19.5 CONSENT. In any case when the consent or approval of either party is
required to be obtained by the other party under this Agreement, such
consent or approval shall not be unreasonably withheld (unless
otherwise specified in the Agreement or Operative Agreement). No such
consent or approval shall be valid unless the same shall be in writing
and signed by a duly authorized officer of both parties.
19.6 DOCUMENTS.
Comdisco and SABRE shall execute or provide, as applicable, such other
documents as may be required to effectuate the purposes of this
Agreement, including but not limited to: Assignment of Equipment on
Order, Acceptance Document, opinion of in house counsel for an
Equipment Schedule having an aggregate Monthly Rental in excess of
$[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] that such Equipment
Schedule is duly authorized and executed by SABRE, secretary's
certificate of incumbency and authority, Uniform Commercial Code
financing statements showing the interests of Comdisco and any
Assignee in the Equipment, and Casualty Value Table.
19.7 REPORTS. Each party agrees promptly to furnish to the other party,
at any time and from time to time, upon the request of the other
party, audited publicly available financial statements of such party
for the most recent period.
19.8 LICENSED PRODUCTS. (a) SABRE shall obtain no title from Comdisco to
software licensed from Comdisco or the vendor ("Licensed Products")
which shall at all times remain the property of the owner of the
Licensed Products. A license from the owner may be required and it is
SABRE's responsibility to obtain any required license before the use
of the Licensed Products. SABRE agrees to treat the Licensed Products
as Confidential Information of the owner, to observe all copyright
restrictions, and not to reproduce or sell the Licensed Products.
(b) Comdisco shall obtain no title from SABRE to software owned by
SABRE or licensed by SABRE from a third party ("SABRE Software") which
shall at all times remain the property of the owner of the SABRE
Software. Comdisco agrees to treat the SABRE Software as Confidential
Information of the owner, to observe all copyright restrictions, and
not to reproduce or sell the SABRE Software.
19.9 MODIFICATION, AMENDMENT, SUPPLEMENT OR WAIVER. No modification,
amendment, supplement to or waiver of the Agreement or any of its
provisions shall be binding upon the parties hereto unless made in
writing and duly signed by the party against whom enforcement thereof
is sought. A failure or delay of any party's exercise or partial
exercise of any right or remedy under this Agreement shall not operate
to impair, limit, preclude, cancel, waive or otherwise affect such
right or remedy.
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 50
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<PAGE>
19.10 EXPORT ADMINISTRATION. The parties agree to comply fully with all
relevant export laws and regulations of the United States or any
country in which an Equipment Schedule is entered into ("Export
Laws") to assure that neither the Service nor any direct product
thereof (1) is exported, directly or indirectly, in violation of
Export Laws; or (2) is intended to be used for any purposes
prohibited by the Export Laws, including, without limitation,
nuclear, chemical or biological weapons proliferation.
19.11 INDEPENDENT CONTRACTOR. COMDISCO represents and warrants that it
is an independent contractor with no authority to contract for
SABRE or in any way to bind or to commit SABRE to any agreement of
any kind or to assume any liabilities of any nature in the name of
or on behalf of SABRE. Under no circumstances shall COMDISCO, or
any of its employees, hold itself out as or be considered an agent
or an employee of SABRE, and SABRE shall have no duty to provide or
maintain any insurance or other employee benefits on behalf of
COMDISCO or its employees.
19.12 CAPTIONS. The captions appearing in this Agreement have been
inserted as a matter of convenience and in no way define, limit or
enlarge the scope of this Agreement or any of the Sections thereto.
19.13 SEVERABILITY. In the event that any one or more of the provisions
of this Agreement or the Operative Agreements is determined by a
court of competent jurisdiction to be invalid, unenforceable or
illegal, such invalidity, unenforceability or illegality shall not
affect any other provisions of this Agreement or Operative
Agreements, and this Agreement or Operative Agreements shall be
construed as if the challenged provision had never been contained
herein. The parties further agree that in the event such provision
is an essential part of this Agreement or the Operative Agreements,
they will immediately begin negotiations for a suitable replacement
provision. In the event the parties cannot agree on a suitable
replacement term, then the parties will proceed through Level Three
(excluding Court) of the Dispute Resolution Process as outlined in
this Agreement and make a good faith effort to settle the dispute
in that manner.
19.14 ENTIRE AGREEMENT. This Agreement and the Operative Agreements
constitute the entire agreement between the parties and supersede
any and all previous representations, understandings, discussions
or agreements between SABRE and Comdisco with respect to the
subject matter of this Agreement and the Operative Agreements, and
may only be amended by an instrument in writing signed by SABRE and
Comdisco. Each of Comdisco and SABRE acknowledges that it has had
the opportunity to review this Agreement and the Operative
Agreements with its legal counsel.
19.15 SURVIVAL. In the event of termination or expiration of this
Agreement or such Operative Agreements, then those provisions,
including but not limited to payment obligations, which by their
nature should survive shall survive such termination or expiration.
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 51
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<PAGE>
19.16 OPERATIVE AGREEMENTS, SCHEDULES, ATTACHMENTS AND ORDER OF
PRECEDENCE.
The following is the List of Operative Agreements, Schedules and
Attachments which are incorporated into this Agreement and are part
of this Agreement by reference:
<TABLE>
<S> <C>
Schedule 1 Services Schedule
Attachment A Equipment Schedules
A-1 US Equipment Schedule
Attachment B Third Party Leases
Attachment C Sale Leaseback Agreement
Attachment D Refresh Pool and Early Termination
Examples
Attachment E Comdisco's affiliate list
Exhibit A Non-US Equipment Schedules with higher
precedence
</TABLE>
If there is any conflict between this Agreement and any of the
Operative Agreements, Schedules and Attachments, such
documents shall have the order of precedence as follows:
<TABLE>
<S> <C>
For US Equipment Schedules:
As to Equipment: As to Services:
The Program Lease Agreement The Program Lease Agreement
The US Equipment Schedules The Services Schedule
</TABLE>
Non US Equipment Schedules shall have the same order of
precedence as prescribed above unless and except Non-US
Equipment Schedules which have been executed by the parties or
the applicable affiliates of the parties and acknowledged the
Project Managers for the parties. Such Non-US Equipment
Schedules shall be deemed incorporated into Exhibit A upon
acknowledgement by the Project Managers. In such event and
only to the extent applicable for the country for which the
Non-US Equipment Schedule is applicable the order of
precedence is as follows:
<TABLE>
<S> <C>
The Non US Equipment Schedules:
As to Equipment: As to Services:
The Non-US Equipment Schedule The Program Lease Agreement
The Program Lease Agreement
The Services Schedule
</TABLE>
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 52
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<PAGE>
19.17 COUNTERPARTS. Each executed copy of the Agreement and this
Agreement shall be an original. There shall be only one original
of each Equipment Schedule and it (whether or not together with any
one or more original counterparts to the Agreement and this
Agreement) shall be marked "Counterpart No. 1" and all other
counterparts shall be consecutively numbered. To the extent, if
any, that any Equipment Schedule (whether or not accompanied by any
one or more original Counterparts of the Agreement and this
Agreement) constitutes Chattel Paper (as such term is defined in
the Uniform Commercial Code as in effect in any applicable
jurisdiction), no security interest in any Equipment Schedule may
be created in any documents) other than "Counterpart No. 1".
19.18 MINORITY/WOMEN OWNED BUSINESS ENTERPRISES. At SABRE's request,
Comdisco shall work in good faith with SABRE to strive to
sub-contract portions of its performance under this agreement to
minority or women's owned business enterprises.
IN WITNESS WHEREOF, the parties have had their duly authorized representatives
execute this Agreement as of the date set forth below their signatures to be
effective on the date appearing on the first page of this Agreement.
Comdisco, Inc. The SABRE Group, Inc.
("Comdisco") ("SABRE")
By: By:
------------------------------- -------------------------------
Printed Name: Printed Name:
--------------------- ---------------------
Title: Title:
---------------------------- ----------------------------
- ----------------------------------- -----------------------------------
Date Date
(Rev. KMB 12/4/98)
REVISED 12/04/98 SABRE GROUP, INC. AND COMDISCO, INC. 53
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<PAGE>
US EQUIPMENT SCHEDULE
EQUIPMENT SCHEDULE NO. 1 DATED AS OF SEPTEMBER 30, 1998 TO THE PROGRAM LEASE
AGREEMENT DATED AS OF SEPTEMBER 30, 1998 BETWEEN THE SABRE GROUP, INC., AS
LESSEE ("SABRE"), AND COMDISCO, INC., AS LESSOR ("Comdisco").
<TABLE>
<S> <C>
COMDISCO, INC. THE SABRE GROUP, INC.
ADDRESS FOR NOTICE: ADDRESS FOR NOTICE:
6111 N. River Road 4200 American Blvd.
Rosemont, Illinois 60018 Ft. Worth, TX 76155
Attention: Don Frantz Facsimile: 817-931-0727
Facsimile: 847-518-5440 Attention: Manager, Supply Management
</TABLE>
Location of Equipment: See Equipment Schedule Attachment C
Equipment (as defined below):
<TABLE>
<CAPTION>
MACHINE/ SERIAL MONTHLY TOTAL
ITEM NO. QTY. FEATURE DESCRIPTION NUMBER RENTAL
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
* * * * ** ***
</TABLE>
*See the definition of Equipment under the Program Lease Agreement and
Special Term E herein for a description of Equipment to be leased hereunder.
**The Monthly Rental due under this Equipment Schedule as of the start of the
Initial Term is as provided below, plus applicable taxes (if any) that SABRE
is required to pay pursuant to Sections 4.3, 5.7 and 7.1 of the Program Lease
Agreement. Monthly Rental for October 1998 shall be $[TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] and for November 1998 and December 1998
shall be $[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] each month* and
$[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] each month thereafter,
except as adjusted herein and in the Program Lease Agreement. On or before
December 31, 1998, Comdisco and SABRE shall review, and as appropriate, revise
the Equipment List attached to this Equipment Schedule as Equipment Schedule
Attachment C to "true up" such list to reflect the SABRE Equipment that should
have been transferred as of September 30, 1998. In the event that additional
SABRE Equipment is added to the Equipment List, the purchase price paid by
Comdisco to SABRE under the related purchase agreement shall be adjusted upward
by the Equipment Cost of the added SABRE Equipment. In the event that SABRE
Equipment is subtracted from the Equipment List, the purchase price paid by
Comdisco to SABRE under the related purchase agreement shall be adjusted
downward by the Equipment Cost of the subtracted SABRE Equipment. The additions
and subtractions to the purchase price resulting from such "true up will be
netted. If the adjusted purchase price is lower than $[TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] ($[TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED])("Purchase Price") the Monthly Rental shall be adjusted downwards
by $[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] for every $[TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] reduction in Purchase
- ---------------
* SABRE shall be responsible for payment of the Third Party Lease payments
through December 31, 1998.
REVISED 11/3/98 THE SABRE GROUP, INC. 1
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<PAGE>
Price. If the adjusted purchase price is higher than $[TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED], the monthly rental shall be adjusted upwards
by $[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] for every $[TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED] increase in Purchase Price.
DELIVERY DATE: N/A
ACCEPTANCE DATE: As defined in Section 1.1 of the Program Lease Agreement for
items of Growth and Refresh Equipment, and September 30, 1998 for items of SABRE
Equipment.
COMMENCEMENT DATE: October 1, 1998
EARLY TERMINATION DATE: As provided in the Program Lease Agreement
INITIAL TERM: From October 1, 1998 through September 30, [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED].
PAYMENT LOCATION AND CURRENCY:. 6111 N. River Road, Rosemont, Illinois 60018,
Attention: Don Frantz Payable in US Currency.
SPECIAL TERMS: The following additional terms are a part of this Equipment
Schedule.
A. DEFINITIONS
For purposes of this Equipment Schedule, the terms beginning with a
capital letter used herein shall have the meanings defined in the Program
Lease Agreement dated as of September 30, 1998, and in this Equipment
Schedule.
B. RENT ADJUSTMENTS
As further provided for in the Program Lease Agreement, [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED]
REVISED 11/3/98 THE SABRE GROUP, INC. 2
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<PAGE>
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
FUNDING FACTOR:
The Funding Factor for the Equipment leased hereunder will be calculated
from time to time hereunder using the [TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED] that is in effect on an Acceptance Date. The Funding
Factor for the SABRE Equipment leased hereunder was calculated to be [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED]. If, on the Acceptance Date
for a Unit, the [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]%, the
Funding Factor to be applied to such Unit on such date shall be increased
or decreased by [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] (increase
or decrease, respectively) in the [TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] from [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]%. [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
C. REFRESH POOL
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
REFRESH POOL INCREASE AND DECREASE FACTORS:
Notwithstanding anything contained in the Program Lease Agreement to the
contrary: (i) If SABRE increases the Monthly Rental under the Program by
more than [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
REVISED 11/3/98 THE SABRE GROUP, INC. 3
CONFIDENTIAL
<PAGE>
For example:
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
D. RECONCILIATION ACCOUNT
At SABRE's option, changes in the Monthly Rental pursuant to Section B
hereof and the Program Lease Agreement may be accumulated into a
reconciliation account as more fully described in the Program Lease
Agreement ("Reconciliation Account"), and the Monthly Rental may be
adjusted ("Adjusted Rental") to reflect such changes on a semi-annual basis
on July 1st and January 1st (the "Settlement Date").
Adjusted Rental carried forward by SABRE to the next Settlement Date (both
negative and positive) shall bear interest equal to the [TEXT OMITTED -
CONFIDENTIAL TREATMENT REQUESTED]. If during a reconciliation period
there is a change of [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED],
then either SABRE or Comdisco may call an early Settlement Date.
Additional Settlement Dates can be called by either party as provided for
in the Program Lease Agreement and at SABRE's option, SABRE may cease to
use the Reconciliation Account in which event changes in the Monthly Rental
shall be as provided in Section B above.
E. CURRENT SABRE LEASE COMMITMENTS
SABRE has various lease commitments with regard to SABRE Equipment which
shall be placed under this Equipment Schedule. Comdisco and SABRE agree to
address those leases as follows:
i) Leases with Comdisco: Effective as of December 31, 1998 ("Termination
Date"), and so long as SABRE has paid all amounts then due and owing
under the Equipment Schedules described below, Comdisco's and SABRE's
obligations with respect to the Equipment Schedules described below
shall terminate, except such obligations in connection therewith which
expressly survive said termination. Effective as of January 1, [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED] the Equipment covered by
the Equipment Schedules described below (which Equipment is included
in the Equipment listed on Attachment C) shall become part of the
SABRE Equipment under this Equipment Schedule.
<TABLE>
<CAPTION>
SCHEDULE NO. SL NUMBER
------------ -------------
<S> <C>
[TEXT OMITTED - CONFIDENTIAL 01-SL[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]-00
TREATMENT REQUESTED]
[TEXT OMITTED - CONFIDENTIAL 01-SL[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]-00
TREATMENT REQUESTED]
[TEXT OMITTED - CONFIDENTIAL 01-SL[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]-00
TREATMENT REQUESTED]
[TEXT OMITTED - CONFIDENTIAL 01-SL[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]-00
TREATMENT REQUESTED]
[TEXT OMITTED - CONFIDENTIAL 01-SL[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]-00
TREATMENT REQUESTED]
</TABLE>
ii) Leases with parties other than Comdisco ("Third Party Lease(s)"):
Effective January 1, 1999 and for so long as this Equipment Schedule
remains in effect, Comdisco shall pay, on
REVISED 11/3/98 THE SABRE GROUP, INC. 4
CONFIDENTIAL
<PAGE>
SABRE's behalf, to the lessor specified on Attachment B the rental
obligations of SABRE under the Third Party Leases specified on
Attachment B as required by such Third Party Lease. The equipment
under the Third Party Leases is included in the SABRE Equipment
listed on the Equipment Schedule attached this Schedule as
Attachment C. All Third Party Lease Equipment still in use by SABRE
and under this Program shall be removed from the Program effective
with the end of the Third Party Lease term per the Rent Adjustment
and Refresh Pool Mechanics described in Sections B and C of this
Equipment Schedule and the terms of the Program Lease Agreement.
Comdisco shall not be responsible to pay any rental obligations
extending beyond the term of the applicable Third Party Lease as
identified on Attachment B.
If SABRE has an option to purchase the Equipment under a Third Party
Lease at the expiration of the term of such Third Party Lease, SABRE
shall notify Comdisco of such option. In such event, SABRE shall have
the option of purchasing the Equipment for its own account. If SABRE
elects not to purchase the Equipment for its own account, then upon
Comdisco's request, SABRE shall exercise the purchase option and
subsequently sell the Equipment to Comdisco for the option purchase
price, plus all actual and reasonable costs incurred by SABRE
associated with such purchase. Notwithstanding the above, SABRE may
at its option, at the end of the term of such Third Party Lease, renew
such Third Party Lease with the Third Party Lessor and continue to
operate the equipment outside of the Program.
In the event of a default by SABRE under this Equipment Schedule, and upon
at least 30 days notice, Comdisco's obligation to make payments as
described in this Section E shall cease until SABRE's default has been
cured. In addition, Comdisco's obligation to make payments as described
herein shall cease if the Equipment Schedule is terminated pursuant to the
terms of the Program Lease Agreement. SABRE acknowledges that except as
specifically provided for herein, it retains the obligation to make all
rental payments to such entities. Comdisco's notice made pursuant to this
paragraph of Section E shall state the last payment to be made by Comdisco
under the Third Party Lease absent a cure by SABRE.
F. INDIAN TERRITORY CREDIT
SABRE and Comdisco agree that the Equipment under lease may qualify for
incremental accelerated tax benefits under the federal tax law in light of
IRS Notice 98-45, issued in August, 1998, and Internal Revenue Code Section
168(j)(6). SABRE and Comdisco further agree that the incremental
accelerated tax benefits relate specifically to the fact that tangible
personal property that is located on Indian Reservation land within the
meaning of IRC Section 168(j)(6) (including Former Indian Reservations in
Oklahoma as clarified by Notice 98-45) receives three year tax depreciation
and not five year tax depreciation under the federal income tax laws.
The Equipment that qualifies for this treatment as of September 30, or
March 31 for Equipment that has been installed for more than 3 years, of
each year shall be deemed "Indian Territory Equipment" for that year.
Comdisco shall pay SABRE a credit ("Indian Territory Credit") in the
REVISED 11/3/98 THE SABRE GROUP, INC. 5
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<PAGE>
form of cash to SABRE on or before November 15th of each year starting in
1998 for Indian Territory Equipment for that year.
The Indian Territory Credit for any given year shall be equal to the sum of
the credits for all Indian Territory Equipment for that year calculated as
a percentage of the Equipment Cost for each item of Indian Territory
Equipment based on the following table:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Months under Schedule and as Indian Territory Equipment Credit as % of Equipment Cost
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
1-12 Months [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]%
13-24 Months [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]%
25-36 Months [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]%
37-48 Months [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]%
Over 48 Months [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
For Equipment to qualify as Indian Territory Equipment, the following
conditions must all apply: (a) the incremental accelerated tax benefits as
described above must not have been repealed; (b) the Equipment continues to
be located on an Indian Reservation as defined by IRC Section 168(j)(6) (or
Former Indian Reservations in Oklahoma as defined in Notice 98-45) for the
period of time set forth in the chart above to calculate the credit; (c)
the Equipment continues to be leased under this Equipment Schedule as of
September 30 or March 31 the relevant year as described; and (d) the
Equipment is included in this Equipment Schedule and entered into on the
basis that Comdisco intends to claim, as allowed by the Internal Revenue
Code, such deductions for tax depreciation, interest on purchase money and
other tax benefits as are provided to an owner of Equipment.
PROGRAM LEASE AGREEMENT: This Equipment Schedule is issued pursuant to the
Program Lease Agreement between the parties hereto identified on page 1 of
this Equipment Schedule. All of the terms and conditions of the Program
Lease Agreement are incorporated herein by this reference and made a part
hereof as if such terms and conditions were set forth in this Equipment
Schedule and this Equipment Schedule constitutes a separate lease for the
Equipment. In the event of a conflict between the terms and conditions of
this Equipment Schedule, and the Program Lease Agreement, the order of
precedence is set forth in Section 19.17 of the Program Lease Agreement.
The parties hereby reaffirm all of the terms and conditions of the Program
Lease Agreement (including, without limitation, the representations and
warranties set forth in Section 44.3, 5.7 and 7 of the Program Lease
Agreement). This Equipment Schedule may not be amended or rescinded except
by a writing signed by both parties.
REVISED 11/3/98 THE SABRE GROUP, INC. 6
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<PAGE>
Comdisco, Inc. The SABRE Group, Inc.
("Comdisco") ("SABRE")
By: By:
-------------------------- --------------------------
Printed Name: Printed Name
---------------- ----------------
Title: Title:
----------------------- -----------------------
------------------------------ ------------------------------
Date Date
REVISED 11/3/98 THE SABRE GROUP, INC. 7
CONFIDENTIAL
<PAGE>
ATTACHMENT A
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
REFRESH POOL ADJUSTMENT MECHANICS
- -------------------------------------------------------------------------------
POOL ADJUSTMENT FACTORS POOL ADJUSTMENT FACTORS
----------------------- -----------------------
- -------------------------------------------------------------------------------
DATE OF REDUCTION INCREASE DATE OF REDUCTION INCREASE
REFRESHMENT FACTOR FACTOR REFRESHMENT FACTOR FACTOR
----------- --------- -------- ----------- ---------- --------
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
- -------------------------------------------------------------------------------
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
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[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
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[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
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[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
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[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
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[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
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[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
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[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
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[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
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[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
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[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
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[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
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[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
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[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
- -------------------------------------------------------------------------------
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
- -------------------------------------------------------------------------------
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
- -------------------------------------------------------------------------------
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
- -------------------------------------------------------------------------------
REVISED 11/3/98 THE SABRE GROUP, INC. 8
CONFIDENTIAL
<PAGE>
- -------------------------------------------------------------------------------
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
- -------------------------------------------------------------------------------
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
- -------------------------------------------------------------------------------
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
- -------------------------------------------------------------------------------
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
- -------------------------------------------------------------------------------
</TABLE>
EXAMPLE:
ASSUME:
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
REVISED 11/3/98 THE SABRE GROUP, INC. 9
CONFIDENTIAL
<PAGE>
ATTACHMENT D
CASUALTY VALUE TABLE - MONTHLY RENT - EQUIPMENT SCHEDULE
DATE OF DELIVERY
TO INITIAL TERM
START DATE [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]%
YEAR ONE YEAR THREE
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
YEAR TWO
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
REVISED 11/3/98 THE SABRE GROUP, INC. 10
CONFIDENTIAL
<PAGE>
PURCHASE/LEASEBACK AGREEMENT
Buyer: Seller: The Sabre Group, Inc.
COMDISCO INC. 4255 Amon Carter Blvd.
6111 North River Road Dallas/Fort Worth, Texas
76155
Rosemont, Illinois 60018
1. PURCHASE: Seller agrees to sell and Buyer agrees to purchase from Seller
the equipment listed below (the "Equipment") in accordance with the terms
and conditions specified in this Purchase/Leaseback Agreement dated as of
September 30, 1998.
ITEM MACHINE SERIAL
NO. QTY. MFG. TYPE/FEATURE DESCRIPTION NUMBER
SEE ATTACHED Exhibit A
2. PURCHASE PRICE: $[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]. The
Purchase Price is due upon receipt of this Agreement executed by Seller,
and the Lease referred to below executed by Seller.
3. LEASEBACK: This Agreement is contingent upon Seller leasing the Equipment
from Buyer pursuant to the US Equipment Schedule to the Program Lease
Agreement dated as of September 30, 1998 between the parties (collectively
the "Lease").
4. WARRANTY: SELLER MAKES NO WARRANTIES OTHER THAN THOSE SPECIFICALLY SET OUT
IN THIS AGREEMENT (IF ANY), AND SPECIFICALLY DISCLAIMS THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
5. TITLE: Title to the Equipment will vest in Buyer on September 30, 1998.
Buyer agrees that Seller will have a purchase money security interest in
the Equipment until full payment of the Purchase Price is made to Seller
for that Equipment. Seller represents and warrants that good title to the
Equipment, free and clear of all liens, claims and encumbrances of any kind
will vest in Buyer upon payment of the full Purchase Price. Furthermore,
Seller shall indemnify and hold Buyer harmless from any costs, claims and
expenses arising from a breach of the foregoing representation. Upon
request, Seller will provide Buyer with a Bill of Sale to evidence such
title.
6. TAXES: Buyer warrants that it is in the business of buying and selling
computer, communications and high technology equipment and that the
purchase of the Equipment is for the purpose of resale only.
7. GOVERNING LAW: Texas
8. MULTIPLE COUNTERPARTS: This Agreement may be executed in multiple
counterparts, each of which will be deemed to be an original and of equal
force and effect.
THE SABRE GROUP, INC. COMDISCO, INC.
as Seller as Buyer
By: By:
-------------------------------- --------------------------------
(authorized signature) (authorized signature)
<PAGE>
EXHIBIT A
SABRE GLOBAL TECHNOLOGY POOL
U.S. EQUIPMENT
<TABLE>
<CAPTION>
Sale Sale
Mfg Item Type Serial # Location Date Price
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSATCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
2 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
3 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
4 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
5 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
6 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
7 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
8 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
9 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
10 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
11 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
12 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
13 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
14 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
15 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
16 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
17 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
18 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
19 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
20 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
21 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
22 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
23 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
24 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
25 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
26 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
27 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
28 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
29 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
30 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
31 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
32 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
33 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSATCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
34 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
35 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
36 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
37 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
38 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
39 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
40 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
41 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
42 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
43 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
Comdisco, Inc. Confidential Page 1 3/16/1999
<PAGE>
EXHIBIT A
SABRE GLOBAL TECHNOLOGY POOL
U.S. EQUIPMENT
Sale
Mfg Item Type Serial # Location Date Price
- -----------------------------------------------------------------------------------------------------------------------------------
44 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
45 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
46 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
47 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
48 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
49 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSATCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
50 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
51 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
52 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
55 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
56 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
57 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
58 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
59 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
60 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
61 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
62 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
63 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
64 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
65 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
66 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
67 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
68 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
69 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
70 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
71 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
72 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
73 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
74 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
75 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
76 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
77 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
78 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
79 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
80 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
81 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
82 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
83 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
84 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
85 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
86 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
87 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
88 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
Comdisco, Inc. Confidential Page 2 3/16/1999
<PAGE>
EXHIBIT A
SABRE GLOBAL TECHNOLOGY POOL
U.S. EQUIPMENT
Sale
Mfg Item Type Serial # Location Date Price
- -----------------------------------------------------------------------------------------------------------------------------------
89 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
90 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
91 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
92 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
93 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
94 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
95 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
96 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
97 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
98 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
99 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
100 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
101 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
102 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
103 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
104 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
105 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
106 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
107 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
108 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
109 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
110 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
111 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
112 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
113 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
114 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
115 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
116 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
117 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
118 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
119 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
120 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
121 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
122 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
123 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
124 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
125 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
126 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
127 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
128 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
129 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
130 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
131 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
Comdisco, Inc. Confidential Page 3 3/16/1999
<PAGE>
EXHIBIT A
SABRE GLOBAL TECHNOLOGY POOL
U.S. EQUIPMENT
Sale
Mfg Item Type Serial # Location Date Price
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
132 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
133 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
134 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
135 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
136 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
137 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
138 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
139 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
140 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
141 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
142 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
143 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
144 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
145 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
146 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
147 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
148 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
149 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
150 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
151 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
152 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
153 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
154 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
155 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
156 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
157 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
158 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
159 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
160 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
161 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
162 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
163 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
164 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
165 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
166 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
167 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
168 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
169 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
170 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
171 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
172 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
173 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
174 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
Comdisco, Inc. Confidential Page 4 3/16/1999
<PAGE>
EXHIBIT A
SABRE GLOBAL TECHNOLOGY POOL
U.S. EQUIPMENT
Sale
Mfg Item Type Serial # Location Date Price
- -----------------------------------------------------------------------------------------------------------------------------------
175 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
176 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
177 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
178 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
179 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
180 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
181 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
182 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
183 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
184 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
185 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
186 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
187 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 9/30/1998
TREATMENT REQUESTED]. TREATMENT REQUESTED].
- -----------------------------------------------------------------------------------------------------------------------------------
[TEXT OMITTED -
CONFIDENTIAL
TREATMENT REQUESTED].
TOTAL SALE PROCEEDS
Comdisco, Inc. Confidential Page 5 3/16/1999
</TABLE>
<PAGE>
SERVICES SCHEDULE
FOR THE
PROGRAM LEASE AGREEMENT
BETWEEN
COMDISCO AND SABRE
During the Term of the Program Lease Agreement ("Agreement") or any extension
thereof, Comdisco agrees to provide to SABRE in connection with Equipment and
Managed Equipment the Services as listed hereunder which will be further defined
or modified during completion of the Life-Cycle Process Analysis and
Optimization and optional Implementation tasks (as provided for under a separate
agreement). Any changes to the Services will be documented as an amendment to
the Agreement and this Services Schedule. Subject to the terms and conditions
of the Agreement, Comdisco agrees to provide the following Services:
In the event SABRE requests Comdisco to perform services other than those
described in this Services Schedule, the scope and price for such services must
be mutually agreed to between the parties, and Comdisco will have no obligation
to perform such services unless both parties have executed the Comdisco Change
Control Form. Charges for such services shall be as agreed to between the
parties. SABRE shall pay within 30 days after receipt of an invoice for such
services all items on a related invoice that are not the subject of a bona fide
dispute.
Comdisco's ability to deliver the Services under this Services Schedule for
Equipment and Managed Equipment are contingent upon SABRE's accurate entry of
asset data during receipt and installation of an asset and SABRE's accurate
entry of data relating to changes (moves, adds, changes, removal and break/fix
events that affect the configuration or its components that are being tracked)
to an asset.
1. OPERATIONAL SERVICE DESK
A. STAFFING
Comdisco will staff and manage a service desk located in Tulsa,
Oklahoma (the "Service Desk").
The Service Desk will be staffed as follows:
- "Service Manager" means the position responsible for the [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED]:
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
CONFIDENTIAL
THE SABRE GROUP, INC. AND COMDISCO, INC. 03/16/99
PAGE 1
<PAGE>
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
- "Asset/Lease Manager" means the position responsible for:
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
The staffing for the Service Desk defined above is in support of the
activities defined in this Services Schedule. If additional
responsibilities are added, then additional resources may be required.
B. SERVICES PROVIDED
The Service Desk will support the Services for SABRE as described
below:
(1) ASSET MANAGEMENT SUPPORT
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]:
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
CONFIDENTIAL
THE SABRE GROUP, INC. AND COMDISCO, INC. 03/16/99
PAGE 2
<PAGE>
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
Responsibilities of Comdisco and SABRE in connection with the Services are
detailed in the following Table 1:
DATA BASE INPUT DATA BASE MONITOR PROCESS
-------------- MAINTENANCE ---------------
-----------
Order Service Desk Service Desk Service Desk
Receive SABRE Service Desk Service Desk
Install SABRE Service Desk Service Desk
Change Management SABRE Service Desk Service Desk
Break/Fix SABRE Service Desk Service Desk
Disposal Tracking SABRE/Service Desk Service Desk Service Desk
Lease Management SABRE/Service Desk Service Desk Service Desk
CONFIDENTIAL
THE SABRE GROUP, INC. AND COMDISCO, INC. 03/16/99
PAGE 3
<PAGE>
(2) SUPPORT FOR BUSINESS PLANNING
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]:
- [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED].
C. SERVICE LEVEL AGREEMENTS
CONFIDENTIAL
THE SABRE GROUP, INC. AND COMDISCO, INC. 03/16/99
PAGE 4
<PAGE>
Comdisco and SABRE will jointly develop and agree to service level
agreements (hereinafter "Service Level Agreement(s)" or "SLA(s)")
between SABRE and Comdisco that will be used to measure the
performance of activities supported by the Service Desk. In addition,
Comdisco and SABRE will jointly develop the data input and reporting
requirements of the Service Desk. In the event the parties cannot
agree on all or a portion of the Comdisco/SABRE Service Level
Agreement within ninety (90) days of the date said SLA's are tendered
to SABRE for approval, then the parties will proceed through Level
Three (excluding Courts) of the Dispute Resolution Process as outlined
in the Agreement and make a good faith effort to settle the dispute in
that manner. In the event the parties are unable to reach agreement
through the Dispute Resolution Process, then either party may
terminate this Services Schedule and SABRE's sole remedy shall be a
reduction in the Monthly Rental under the Agreement of $[TEXT OMITTED
- CONFIDENTIAL TREATMENT REQUESTED] per month. Comdisco's sole remedy
is that Comdisco will be relieved of its obligation to perform the
Services hereunder. The Comdisco/SABRE SLA's for which the parties
can exercise the above termination rights, are limited to those
Services provided by the Comdisco Service Desk which are as follows:
Order Entry, Lease Management, and Database Monitoring for
Procurement, Change, and Disposal Management for Mainframes as
defined herein.
To support the development of the Service Level Agreements, Comdisco
and SABRE will perform the following project activities:
- Define, with SABRE assistance, the requirements for SLAs with
each of the following:
- Between Comdisco and SABRE with regard to the Service Desk.
- Between SABRE and internal groups
- Between SABRE and vendors of SABRE
- Finalize the number and types of SLAs required
- Primary.
- Secondary.
- Establish procedures and metrics for developing SLAs
- Establish internal approval process
- Develop SLAs
- Develop SLA reporting criteria
- Meet with parties affected by SLAs
- Assist in negotiations with affected parties
- Assist with the update and approval for negotiated SLAs
- Gain Approval
- Institute SLAs
2. FEES AND SCOPE
The fees and scope for Service Desk staffing are calculated on an estimated
base of up to [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] assets.
For the purposes of the Service Desk, and not for any other purpose, the
"[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] assets" are Mainframe
and Mid-Range assets and are defined as a single piece of equipment, or
equipment
CONFIDENTIAL
THE SABRE GROUP, INC. AND COMDISCO, INC. 03/16/99
PAGE 5
<PAGE>
physically connected in such a way to function as a single unit, which will
be identified with a SABRE bar-code number affixed to the outside
structure. The asset may or may not contain additional components that may
also be inventoried, but will not be included in the count. Any assets in
excess of the [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] assets may
require additional staffing and additional costs to SABRE. Subject to the
foregoing and the following paragraph, in order to effectively
accommodate growth, which could impact the asset base and therefore
staffing requirements, appointed Comdisco's and SABRE's representatives
will formally meet once a quarter, or more often if jointly agreed upon,
to assess the impact of changes to the asset base and come to a mutually
agreeable resolution.
If at any time after the first year of the Services Schedule the activity
level is such that the parties, in good faith, determine that the
Asset/Lease Manager function should be performed by SABRE then in such
event, the Services portion of the Monthly Rental will be reduced by
$[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] per month as of the
effective date of such termination and the service levels under the SLAs
will be adjusted accordingly. In addition, the parties have anticipated
that the staffing levels specified for the Service Desk will handle up to
the [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] assets. If at any
time during the Term of this Services Schedule, SABRE's activity level
requires additional staffing to enable Comdisco to perform the Services
in accordance with this Services Schedule, the parties will in good
faith adjust the staffing levels and the cost to SABRE.
As long as all amounts then due and owing (other than a Disputed Amount)
are paid by SABRE and SABRE gives Comdisco at least ninety (90) days prior
notice, SABRE may terminate the Services effective on December 31, [TEXT
OMITTED - CONFIDENTIAL TREATMENT REQUESTED], or upon the expiration of any
calendar year thereafter as specified in the termination notice. The
Monthly Rental shall be reduced by $[TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED] per month as of the effective date of such termination, which
the parties agree represent the monthly fee for the Services.
Upon prior approval by SABRE and not more than quarterly, reasonable
expenses for travel and living incurred in association with the performance
of Comdisco's ongoing quality control during the delivery of the Services,
or as a result of a SABRE request, will be billed separately at Comdisco's
cost. SABRE shall reimburse Comdisco for such expenses upon submission by
Comdisco of an expense statement in a form authorized by SABRE.
Any Services performed by Comdisco hereunder shall be performed by
qualified and fully trained personnel. Additionally, the Services shall be
performed in a commercially reasonable and professional manner. All
Service personnel assigned for particular functions under this Services
Schedule have the skills, certifications and qualifications indicated
herein.
3. YEAR 2000 WARRANTY
SABRE and Comdisco agree as follows:
The following are definitions for the purposes of this year 2000 Service
warranty:
CONFIDENTIAL
THE SABRE GROUP, INC. AND COMDISCO, INC. 03/16/99
PAGE 6
<PAGE>
"Services Related Products" means (i) any products that Comdisco provides
to use as tools to perform Services under this Services Schedule, (ii) any
SABRE owned or licensed products which Comdisco provides Services for under
this Services Schedule which were demonstrated to Comdisco's satisfaction
to be Year 2000 Compliant prior to the Comdisco performing the Services and
such Services were the direct cause of any Year 2000 non-compliance, and
(iii) any deliverables provided to SABRE by Comdisco as part of its
Services.
"Year 2000 Compliant" means that the software, micro-code, and hard wired
features of the Services Related Products that have date data fields,
processing logic, outputs, and interfaces will correctly recognize,
process, and otherwise support the Gregorian calendar year 2000 and beyond.
The Services Related Products, as well as all features, updates, upgrades,
and options shall so operate regardless of whether SABRE uses them prior
to, during or after the calendar year 2000, so long as the hardware and
software interfacing with the Services Related Products can correctly
recognize, process, and otherwise support the calendar year and beyond.
Notwithstanding anything to the contrary in this Services Schedule, except
for SABRE owned and licensed products under (ii) above, Comdisco warrants
that the Services Related Products are Year 2000 Compliant. Comdisco shall
not be responsible for maintaining the Year 2000 Compliant status of the
Services Related Products on and after the date of any changes to them made
by any person other than Comdisco under this Services Schedule, which
resulted in the Services Related Products being rendered non-Year 2000
Compliant. Comdisco will informally over time provide to SABRE compliance
status information for Comdisco's legacy systems and then current Services
offerings and tools, and will communicate to SABRE possible work around
options for non-compliant functionality. This warranty shall survive the
expiration or termination of this Services Schedule for a period of 12
months from January 1, 2000.
4. CHANGE CONTROL
Upon the identification of any change to the Services, SABRE and Comdisco
will complete a Comdisco Change Control Form ("CCF"). The Comdisco Change
Control process is described below:
Any changes to the Services must be mutually agreed upon by both Comdisco
and SABRE to ensure common expectations are maintained for the
deliverables. Mutually acceptable changes will become the basis of a
modification to this Services Schedule with a Statement of Change ("SOC").
Neither party shall have any obligation to commence work in connection with
a change request prior to completing this Change Control Process.
A change to the scope of the Services must be submitted in writing, using
Comdisco's standard CCF and this process:
- The requested change will be described by the party originating the
change (either SABRE or Comdisco) using the CCF. The CCF will then be
submitted to SABRE for approval.
CONFIDENTIAL
THE SABRE GROUP, INC. AND COMDISCO, INC. 03/16/99
PAGE 7
<PAGE>
- SABRE will evaluate the CCF and either reject it, or sign and send the
form to Comdisco.
- Comdisco will work with SABRE as required to identify and document the
scope of change using an SOC.
- Comdisco will approve and sign the SOC.
- The SOC will be delivered to SABRE for approval and final signature.
- Upon receipt of an SOC signed by both companies, Comdisco will
implement the changes and document closure on the CCF. If SABRE
decides not to sign the SOC, the reasons will be documented on the CCF
as part of closing this requested change.
5. SUBCONTRACTORS
In the event of any replacement of the Service Desk staff, Comdisco may
upon prior notice to SABRE utilize a subcontractor on a temporary basis to
maintain the appropriate service levels as provided for under this Services
Schedule. Notwithstanding the above, Comdisco shall remain liable for such
Service.
6. ELIGIBILITY TO WORK
Comdisco warrants that each Comdisco employee furnished by Comdisco is
eligible to legally work in the United States (being a citizen, documented
resident alien or possessing other eligibility documentation), and that
said Comdisco employee is free from any legal or contractual restraints
prohibiting working or the exercise of skills, including employment
agreements or non-competitive agreements with other or former employers
(excluding any agreement between Comdisco and Comdisco employee.
COMDISCO STAFFING
1. ADEQUATE PERSONNEL
Comdisco shall ensure that an adequate number of appropriately qualified
and trained personnel are employed and available at all times to provide
and support the Service Desk in accordance with the terms of this Services
Schedule. Comdisco shall augment through the Change Control Process the
personnel assigned to SABRE from time to time as may be necessary to carry
out special projects requested by SABRE. If Comdisco personnel are
reassigned during the Term, Comdisco shall use its best efforts to ensure a
smooth transition, including cooperation between the replaced and newly
assigned personnel or, where appropriate, an overlap in the assignment of
such personnel to SABRE.
Comdisco shall provide the following number of personnel to support SABRE
during the Term of this Services Schedule and any extension, unless the
parties agree (which agreement will not be unreasonably withheld) that such
number should be adjusted. The parties agree to meet annually to review
the staffing levels required for Comdisco to perform the Services to be
provided herein.
CONFIDENTIAL
THE SABRE GROUP, INC. AND COMDISCO, INC. 03/16/99
PAGE 8
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
COMPONENT RESOURCES DURATION LOCATION
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Operational Service Manager* 7 Years Tulsa
Service Desk Asset/Lease Manager** 7 Years Tulsa
Service Delivery Director *** Tulsa
- ------------------------------------------------------------------------------
</TABLE>
* The Service Manager reviews with SABRE's Project Manager the project
status and deliverables monthly over the life of the project.
** The Asset/Lease Manager is a full time operational position who transitions
from the Interim Service Desk to the Operational Service Desk.
*** The Service Delivery Director periodically reviews the Quality Assurance,
project status, deliverables and customer satisfaction over the life of
the project.
2. COMDISCO SERVICE MANAGER
No later than forty-five (45) days from the execution of this Services
Schedule by both parties, Comdisco shall appoint a Service Manager with
sufficient experience and expertise to act as the primary liaison between
the parties and to assume overall responsibility for the party's
performance under this Services Schedule. If Comdisco reassigns its
Service Manager or such individual has any other conflict which would
impact the delivery of the Services, Comdisco will promptly replace such
person with another person no less qualified or knowledgeable as to
Comdisco's business. Comdisco will also make available to SABRE other
reasonably necessary resources on a timely basis. Comdisco will ensure
that the personnel involved in the Services have available to them
personnel with sufficient knowledge of all relevant aspects of Comdisco's
business, including technical, financial and functional requirements
relevant to the Services.
3. REASSIGNMENT OF PERSONNEL
Absent SABRE's consent (which shall not be unreasonably withheld) or as
otherwise provided herein, for 12 months from the Effective Date of this
Services Schedule, Comdisco shall not eliminate any personnel positions
that have been provided as of the Effective Date. Except in situations
where personnel leave the employ of Comdisco, Comdisco shall avoid
unreasonable churn in the assignment and reassignment of Comdisco
personnel.
4. REMOVAL OF PERSONNEL
SABRE may notify Comdisco when it finds any Comdisco personnel unacceptable
to SABRE for any lawful reason, including SABRE's reasonable determination
that he or she is not qualified to perform the work to which he or she is
assigned. Upon receipt of such notice Comdisco shall within 10 business
days review the matter with SABRE. Notwithstanding the above, such notice
of unsatisfactory performance shall in no way limit or restrict SABRE
rights under this Services Schedule or relieve Comdisco of its obligations
to perform.
CONFIDENTIAL
THE SABRE GROUP, INC. AND COMDISCO, INC. 03/16/99
PAGE 9
<PAGE>
5. REPORTS
During the Term of this Services Schedule, Comdisco shall provide SABRE no
later than the 16th day of the following month with (i) monthly statements
reflecting the activity of the Refresh Equipment and Growth Equipment
supplied to SABRE during the prior month in the detail as agreed upon
between the parties; (ii) revised Monthly Rental schedule based upon the
activity described in (i); and (iii) a status report issued monthly with
the current remaining balance of the Refresh Pool. SABRE shall use these
reports to identify the Equipment being returned or refreshed under the
Program. SABRE shall provide Comdisco with not less than 30 days written
notice of its intent to return or refresh Equipment; provided, however,
nothing herein shall be deemed to limit SABRE's rights under Part V,
Section 4 of this Services Schedule if SABRE requires a shorter time frame.
SABRE STAFFING
1. SABRE PROJECT MANAGER
No later than forty-five (45) days from the execution of this Services
Schedule by both parties, SABRE shall appoint a Project Manager with
sufficient experience and expertise to act as the primary liaison between
the parties and to assume overall responsibility for the party's
performance under this Services Schedule. If SABRE reassigns its Project
Manager or such individual has any other conflict which would impact the
delivery of the Services, SABRE will promptly replace such person with
another person no less qualified or knowledgeable as to SABRE's business.
SABRE will also make available to Comdisco other reasonably necessary
resources on a timely basis. SABRE will ensure that the personnel involved
in the Services have available to them personnel with sufficient knowledge
of all relevant aspects of SABRE's business, including technical, financial
and functional requirements relevant to the Services.
CONFIDENTIAL
THE SABRE GROUP, INC. AND COMDISCO, INC. 03/16/99
PAGE 10
<PAGE>
CERTAIN OBLIGATIONS
OF COMDISCO
1. ACCESS AND SECURITY
Subject to the subsections below, Comdisco personnel shall have such access
at all times to SABRE's premises as is reasonably necessary to provide the
Service in accordance with the terms of this Services Schedule.
All Comdisco personnel shall comply with SABRE's or SABRE's customers
security requirements where such security requirements are posted or SABRE
or SABRE's customer otherwise advises Comdisco personnel of such
requirements. When deemed appropriate by SABRE or SABRE's customer,
Comdisco personnel will be issued passes or visitor identification cards
which must be presented upon request to SABRE's or SABRE's customer
personnel and surrendered promptly upon SABRE's or SABRE's customer demand
or upon termination of this Services Schedule. SABRE or SABRE's customer
shall have the right to refuse to issue such passes or identification cards
or immediately to terminate the right of access should SABRE or SABRE's
customer determine in its sole discretion for any lawful reason that such
termination is in SABRE's or SABRE's customer best interest. SABRE shall
promptly notify Comdisco of any such refusal or termination of access, and
Comdisco shall have the opportunity to demonstrate to SABRE that refused or
terminated rights of access should be granted or reinstated. In no event
shall the termination of such right of access or refusal to issue such
passes or identification cards to a Comdisco personnel excuse Comdisco from
performance herein, provided Comdisco has 3 business days from receipt of
such notice to replace the Comdisco personnel.
IN WITNESS WHEREOF, the parties have caused this Services Schedule to be
executed by their duly authorized officers as of the day and year first set
forth above.
THE SABRE GROUP, INC. COMDISCO, INC.
By: By:
---------------------------- -------------------------------
Title: Title:
------------------------- ----------------------------
Date: Date:
-------------------------- ----------------------------
CONFIDENTIAL
THE SABRE GROUP, INC. AND COMDISCO, INC. 03/16/99
PAGE 11
<PAGE>
ATTACHMENT C
SABRE GLOBAL TECHNOLOGY POOL
U.S. EQUIPMENT
<TABLE>
<CAPTION>
Commencement End of
Mfg Item Type Serial # Location Date Commitment
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSATCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
2 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
3 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
4 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
5 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
6 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
7 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
8 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
9 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
10 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
11 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
12 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
13 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
14 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
15 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
16 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
17 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
18 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
19 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
20 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
21 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
22 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
23 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
24 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
25 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
26 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
27 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
28 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
29 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
30 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
31 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
32 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
33 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSATCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
34 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
35 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
36 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
37 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
38 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
39 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
40 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
41 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
42 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
43 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
44 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
45 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Pick-Up Equipment Rental Rental
Date Cost * Factor Amount
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
2 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
3 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
4 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
5 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
6 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
7 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
8 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
9 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
10 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
11 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
12 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
13 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
14 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
15 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
16 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
17 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
18 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
19 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
20 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
21 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
22 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
23 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
24 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
25 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
26 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
27 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
28 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
29 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
30 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
31 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
32 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
33 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
34 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
35 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
36 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
37 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
38 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
39 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
40 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
41 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
42 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
43 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
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44 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
45 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
</TABLE>
Comdisco, Inc. Confidential Page 1 3/16/1999
<PAGE>
ATTACHMENT C
SABRE GLOBAL TECHNOLOGY POOL
U.S. EQUIPMENT
<TABLE>
<CAPTION>
Commencement End of
Mfg Item Type Serial # Location Date Commitment
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
46 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
47 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
48 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
49 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSATCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
50 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
51 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
52 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
53 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
54 [TEXT OMITTED - CONFIDENTIAL Proc [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
55 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
56 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
57 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
58 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
59 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
60 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
61 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
62 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
63 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
64 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
65 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
66 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
67 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
68 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
69 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
70 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
71 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
72 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
73 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
74 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
75 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
76 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
77 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
78 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSATCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
79 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
80 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
81 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
82 [TEXT OMITTED - CONFIDENTIAL DASD [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
83 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
84 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
85 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
86 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
87 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
88 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
89 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
90 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Pick-Up Equipment Rental Rental
Date Cost * Factor Amount
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
46 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
47 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
48 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
49 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
50 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
51 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
52 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
53 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
54 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
55 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
56 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
57 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
58 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
59 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
60 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
61 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
62 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
63 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
64 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
65 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
66 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
67 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
68 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
69 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
70 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
71 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
72 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
73 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
74 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
75 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
76 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
77 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
78 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
79 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
80 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
81 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
82 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
83 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
84 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
85 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
86 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
87 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
88 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
89 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
90 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
</TABLE>
Comdisco, Inc. Confidential Page 2 3/16/1999
<PAGE>
ATTACHMENT C
SABRE GLOBAL TECHNOLOGY POOL
U.S. EQUIPMENT
<TABLE>
<CAPTION>
Commencement End of
Mfg Item Type Serial # Location Date Commitment
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
91 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
92 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
93 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
94 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSATCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
95 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
96 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
97 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
98 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
99 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
100 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
101 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
102 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
103 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
104 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
105 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
106 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
107 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
108 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
109 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
110 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
111 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
112 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
113 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
114 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
115 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
116 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
117 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
118 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
119 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
120 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
121 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
122 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
123 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSATCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
124 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
125 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
126 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
127 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
128 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
129 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
130 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
131 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
132 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
133 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
134 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
135 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Pick-Up Equipment Rental Rental
Date Cost * Factor Amount
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
91 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
92 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
93 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
94 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
95 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
96 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
97 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
98 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
99 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
100 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
101 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
102 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
103 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
104 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
105 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
106 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
107 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
108 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
109 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
110 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
111 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
112 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
113 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
114 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
115 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
116 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
117 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
118 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
119 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
120 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
121 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
122 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
123 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
124 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
125 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
126 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
127 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
128 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
129 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
130 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
131 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
132 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
133 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
134 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
135 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
</TABLE>
Comdisco, Inc. Confidential Page 3 3/16/1999
<PAGE>
ATTACHMENT C
SABRE GLOBAL TECHNOLOGY POOL
U.S. EQUIPMENT
<TABLE>
<CAPTION>
Commencement End of
Mfg Item Type Serial # Location Date Commitment
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
136 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
137 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
138 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
139 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
140 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
141 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
142 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
143 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
144 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
145 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
146 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
147 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
148 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
149 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
150 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
151 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
152 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
153 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
154 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
155 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
156 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
157 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
158 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
159 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
160 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
161 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
162 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
163 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
164 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
165 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
166 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
167 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
168 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSATCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
169 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
170 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
171 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
172 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
173 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
174 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
175 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
176 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
177 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
178 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
179 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
180 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Pick-Up Equipment Rental Rental
Date Cost * Factor Amount
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
136 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
137 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
138 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
139 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
140 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
141 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
142 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
143 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
144 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
145 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
146 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
147 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
148 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
149 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
150 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
151 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
152 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
153 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
154 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
155 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
156 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
157 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
158 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
159 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
160[TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
161 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
162 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
163 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
164 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
165 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
166 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
167 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
168 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
169 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
170 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
171 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
172 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
173 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
174 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
175 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
176 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
177 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
178 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
179 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
180 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
</TABLE>
Comdisco, Inc. Confidential Page 4 3/16/1999
<PAGE>
ATTACHMENT C
SABRE GLOBAL TECHNOLOGY POOL
U.S. EQUIPMENT
<TABLE>
<CAPTION>
Commencement End of
Mfg Item Type Serial # Location Date Commitment
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
181 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
182 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
183 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
184 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
185 [TEXT OMITTED - CONFIDENTIAL Tape [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
186 [TEXT OMITTED - CONFIDENTIAL TREATMENT [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
187 [TEXT OMITTED - CONFIDENTIAL TREATMENT [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
188 [TEXT OMITTED - CONFIDENTIAL TREATMENT [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
189 [TEXT OMITTED - CONFIDENTIAL TREATMENT [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
190 [TEXT OMITTED - CONFIDENTIAL TREATMENT [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
191 [TEXT OMITTED - CONFIDENTIAL TREATMENT [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
192 [TEXT OMITTED - CONFIDENTIAL TREATMENT [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
193 [TEXT OMITTED - CONFIDENTIAL TREATMENT [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
194 [TEXT OMITTED - CONFIDENTIAL TREATMENT [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
195 [TEXT OMITTED - CONFIDENTIAL TREATMENT [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
196 [TEXT OMITTED - CONFIDENTIAL TREATMENT [TEXT OMITTED - CONFIDENTIAL TULSASCC 10/1/1998 10/31/1998
REQUESTED] TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Pick-Up Equipment Rental Rental
Date Cost * Factor Amount
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
181 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
182 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
183 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
184 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
185 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
186 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
187 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
188 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
189 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
190 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
191 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
192 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
193 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
194 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
195 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
196 [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Equipment cost to be reassigned pending redefinition of item descriptions
Comdisco, Inc. Confidential Page 5 3/16/1999
<PAGE>
ATTACHMENT B
SABRE GLOBAL TECHNOLOGY POOL
THIRD PARTY LEASES
<TABLE>
<CAPTION>
Vendor Item Configuration Type Qty Serial # Lessor
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 [TEXT OMITTED - to be defined [TEXT OMITTED - [TEXT OMITTED -
CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED] TREATMENT REQUESTED]
- -------------------------------------------------------------------------------------------------------
2 [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED] [TEXT OMITTED -
CONFIDENTIAL
TREATMENT REQUESTED]
- -------------------------------------------------------------------------------------------------------
3 [TEXT OMITTED - [TEXT OMITTED - [TEXT OMITTED -
CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED] TREATMENT REQUESTED]
- -------------------------------------------------------------------------------------------------------
<CAPTION>
Payment
Lease # Location End Date Due Date Monthly Rent
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 TULSA [TEXT OMITTED - 15th [TEXT OMITTED -
CONFIDENTIAL CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------
2 TULSA [TEXT OMITTED - 31st [TEXT OMITTED -
CONFIDENTIAL CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------
3 TULSA [TEXT OMITTED - 31st [TEXT OMITTED -
CONFIDENTIAL CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------
</TABLE>
SABRE to provide Comdisco with payee information on above leases including
contact information, payment due dates, notice requirements
Comdisco, Inc. Confidential 3/16/1999
<PAGE>
ATTACHMENT B
SABRE GLOBAL TECHNOLOGY POOL
COMDISCO LEASES
<TABLE>
<CAPTION>
Vendor Item Configuration Type Qty Serial # Lessor
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 COMDISCO [TEXT OMITTED to be defined [TEXT OMITTED COMDISCO
- CONFIDENTIAL - CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- -------------------------------------------------------------------------------------------------------
2 COMDISCO [TEXT OMITTED [TEXT OMITTED COMDISCO
- CONFIDENTIAL - CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- -------------------------------------------------------------------------------------------------------
3 COMDISCO [TEXT OMITTED [TEXT OMITTED COMDISCO
- CONFIDENTIAL - CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- -------------------------------------------------------------------------------------------------------
4 COMDISCO [TEXT OMITTED [TEXT OMITTED COMDISCO
- CONFIDENTIAL - CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- -------------------------------------------------------------------------------------------------------
5 COMDISCO [TEXT OMITTED [TEXT OMITTED COMDISCO
- CONFIDENTIAL - CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- -------------------------------------------------------------------------------------------------------
6 COMDISCO [TEXT OMITTED [TEXT OMITTED [TEXT OMITTED COMDISCO
- CONFIDENTIAL - CONFIDENTIAL - CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT TREATMENT REQUESTED]
REQUESTED]
- -------------------------------------------------------------------------------------------------------
<CAPTION>
Payment Refresh Pool
Lease # Location End Date Due Date Monthly Rent Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 TULSA [TEXT OMITTED [TEXT OMITTED
- CONFIDENTIAL - CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ---------------------------------------------------------------------------------------------
2 TULSA [TEXT OMITTED [TEXT OMITTED
- CONFIDENTIAL - CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ---------------------------------------------------------------------------------------------
3 TULSA [TEXT OMITTED [TEXT OMITTED
- CONFIDENTIAL - CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ---------------------------------------------------------------------------------------------
4 TULSA [TEXT OMITTED [TEXT OMITTED
- CONFIDENTIAL - CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ---------------------------------------------------------------------------------------------
5 TULSA [TEXT OMITTED [TEXT OMITTED
- CONFIDENTIAL - CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ---------------------------------------------------------------------------------------------
6 TULSA [TEXT OMITTED [TEXT OMITTED
- CONFIDENTIAL - CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ---------------------------------------------------------------------------------------------
SABRE to provide Comdisco with payee information on above leases [TEXT OMITTED -
including contact information, payment due dates, notice requirements CONFIDENTIAL
TREATMENT REQUESTED].
</TABLE>
<PAGE>
THIS AGREEMENT HAS CONFIDENTIAL PORTIONS OMITTED, WHICH PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED
PORTIONS ARE INDICATED IN THIS AGREEMENT WITH "[TEXT OMITTED - CONFIDENTIAL
TREATMENT REQUESTED]."
June 24, 1998
T. Patrick Kelly
Chief Financial Officer
The SABRE Group
P.O. Box 619616 - MD 4202
DFW Airport, TX 75261-9616
Re: Corporate Travel Agreement between The SABRE Group ("Customer")
and American Airlines, Inc. ("American")
This Corporate Travel Agreement (this "Agreement") will confirm the
understanding between Customer and American regarding travel by Customer's
employees on company business.
1. TERM AND TERMINATION. This Agreement will be valid for travel
commencing from July 1, 1998, through June 30, 2001, unless terminated earlier
by either party in accordance with the terms hereof. Either party may terminate
this Agreement for any reason, with or without cause, upon at least thirty (30)
days' prior written notice to the other party. In the event of a breach or
default by a party hereto, the other party may terminate this Agreement upon
giving at least three (3) days' prior written notice to the breaching party or
defaulting party. Customer will not be entitled to receive any discount and/or
credit on any tickets issued for travel on or after the effective date of
termination or expiration of this Agreement. If American terminates or reduces
service to any city that is covered by this Agreement, this Agreement shall be
automatically amended to exclude such city or to reflect such reduction,
without liability to any party, and this Agreement will continue in full force
and effect as to the cities and service not affected by such termination or
reduction.
2. ISSUANCE OF CUSTOMER NUMBERS. American will provide Customer with a
Customer Identification Number which will identify Customer for recordkeeping
purposes for travel pursuant to this Agreement ("CART #"). IT IS THE
RESPONSIBILITY OF THE CUSTOMER TO ADVISE ITS DESIGNATED TRAVEL AGENCY TO RECORD
THE PROPER ACCOUNT NUMBER DESIGNATED BY THE LETTER "C" FOLLOWED BY THE SIX DIGIT
NUMBER ON EACH TICKET IN THE TOUR CODE BOX AT THE TIME OF ISSUANCE.
3. DISCOUNT. Customer will be entitled to a discount, as applicable, subject
to the terms and conditions set forth in the Appendices hereto.
4. RULES GOVERNING TICKETS. All purchases will be subject to American's
Conditions of Carriage and all rules applicable to the general public for the
class or category of fare selected (including also any charges to Customer for
change in travel arrangements that may be applicable to the class or category of
fare selected). American's obligation to issue tickets pursuant to the terms
and conditions of this Agreement to Customer (either directly or through an
Agency of Record, listed on the Appendices hereto) is subject to availability of
seats for the specified class of service. American may discontinue flights or
change flight schedules at any time for any reason without prior notice,
liability or obligation to Customer. All travel pursuant to this Agreement must
be booked in the proper class of service as specified in the enclosed Appendices
and all tickets for such travel must be used for travel prior to the date of
termination or expiration of this Agreement (or any extension hereof). Customer
acknowledges that hidden-city ticketing, beyond-point ticketing, back-to-back
ticketing, cross-border ticketing and speculative or abusive bookings are in
violation of American's Conditions of Carriage as well as its other rules and
regulations and that if Customer purchases or books such tickets, Customer will
be in violation of these rules, regulations and tariffs. If Customer engages in
any such prohibited activity, American may terminate this Agreement immediately
upon prior notice to Customer and any benefits earned but not used by the
Customer under the terms and conditions of this Agreement will be forfeited.
5. RESPONSIBILITY FOR UNAUTHORIZED USE. Customer shall immediately report to
American any fraudulent or unauthorized use under this Agreement of which
Customer becomes aware. Customer will be fully responsible for any fraudulent
or unauthorized use through the date it reports same to American. Customer must
notify American of such fraudulent or unauthorized use by contacting American
Airlines at the mailing address specified in the enclosed Appendices.
1
<PAGE>
6. CONFIDENTIALITY. Customer and American will each keep confidential
the existence, terms and conditions of this Agreement and (unless required by
law or judicial process after making reasonable efforts to resist disclosure)
will not disclose any of same to any third party (other than any Agencies of
Record) without obtaining the prior written consent of the other party hereto.
Customer may disclose information concerning this Agreement to its Agency of
Record to the extent necessary for the Agency of Record to perform its services
to Customer, provided Customer obtain a written agreement from the Agency of
Record to be bound by the confidentiality provisions contained herein. If
during the term of this Agreement, the Customer discloses the conditions of this
Agreement to a third party (except as expressly permitted in the preceding
sentence) without prior written consent of American, the Customer will be deemed
in default of this Agreement, and American may terminate this Agreement
immediately upon prior written notice to Customer and any benefits earned but
not used by the Customer under the terms and conditions of this Agreement will
be forfeited. The provisions of this Section 6 will survive the termination or
expiration of this Agreement.
7. CHANGE IN STRUCTURE. It is the responsibility of Customer to notify
American in writing on Customer letterhead of any changes to Customer's
organizational structure including (but not limited to) any mergers or
consolidations, sales of all or substantially all of Customer's assets or other
transfers of control of Customer. Upon notice of a change in Customer's
organizational structure, the parties shall review the terms and conditions of
this Agreement to determine what amendments, if any, are necessary in light of
Customer's new organizational structure. In addition, Customer must obtain a
written agreement from its Agency of Record to notify American of any similar
changes to the Agency of Record's organizational structure.
8. SABRE COMPUTER RESERVATION SYSTEM. Customer agrees that all purchases
pursuant to this Agreement will be booked and ticketed by Customer or an Agency
of Record through the SABRE computer reservation system. If, during the course
of an audit, it is found that SABRE was not used in accordance with this
Agreement, Customer agrees to pay for the cost of the audit as well as a fee of
$12.00 per booking made not using SABRE.
9. GENERAL TERMS. (a) Neither Customer nor American may assign this
Agreement, in whole or in part, except with the prior written consent of the
other, and any such attempted unauthorized assignment will be void and
unenforceable. (b) This Agreement may be amended, renewed, extended or
otherwise modified in written form only and must be signed by both parties.
(c) This Agreement will be governed by and construed in accordance with the laws
of the State of Texas without regard to choice of laws principles. Any action
arising from or under this Agreement shall be brought only in a court of
competent jurisdiction in the State of Texas. (d) American shall not be
responsible for any delays or failures in performance caused by circumstances
beyond American's control, including (without limitation) strikes, lockouts or
other labor disputes, acts of God, material shortages, mechanical difficulties,
riots, acts of war or other hostilities, governmental regulations or activities,
fire, earthquakes or other natural disasters. (e) All remedies provided under
this Agreement are non-exclusive and are in addition to all other available
legal and equitable remedies, except that neither party will hereto be liable to
the other for any consequential, punitive or exemplary damages (including also
lost revenues, lost profits and lost prospective economic advantage) arising
from any performance of this Agreement or any breach or default hereunder, even
if such party knew or should have known of the existence of such damages, and
each party hereby releases and waives any claims against the other party
regarding such damages. (f) Either party to this Agreement may specifically
waive any of the provisions hereof or any default or remedy hereunder, but no
such waiver shall constitute a future waiver of any such provision, default or
remedy or a waiver of any other provision, default or remedy. No delay or
omission in the exercise or enforcement of any right or remedy provided
hereunder or by law by either party shall be construed as a waiver of such right
or remedy. (g) If one or more of the provisions of this Agreement shall be
held to be invalid, illegal or unenforceable, such invalidity, illegality or
unenforceability shall not affect the remaining provisions of this Agreement,
and this Agreement shall be enforced to the fullest extent possible. (h) This
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes any prior agreements or understandings,
whether oral or written, between the parties. (i) All notices required or
permitted hereunder shall be in writing and served personally by express
delivery service, by United States mail, postage pre-paid, first class, or by
facsimile, in case addressed to the parties at the addresses set forth in the
Appendices to this Agreement. (j) The Appendices to this Agreement are
incorporated into this Agreement and form a part hereof for all intents and
purposes.
2
<PAGE>
10. This Agreement will supersede the Corporate Travel Agreement between
American and Customer dated July 25, 1996.
This Agreement is not valid until fully executed by all parties and
countersigned at American Airlines Corporate Headquarters. If all signatures
are not obtained within thirty (30) days of the date first written above, the
terms and conditions specified herein are null and void.
AMERICAN AIRLINES, INC.
By:
---------------------------------------
Name: Steven A. Rosato
Title: Multi-National Account Manager
CONFIRMED:
The SABRE Group American Airlines - Corporate Headquarters
By: By:
--------------------------- ---------------------------------------
Name: T. Patrick Kelly Name: Frank D. Morogiello
Title: Chief Financial Officer Title: Managing Dir- Natl Accts/Sales
Programs
Date: Date:
------------------------- -------------------------------------
3
<PAGE>
APPENDIX A
U. S. POINT-OF-SALE: DOMESTIC UPFRONT AGREEMENT
1. CONTACT, NOTICE AND MAILING INFORMATION
<TABLE>
<CAPTION>
Customer American
<S> <C> <C>
Mailing Address: The SABRE Group Mailing Address: American Airlines, Inc.
P.O. Box 619616, MD 4202 700 DFW Business Center
DFW Airport, TX 75261-9616 MD 1302, North Tower, 2nd Flr
DFW Airport, TX 75261
Attn: National Account Sales
Contact: Michal A. Stewart Contact: Steven A. Rosato
Title: Manager, Corporate Travel Title: Multi-National Account Manager
Phone: (817) 967-2999 Phone: (972) 425-7005
Fax: (817) 967-3456 Fax: (972) 425-6977
</TABLE>
2. ACCOUNT NUMBER AND CUSTOMER IDENTIFICATION NUMBER.
AN#: 09X1CA CART#: 507574
3. DISCOUNT INFORMATION. Customer will be entitled to a discount (the
"Discount") for travel on corporate business by Customer's employees toward
purchases of published fares (excluding taxes) ("Permitted Purchases") for the
city pairs and fare levels specified herein only when utilizing Customer's
applicable AN# and CART#. The Discount will apply in full at the time of
ticketing and is expressed as a percentage reduction of such fares. Customer
will not receive any payment or reimbursement for Discounts not applied at time
of ticket issuance. Tickets issued pursuant to this Agreement are non-endorsable
and are valid for travel on American only. All tickets must be validated on
American Airlines (001) ticket stock The Discount may not be used with any
other promotion, discount or special offer (except that tickets purchased with
the Discount are eligible for credit under American's AADVANTAGE-Registered
Trademark- program for frequent fliers, in accordance with the rules of such
program). Any travel booked pursuant to this Agreement must be booked with
American by Customer directly or by Customer's designated travel agency of
record which is approved by American (each such agency, an "Agency of Record").
To qualify as an Agency of Record, the travel agency must execute the attached
Limited Travel Agency Agreement. Travel booked by any other person or entity
other than Customer or an Agency of Record will not be entitled to the benefits
of this Agreement. If Customer or an Agency of Record uses the AN# or CART# to
make any purchase other than a Permitted Purchase, American may (without
limiting its rights under this Agreement or the Limited Travel Agency Agreement)
assess a surcharge equal to the difference between the Discount fare and the
appropriate published fare for such purchases.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
DOMESTIC CITY PAIRS FARES INVENTORY [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
- ------------------- ----- ---------
To / From
U.S. System to U.S. System Full F/C/Y [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
(includes U.S. 48, Hawaii,
Puerto Rico, USVI, and Canada)
DFW-LGA/ORD/LAX/DCA/GSO/PIT** Full F/C/Y [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
Applicable Applicable [TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
</TABLE>
* The Discount will be net of all base and incentive commissions. Customer
agrees that American will not incur any base or incentive commissions, or credit
card fees, for tickets issued as net fares. Any commission taken or override
incentive earned on Net Fare purchases will be subject to commission or override
recall. Any credit card fees incurred by American will be billed back to
Customer.
4
<PAGE>
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
<TABLE>
<CAPTION>
<S> <C>
-------------------------------------------------------------------------
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
-------------------------------------------------------------------------
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
-------------------------------------------------------------------------
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
-------------------------------------------------------------------------
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
-------------------------------------------------------------------------
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
-------------------------------------------------------------------------
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
-------------------------------------------------------------------------
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
-------------------------------------------------------------------------
</TABLE>
4. SHARE COMMITMENT: For each city pair listed above, Customer agrees to
maintain the applicable percentage of flown segments on American compared to all
other air carriers (combined) for that city pair (the "Share Commitment") in all
areas specified below (Domestic, International and American System) for each ARC
reporting month during the term of the Agreement. American will review
Customer's booking and revenue performance for each calendar month of this
Agreement with Customer. If Customer does not maintain, on an averaged basis
over the course of a calendar quarter, the Share Commitment for any listed city
pair, American may terminate this Agreement upon giving Customer thirty (30)
days prior written notice. Domestic City Pair is defined as a point of origin
and destination served by American within the U. S. Contiguous 48 States,
Hawaii and the District of Columbia. International City Pair is defined as a
U.S. point of origin and a point of destination served by American in Europe,
Pacific and Central/South America. American System is defined as all points of
origin and destination served by American.
<TABLE>
<CAPTION>
Domestic [TEXT OMITTED - CONFIDENTIAL International [TEXT OMITTED - CONFIDENTIAL
City Pairs TREATMENT REQUESTED] City Pairs TREATMENT REQUESTED]
---------- -------------------- ---------- --------------------
<S> <C> <C> <C>
All where AA offers [TEXT OMITTED - CONFIDENTIAL All where AA offers [TEXT OMITTED - CONFIDENTIAL
competitive service* TREATMENT REQUESTED] competitive service* TREATMENT REQUESTED]
AA Domestic System AA International
System
</TABLE>
* Competitive service is defined as those city pairs in which American
Airlines offers regularly scheduled non-stop, direct, or connecting
service.
5. REPORTING: Customer, or its Agency of Record, will provide American on or
prior to the twentieth (20th) business day of each month, a consolidated
summary for the immediately preceding month which includes (i) the total number
of segments for each city pair specified above (AA plus OA segments), (ii) the
number of Customer's Permitted Purchases for each such city pair, (iii) the
total price of Customer's Permitted Purchases for each such city pair, and (iv)
Customer's market share in each such city pair (see sample report).
6. AGENCY OF RECORD INFORMATION
<TABLE>
<CAPTION>
Name ARC # Pseudo City Code CRS Dedicated (Y/N)
---- ----- ----------------- ----- ---------------
<S> <C> <C> <C> <C>
Answers Travel 45-53728 NOV3, J7P4, W2E4, U0Z4 SABRE No
</TABLE>
5
<PAGE>
APPENDIX B
U. S. POINT-OF-SALE: INTERNATIONAL UPFRONT AGREEMENT
1. CONTACT, NOTICE AND MAILING INFORMATION
<TABLE>
<CAPTION>
Customer American
<S> <C> <C>
Mailing Address: The SABRE Group Mailing Address: American Airlines, Inc.
P.O. Box 619616, MD 4202 700 DFW Business Center
DFW Airport, TX 75261-9616 MD 1302, North Tower, 2nd Flr
DFW Airport, TX 75261
Attn: National Account Sales
Contact: Michal A. Stewart Contact: Steven A. Rosato
Title: Manager, Corporate Travel Title: Multi-National Account Manager
Phone: (817) 967-2999 Phone: (972) 425-7005
Fax: (817) 967-3456 Fax: (972) 425-6977
</TABLE>
2. ACCOUNT NUMBER AND CUSTOMER IDENTIFICATION NUMBER.
AN#: 09X1CA CART#: 507574
3. DISCOUNT INFORMATION. Customer will be entitled to a discount (the
"Discount") for travel on corporate business by Customer's employees toward
purchases of published fares (excluding taxes) ("Permitted Purchases") for
all city pairs and classes of service specified herein only when using the
Ticket Designator SABRE. The Discount will apply in full at the time of
ticketing and is expressed as a percentage reduction of such fares.
Customer will not receive any payment or reimbursement for Discounts not
applied at time of ticket issuance. Tickets issued using the Ticket
Designator are non-endorsable and are valid for travel on American only.
All tickets must be validated on American Airlines (001) ticket stock.
Ticket Designator may not be used for travel itineraries which include
other airline segments. The Discount may not be used with any other
promotion, discount or special offer (except that tickets purchased with
the Discount are eligible for credit under American's AADVANTAGE-Registered
Trademark- program for frequent fliers, in accordance with the rules of
such program). Any travel booked pursuant to this Agreement must be booked
with American by Customer directly or by Customer's designated travel
agency of record which is approved by American (each such agency, an
"Agency of Record"). To qualify as an Agency of Record, the travel agency
must execute the attached Limited Travel Agency Agreement. Travel booked by
any other person or entity other than Customer or an Agency of Record will
not be entitled to the benefits of this Agreement. If Customer or an
Agency of Record uses the Ticket Designator to make any purchase other than
a Permitted Purchase, American may (without limiting its rights under this
Agreement or the Limited Travel Agency Agreement) assess a surcharge equal
to the difference between the Discount fare and the appropriate published
fare for such purchases.
<TABLE>
<CAPTION>
[TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL
INTERNATIONAL CITY PAIRS FARES TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------ ----- ---------------------------- ----------------------------
<S> <C> <C> <C>
U.S. System to/from Europe Full F/C/Y [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL
U.S. System to/from Europe Applicable TREATMENT REQUESTED] TREATMENT REQUESTED]
U.S. System to/from Pacific Full F/C/Y
U.S. System to/from Pacific Applicable
U.S. System to/from South/Central America Full F/C/Y [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL
U.S. System to/from South/Central America Applicable TREATMENT REQUESTED] TREATMENT REQUESTED]
U.S. System to/from Mexico Full F//Y
U.S. System to/from Mexico Applicable [TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL
U.S. System to/from Africa/Middle East Full F/C/Y TREATMENT REQUESTED] TREATMENT REQUESTED]
</TABLE>
* The Discount will be net of all base and incentive commissions. Customer
agrees that American will not incur any base or incentive commissions, or credit
card fees, for tickets issued as net fares. Any commission taken or override
incentive earned on Net Fare purchases will be subject to commission or override
recall. Any credit card fees incurred by American will be billed back to
Customer.
6
<PAGE>
3A. APPLICABILITY OF INTERNATIONAL DISCOUNT TO CODESHARE FLIGHTS:
- - Travel must be on American Airlines or on a carrier listed in Appendix D,
with whom AA has a codeshare relationship (a "Codeshare Partner"). Any
other travel is not covered by this Agreement and is not eligible for this
Discount.
- - When American Airlines and one or more of its Codeshare Partners serve the
same overwater segment, American Airlines must be the operating carrier on
that overwater segment.
- - Discount applicable only to those flights which are designated with an
American Airlines flight number.
- - Tickets written with international destinations must include travel on
flights which American Airlines is the operating carrier for segments
outbound from the U.S. gateway and segments inbound to the U.S. gateway
whenever American offers scheduled service between the U.S. gateway and the
international destination.
- - Tickets must be plated on American Airlines ticket stock. Tickets must be
issued within the U.S. or Canada. Travel may originate outside the
U.S.
- - Tickets must be issued at a percentage off for flights operated by a
Codeshare Partner FULL FARE FIRST CLASS, FULL FARE BUSINESS CLASS, OR FULL
FARE FIRST CLASS ONLY as outlined for Customer in Appendix A on any AA 6000
or AA 7000 series flights.
- - Customer will use the designated CART number for all American Airlines
tickets on which the Codeshare Partner is the operating carrier.
- - Flights on which American Airlines is the operating carrier, but for which
a Codeshare Partner is the marketing carrier (i.e., the carrier selling the
ticket) are not covered by this Agreement and are not eligible for the
Discount.
7
<PAGE>
3B. APPLICABILITY OF INTERNATIONAL DISCOUNT TO AMERICAN AIRLINES/BRITISH
AIRWAYS JOINT THROUGH FARES:
<TABLE>
<CAPTION>
CITY PAIRS FARES INVENTORY DISCOUNT
---------- ----- --------- --------
<S> <C> <C> <C>
From U.S. System to Europe* Full F/CY F/C/Y [TEXT OMITTED -
CONFIDENTIAL TREATMENT
REQUESTED]
(Includes US48, Hawaii, District of Columbia, and Puerto Rico to Europe)
</TABLE>
*Discount will apply on the joint through fares between the United States and
Europe where American Airlines is used on the transatlantic segment and British
Airways is used from London to points in the United Kingdom, Ireland, and
Continental Europe. Tickets must be plated on American Airlines ticket stock
and must be issued within the United States. Customer must input their
designated CART number in the Tour Code Box of every ticket issued as part of
this Agreement in order to be eligible for the discount. Tickets must be issued
as a percentage off of FULL FARE FIRST CLASS, FULL FARE BUSINESS CLASS, OR FULL
FARE COACH CLASS ONLY; no other joint through fares are eligible for the
discount. The discount will apply to the following European cities listed
below.
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
**Valid to Glasgow only during the months in which AA does not provide nonstop
service out of Chicago O'Hare.
*** The Discount will be net of all base and incentive commissions. Customer
agrees that American will not incur any base or incentive commissions, or credit
card fees, for tickets issued as net fares. Any commission taken or override
incentive earned on Net Fare purchases will be subject to commission or override
recall. Any credit card fees incurred by American will be billed back to
Customer.
8
<PAGE>
4. SHARE COMMITMENT: For each city pair or Market Area listed above, Customer
agrees to maintain the applicable percentage of flown segments on American
compared to all other air carriers (combined) for that city pair (the "Share
Commitment") for each ARC reporting month during the term of the Agreement.
American will review Customer's booking and revenue performance for each
calendar month of this Agreement with Customer. If Customer does not maintain,
on an averaged basis over the course of a calendar quarter, the Share Commitment
for any listed city pair, American may terminate this Agreement upon giving
Customer thirty (30) days prior written notice. Domestic City Pair is defined
as a point of origin and destination served by American within the U. S.
Contiguous 48 States, Hawaii and the District of Columbia. International City
Pair is defined as a U. S. point of origin and a point of destination served by
American in Europe, Pacific and Central/South America. American System is
defined as all points of origin and destination served by American.
<TABLE>
<CAPTION>
Domestic [TEXT OMITTED - CONFIDENTIAL International [TEXT OMITTED - CONFIDENTIAL
City Pairs TREATMENT REQUESTED] City Pairs TREATMENT REQUESTED]
---------- -------------------- ---------- --------------------
<S> <C> <C> <C>
All where AA offers [TEXT OMITTED - CONFIDENTIAL All where AA offers [TEXT OMITTED - CONFIDENTIAL
competitive service* TREATMENT REQUESTED] competitive service* TREATMENT REQUESTED]
AA Domestic System AA International
System
</TABLE>
* Competitive service is defined as those city pairs in which American
Airlines offers regularly scheduled non-stop, direct, or connecting
service.
5. REPORTING: Customer, or its Agency of Record, will provide American on or
prior to the twentieth (20th) business day of each month, a consolidated
summary for the immediately preceding month which includes (i) the total
number of segments for each city pair specified above (AA plus OA segments),
(ii) the number of Customer's Permitted Purchases for each such city pair,
(ii) the total price of Customer's Permitted Purchases for each such city
pair, and (iv) Customer's market share in each such city pair (see sample
report).
6. AGENCY OF RECORD INFORMATION
<TABLE>
<CAPTION>
Name ARC # Pseudo City Code CRS Dedicated (Y/N)
---- ----- ---------------- ----- ---------------
<S> <C> <C> <C> <C>
Answers Travel 45-53728 NOV3, J7P4, W2E4, U0Z4 SABRE No
</TABLE>
9
<PAGE>
APPENDIX C
CANADIAN AIRLINES ADDENDUM
1. CONTACT, NOTICE AND MAILING INFORMATION
<TABLE>
<CAPTION>
Customer American
<S> <C> <C>
Mailing Address: The SABRE Group Mailing Address: American Airlines, Inc.
P.O. Box 619616, MD 4202 700 DFW Business Center
DFW Airport, TX 75261-9616 MD 1302, North Tower, 2nd Flr
DFW Airport, TX 75261
Attn: National Account Sales
Contact: Michal A. Stewart Contact: Steven A. Rosato
Title: Manager, Corporate Travel Title: Multi-National Account Manager
Phone: (817) 967-2999 Phone: (972) 425-7005
Fax: (817) 967-3456 Fax: (972) 425-6977
</TABLE>
2. ACCOUNT NUMBER AND CUSTOMER IDENTIFICATION NUMBER.
AN#: 09X1CA CART#: 507574
3. DISCOUNT/TRANSBORDER: Paragraph 3 of Appendix A of the Corporate Travel
Agreement is hereby amended as follows: All transborder flights between the
United States and Canada operated by Canadian (including flights operated by
Canadian but marketed as American codeshared flights) ("Qualifying CP
Trans-Border Flights") are eligible as Permitted Purchases only when utilizing
Customer's applicable AN# and CART# in the Tour Code Box at the time of
ticketing. Tickets purchased with the Discount are also eligible for credit
under Canadian's Frequent Flyer Program, in accordance with the rules of such
program. All tickets for the above must be issued by the Customer's Agency of
Record within the United States or Canada and validated on American Airlines
(001) ticket stock or Canadian (018) ticket stock (i.e., both U.S. and Canadian
points of sale and/or origin are permissible). Notwithstanding any provision of
the Corporate Travel Agreement to the contrary, itineraries involving travel on
both American and Canadian may be included on a single ticket. No other carrier
may appear on the ticket.
3A. DISCOUNT/INTRA-CANADA: In addition, Paragraph 3 of Appendix A of the
Corporate Travel Agreement is hereby amended as follows: All intra-Canada
flights operated by Canadian (including flights operated by Canadian but
marketed as American codeshared flights) ("Qualifying CP Intra-Canada Flights")
are eligible as Permitted Purchases for the fare levels specified herein and are
subject to the discount level set forth below. Customer and each Agency of
Record must utilize the applicable AN# and CART# in the Tour Code Box at the
time of ticketing.
<TABLE>
<CAPTION>
[TEXT OMITTED - CONFIDENTIAL
CITY PAIRS FARES INVENTORY TREATMENT REQUESTED] ADV PURCH.
- ---------- ----- --------- -------------------- ----------
<S> <C> <C> <C> <C>
To / From
Canada System to Canada System Full J/Y [TEXT OMITTED - CONFIDENTIAL N/A
Applicable Applicable TREATMENT REQUESTED] Applicable
</TABLE>
* The Discount will be net of all base and incentive commissions. Customer
agrees that American will not incur any base or incentive commissions, or credit
card fees, for tickets issued as net fares. Any commission taken or override
incentive earned on Net Fare purchases will be subject to commission or override
recall. Any credit card fees incurred by American will be billed back to
Customer.
10
<PAGE>
3D. DISCOUNT/TRANSPACIFIC AND TRANSATLANTIC: In addition, Paragraph 3 of
Appendix A of the Corporate Travel Agreement is hereby amended as follows: All
transpacific flights operated by Canadian between the United States/Canada and
Asia, and all transatlantic flights operated by Canadian between the United
States/Canada and Europe (including American codeshared flights) ("Qualifying CP
International Flights") are eligible as Permitted Purchases for the city pairs
and fare levels specified herein only when utilizing Customer's applicable
ticket designator. Tickets issued pursuant to this Agreement will also be valid
for travel on Canadian. Tickets purchased with the Discount are also eligible
for credit under Canadian's Frequent Flyer Program, in accordance with the rules
of such program. All tickets for the above must be issued by the Customer's
Agency of Record within the United States or Canada and validated on American
Airlines (001) ticket stock or Canadian (018) ticket stock (i.e., both U.S. and
Canadian points of sale and/or origin are permissible). Notwithstanding any
provision of the Corporate Travel Agreement to the contrary, itineraries
involving travel on both American and Canadian may be included on a single
ticket. No other carrier may appear on the ticket.
<TABLE>
<CAPTION>
[TEXT OMITTED - CONFIDENTIAL [TEXT OMITTED - CONFIDENTIAL
INTERNATIONAL CITY PAIRS FARES TREATMENT REQUESTED] ADV. PURCH. TREATMENT REQUESTED
- ------------------------ ----- -------------------- ----------- -------------------
<S> <C> <C> <C> <C>
Canada to/from Europe Full J/Y [TEXT OMITTED - CONFIDENTIAL N/A [TEXT OMITTED - CONFIDENTIAL
Canada to/from Pacific Full J/Y TREATMENT REQUESTED] N/A TREATMENT REQUESTED
</TABLE>
* The Discount will be net of all base and incentive commissions. Customer
agrees that American will not incur any base or incentive commissions, or credit
card fees, for tickets issued as net fares. Any commission taken or override
incentive earned on Net Fare purchases will be subject to commission or override
recall. Any credit card fees incurred by American will be billed back to
Customer.
4. SHARE COMMITMENT: Qualifying CP Transborder Flights, Qualifying CP
Intra-Canada Flights and Qualifying CP International Flights (collectively
"Qualifying CP Flights") may be included to determine if Customer has met the
Share Commitment set forth in paragraph 4 of Appendix A of the Corporate Travel
Agreement.
5. NEW YORK-TORONTO TRAFFIC: Customer confirms and represents to American that
local U.S. point-of-sale non-stop New York - Toronto traffic constitutes no more
than 25% of Customer's (or the affiliated corporate group's) anticipated travel
(measured in flight segments) under the Corporate Travel Agreement. In the event
that Customer at any time during the term of the Corporate Travel Agreement
anticipates such traffic will exceed the 25% threshold, Customer shall
immediately inform American and Canadian in writing. Upon such notification, or
if American for any other reason anticipates that such 25% threshold will be
crossed, American may immediately terminate the Agreement with respect to the
New York/Toronto market.
6. ANTITRUST IMMUNITY: This Agreement may be modified or terminated by
American effective immediately with respect to one or more (or all) Qualifying
CP Flights in the event that the U.S. Department of Transportation ("DOT")
revokes or adversely modifies the antitrust immunity previously granted to
American and Canadian in connection with the marketing activities reflected in
this Agreement, or in the event the DOT or another federal or state governmental
entity proposes other adverse actions or claims against American or Canadian in
connection therewith. In the event American chooses to modify (rather than
terminate) this Agreement with respect to one or more of such flights, and
Customer objects to American's modification, then Customer may terminate this
letter agreement with respect to such flights upon thirty (30) days' written
notice. CUSTOMER HEREBY WAIVES AND RELEASES AMERICAN AND CANADIAN FROM ANY
CAUSE OF ACTION OR CLAIM THAT THE AGREEMENT CONTRAVENE ANY FEDERAL OR STATE
ANTITRUST LAW.
7. CONDITIONS OF CARRIAGE: Notwithstanding anything to the contrary in this
Agreement, all travel on Qualifying CP Flights (other than American
codeshared flights) shall be in accordance with Canadian's conditions of
carriage. In offering the discounts, redemption of credits and other
corporate terms set forth above and otherwise participating in the sale of
travel on such Canadian flights, American acts only as an agent of Canadian,
and Customer agrees that American shall not be liable to Customer for any
injury to or death of a passenger, or any loss of or damage to baggage or
other property, caused by or occurring on or in connection with such flights
and that Canadian's limitations of liability shall apply. In the event that
American ceases to be Canadian's agent with regard to the marketing
activities described herein, each party's obligations and responsibilities
pursuant to this addendum shall automatically terminate.
11
<PAGE>
APPENDIX D
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
12
<PAGE>
ATTACHMENT A
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
13
<PAGE>
ATTACHMENT B
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
[TEXT OMITTED - CONFIDENTIAL TREATMENT REQUESTED]
14
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES
THE SABRE GROUP HOLDINGS, INC.
The Sabre Group Holdings, Inc. SUBSIDIARY
(All subsidiaries are wholly-owned unless otherwise noted in parenthesis. Each
subsidiary's subsidiaries outlined further below.)
The Sabre Group, Inc. (Delaware)
The Sabre Group, Inc. SUBSIDIARIES
Axess International Network, Inc. (Japan) (25%)
ENCOMPASS Holding, Inc. (Delaware)
Prize Ltd. (Latvia) (50%)
Sabre Decision Technologies International, Inc. (Delaware)
Sabre Decision Technologies Licensing, Inc. (Delaware)
Sabre Enterprises, Inc. (Delaware)
Sabre International, Inc. (Delaware)
Sabre International Holdings, Inc. (Delaware)
Sabre Limited (New Zealand)
Sabre Soluciones de Viaje S. de R.L. de C.V. (Mexico) (99%)
Sabre Technology Enterprises, Ltd. (Cayman Islands)
Sabre Technology Holland B.V. (The Netherlands)
SST Finance, Inc. (Delaware)
SST Holding, Inc. (Delaware)
TSGL, Inc. (Delaware)
The Sabre Group Sales (Barbados), Ltd.
Ticketnet Corporation (Canada)
Sabre Decision Technologies International, Inc. SUBSIDIARY
Sabre Group International Limited, formerly INHOCO 858 Limited (UK)
Sabre Decision Technologies (Australia) Pty Ltd.
Sabre International, Inc. SUBSIDIARIES
Sabre CIS Holdings, Inc. (Delaware)
Sabre Belgium (Belgium) (99%)
Sabre Computer-Reservierungssystem GmbH (Austria)
Sabre Danmark ApS (Denmark)
Sabre Deutschland Marketing GmbH (Germany)
Sabre Deutschland Services GmbH (Germany)
Sabre Espana Marketing, S.A. (Spain) (99%)
Sabre Europe Management Services Ltd. (UK) (99%)
Sabre France Sarl (France)
Sabre Hellas SA (Greece)
Sabre Ireland Limited (Ireland)
Sabre Italia S.r.l. (Italy) (99%)
Sabre Marketing Nederland B.V. (The Netherlands)
Sabre Norge AS (Norway)
Sabre Portugal Servicos LDA (Portugal) (99%)
64
<PAGE>
Sabre International, Inc. SUBSIDIARIES - Continued
Sabre Servicios Colombia LTDA (Colombia) (99%)
Sabre Suomi Oy (Finland)
Sabre Sverige AB (Sweden)
Sabre UK Marketing Ltd. (UK) (99%)
STIN Luxembourg S.A. (Luxembourg) (99%)
Sabre International Holdings, Inc. SUBSIDIARIES
Sabre Belgium (Belgium) (1%)
Sabre Espana Marketing, S.A. (Spain) (1%)
Sabre Europe Management Services Ltd. (UK) (1%)
Sabre Italia S.r.l. (Italy) (1%)
Sabre Portugal Servicios LDA (Portugal) (1%)
Sabre Servicios Colombia LTDA (Colombia) (1%)
Sabre UK Marketing Ltd. (UK) (1%)
STIN Luxembourg S.A. (Luxembourg) (1%)
The Sabre Group International (Bahrain) W.L.L. (1%)
Sabre Soluciones de Viaje S. de R.L. de C.V. SUBSIDIARY
Sabre Informacion S.A. de C.V. (Mexico) (99%)
Sabre Technology Enterprises, Ltd. SUBSIDIARIES
Sabre Technology Enterprises II, Ltd. (Cayman Islands)
The Sabre Group International (Bahrain) W.L.L. (99%)
Sabre Technology Holland B.V. SUBSIDIARIES
Sabre Informacion S.A. de C.V. (Mexico) (1%)
Sabre Soluciones de Viaje S. de R.L. de C.V. (Mexico) (1%)
SST Holding, Inc. SUBSIDIARY
Sabre Sociedad Tecnologica S.A. (Mexico) (51%)
Sabre Sociedad Tecnologica S.A. SUBSIDIARY
Sabre Services Administration (Mexico)
TSGL, Inc. SUBSIDIARY
TSGL Holding, Inc. (Delaware)
Ticketnet Corporation SUBSIDIARY
148548 Canada, Inc. (Canada)
* All subsidiaries are wholly-owned unless otherwise noted in parenthesis
65
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 333-13917, 333-14509, and 333-18851) pertaining to The Sabre
Group Holdings, Inc. 1996 Long-Term Incentive Plan, 1996 Directors Stock
Incentive Plan, and Employee Stock Purchase Plan, respectively, of our
report dated January 18, 1999, except for Note 14, as to which the date is
March 16, 1999, with respect to the consolidated financial statements of The
Sabre Group Holdings, Inc. included in the Annual Report (Form 10-K) for the
year ended December 31, 1998.
ERNST & YOUNG LLP
Dallas, Texas
March 18, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 8,008
<SECURITIES> 529,735
<RECEIVABLES> 350,106
<ALLOWANCES> 12,403
<INVENTORY> 0
<CURRENT-ASSETS> 944,404
<PP&E> 1,381,264
<DEPRECIATION> 737,488
<TOTAL-ASSETS> 1,926,817
<CURRENT-LIABILITIES> 400,810
<BONDS> 317,873
0
0
<COMMON> 1,311
<OTHER-SE> 952,432
<TOTAL-LIABILITY-AND-EQUITY> 1,926,817
<SALES> 0
<TOTAL-REVENUES> 2,306,387
<CGS> 0
<TOTAL-COSTS> 1,763,017
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,493
<INCOME-PRETAX> 371,454
<INCOME-TAX> 139,513
<INCOME-CONTINUING> 231,941
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 231,941
<EPS-PRIMARY> 1.78
<EPS-DILUTED> 1.78
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 11,286
<SECURITIES> 573,620
<RECEIVABLES> 248,531
<ALLOWANCES> 8,905
<INVENTORY> 0
<CURRENT-ASSETS> 877,602
<PP&E> 1,303,484
<DEPRECIATION> 721,917
<TOTAL-ASSETS> 1,503,958
<CURRENT-LIABILITIES> 311,520
<BONDS> 317,873
0
0
<COMMON> 1,309
<OTHER-SE> 755,979
<TOTAL-LIABILITY-AND-EQUITY> 1,503,958
<SALES> 0
<TOTAL-REVENUES> 1,788,463
<CGS> 0
<TOTAL-COSTS> 1,303,517
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,692
<INCOME-PRETAX> 323,649
<INCOME-TAX> 123,796
<INCOME-CONTINUING> 199,853
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 199,853
<EPS-PRIMARY> 1.53
<EPS-DILUTED> 1.53
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 15,992
<SECURITIES> 426,945
<RECEIVABLES> 201,109
<ALLOWANCES> 4,094
<INVENTORY> 0
<CURRENT-ASSETS> 694,528
<PP&E> 1,224,951
<DEPRECIATION> 665,884
<TOTAL-ASSETS> 1,287,083
<CURRENT-LIABILITIES> 289,827
<BONDS> 317,873
0
0
<COMMON> 1,308
<OTHER-SE> 568,333
<TOTAL-LIABILITY-AND-EQUITY> 1,287,083
<SALES> 0
<TOTAL-REVENUES> 1,625,131
<CGS> 0
<TOTAL-COSTS> 1,152,613
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,401
<INCOME-PRETAX> 305,856
<INCOME-TAX> 119,282
<INCOME-CONTINUING> 186,574
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 186,574
<EPS-PRIMARY> 1.43
<EPS-DILUTED> 1.43
</TABLE>
